francine: amazon pledges $800 million to reduce the livery times as profits surge, investors remain unmoved. cutting bank warning, targets a day after ending merger talks. rbs warns of uncertain growth, shares sink. uber aims for a valuation of as much as $90 billion, taking a conservative approach after lyf t's listing fell flat. ♪

francine: welcome to "bloomberg: surveillance." markets, ther stoxx 600 is unchanged, a little bit flat, a little less concern at of the asian economies. we did have worse than expected gdp in korea, and today, a drag on some japanese figures. i am looking at the chinese renminbi at 6.73. will not useid he currency as a tool in trade and i am also looking at crude, because it has been quite a week, up and down. $64 and $.93, we also had figures from total giving back to investors. coming up, we speak to a chief hometive of the swedish

appliance manufacturer electrolux. let's get straight to bloomberg first word news in new york city. china won't engage in currency depreciation that harms other countries, that is the message from's xi jinping. earlier, he spoke of the opening of the belt and road for an says the currency will be kept at a quote reasonable level, saying the market will play a bigger role in setting the exchange rate. may's plan to keep britain out of the elections next month is failing. they have learned the prime minister is unlikely to put her bill through parliament next week, meeting she could run out of time to get it ratified before the vote kicks off on may 23. the elections threatened to be part -- particularly damaging for her party. of tax cuts is what

emmanuel macron is promising the french middle-class, his newest gambit toplacate -- reinvigorate -- to placate protesters. he is facing a backlash over his reform agenda but says it must continue. >> i think the ongoing transformation, the necessary transformations must not be they deeplyuse answer to the aspirations of our citizens. they have not been quick enough, radical enough, human enough, but i think these decisions were, in many ways, fair. >> raises challenges facing banks could be deepening, that is the message from rbs. warned be estimates but tough conditions make it income over the next few months. rbs is facing nervous customers cutting estimates during the brexit process.

global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: thank you so much. let's focus on tech. earnings,ge week for it was a thumbs up for facebook after posting robust quarterly sales growth. it is $1 trillion and counting for microsoft as strong march results -- after strong march results. and amazon posts a strong beat as they plan to spend $800 million in the order to reduce delivery times. . what our guests on bloomberg have been saying about the tech sector is earnings he's kicked off -- season kicked off. >> we are keeping a close eye on tech. >> high-growth tech faang stocks. >> these other companies delivering results. >> the numbers don't have to be great to do better with the bar lowered. >> the bar has been brought down dramatically. >> very low expectations.

>> as long as we come in better, the market will give these names a pass. >> you're starting to see companies beat and it is bringing optimism that. -- back. >> the back half of the year will be meaningfully better. >> relatively ok. >> the markets will look to that and move higher, no doubt about that in my mind. francine: meanwhile, bloomberg -- uber is starting to market shares at a price range of 44-50 dollars. earlier estimates have seen a valuation of up to 120 billion. they are expected to set the terms as soon as today. of global is the head asset allocation at societe generale. and here to talk tech is matthew from bloomberg intelligence. they give for joining us.

-- as always,g thank you for giving us some of your time. why did amazon shares not react as positively? thew: basically, guidance for revenue is still growing well, but no better than the markets are looking for an you had profit guidance somewhere below q1 beat. so there has been this? about how much they will invest. how muchuestion about they will invest but there will still be a big drag. francine: uber looked at lyft and repriced. matthew: it is interesting because the price tag would value them pretty much the same as lyft.

they potentially have much more attractive growth opportunities and perhaps are trying to leave a little bit on the table. rather than take too much themselves. we will see where the enterprise and is up, but there is still a huge amount of potential. francine: for 18 monthsfrancine: , we kept saying evaluations seem expensive. but a lot of these giants seem to have delivered. does it mean valuations are no longer that lofty? high andions are earning momentum is key. you need the momentum to be at least neutral. broaderyou look at the part of the market, taking growth against value, the yields elementhad have been an for free weight value into the growth component.

it has been an astonishing rebound after a nasty q4 all of this has integrated. so markets are very efficient and are pricing in advance what is going to happen. we would need how are behind the technology sector. so that markets are looking forward in efficiency. francine: we used to talk about concerns regarding privacy and that facebook would be split and all that. thehese earnings mean concerns are taken aback? they have certainly not gone away, but what mark zuckerberg said was very reassuring. he went through detail about privacy and changing the business model. very clear he does not see any of these materially

compromising the business model. thingk that is the main that investors took encouragement from. francine: and another record high for the nasdaq. what does that mean for fed policy? things.ple of last time we had valuations at similar levels, q4 last year, there were genuine concerns growth. so we are back to the valuations, but the earnings are somewhat justifying that. the fed was as concerned as the market about the growth trajectory. , but they have doubled down on the dovish stance. while earnings and growth is a positive for markets, i think the fed is more concerned about the longer-term trajectory. and until we see a meaningful pickup, i think they're fairly comfortable with where rates are now. francine: thank you.

we are just getting some breaking news from deutsche bank. the analyst call is going on, and yesterday, we had news that deutsche bank and commerzbank were no longer pursuing the merger. that has left questions on how they will grow. christian sewing say they will look at alternatives to boost profitability. since 2015, we have seen five turnaround plans. i know investors will be asking questions of christian sewing and of his chief financial officer. up, we speak with the chief executive of electrolux. tariffs areow impacting the home appliance business. that discussion is up next, this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg: surveillance." let's get straight to the bloomberg business flash. >> we need more time to resolve , what elon musk and the u.s. securities and exchange commission told a judge. the chiefe is over executives's tweeting habits and has asked a court to hold him in contempt. the negotiations, which have been likened to couples counseling, have failed in both parties plan to update the judge on a possible settlement. the cloud computing expansion might be coming to an end. intel, the message from one of the biggest beneficiaries

of a multibillion-dollar splurge by tech companies. that they will pose a revenue decline, the first drop in a decade. provides the chips that are at the heart of almost all server computers. and starbucks is still posting strong growth in key markets, but that is coming from higher prices rather than an increase in traffic. coffee chainiggest posted sales that beat estimates and is betting they can overcome increase competition with a revamped loyalty program and is introducing new drinks. that is your business flash, francine. francine: thank you. electrolux has posted higher than expected earnings as price increases offset higher production costs. the appliance maker also says that raw material costs and iteris will not be as big of a burden as feared, sending shares higher. joining us from stockholm is the chief executive of electrolux.

thank you for giving us a little bit of your time. see thea sense we negotiations going and what this means for electrolux. jonas: good morning. negotiations,on we had allowed for 10-15% tariffs, but currently, our outlook is that tariffs will remain at the current 10% level. we are not making a specific forecast, but just what we have assumed. francine: given the low visibility on what care costs will be on the end, are you doing enough preparation for the best case scenario or worst-case? jonas: we raise prices in the beginning of the year in north america to counter these tariffs. and then we have discounted down to account for the fact there -- they are currently at 10%.

francine: so what you are telling me is that you are managing to offset higher cost by increasing prices, what are those prices also impacting demand? jonas: yes, there is an elasticity to demand and higher prices. it will have an impact or is currently having an impact on consumer demand. francine: what will demand look like in north america? what factors are weighing on demand? jonas: we are forecasting the market to be slightly down. consumerderlying confidence, and of course, numbers are supported. but with higher prices, there is elasticity and some uncertainty around the future of the tariff situation. and then, we have seen towards the end of last year somewhat weaker housing construction

numbers. we do expect those to come back up, but in the short-term, that has a negative impact. much scope is therefore a more positive development overall? jonas: i could not quite here. -- hear that? francine: in terms of positive surprises, where to those come from -- do those come from? jonas: we are still seeing headwinds from tariffs, but they could come down further. and for us, the most important thing is new, innovative products we launch and rollout throughout the year, which we have high hopes for. we have a solid outlook for the rest of the year. francine: the worry about european demand -- do you worry about european demand? yes, it was a little

better than some people expected. there is a downward trend in we arer confidence, so not expecting a strong market, but not a dramatic drop. in fact a full year positive outlook for europe. francine: so you expect a pickup by year end or next year? jonas: actually, in the first quarter, we saw demand growth in terms of consumer demand. so we're not see a negative number yet. it is not strong, and there might be some downside, but for the full year, we expect to see growth in the european market. , theine: thank you so much chief executive of electrolux. now let's look at how banks are doing. deutsche bank lower, rbs warns about brexit uncertainty. you can see the share prices down, rbs slammed 5% lower.

deutsche bank down 4%. this is bloomberg. ♪

bloombergthis is surveillance. xi jinping spoke of the opening of the belt and road's form and says the currency will be kept at a reasonable level. they say the market will play a

bigger role in setting the exchange rate. still with us are our guests from societe generale and jpmorgan. when you look at the economy, are you confident it is on better footing where are these -- on a better footing? moment, they want to see how the existing stimulus feeds through to the broader economy. i do not think the growth they are expecting is what they had hoped for, where they are trying to push into a consumer led economy but have now been forced ofgo back to a old model fixed asset investment in infrastructure spending. but we are seeing signs that the credits channels have been unlocked and there is a pickup in fixed asset investment as well, which should be supportive of growth. francine: do you have concerns about china?

is it true they will not use currency manipulation? they are going to open up some of their sectors to foreign companies. >> to questions in one. -- 2 questions in one. the fears about the trade war edits the valuations are going away. it does not seem like it will switch to hire tariffs, meaning that the fears of retaliation is moving away and that is priced in. wastrolux a minute ago quite clear on this, and we agreed. the other feature is the stimulus we are having now which seems to be rather different led the previous, consumer spending. infrastructureof , which the previous plan focused on. we are focusing now on the

consumer, whether it is within the equity markets and all of those in europe or the u.s.. those stocks having exposure to chinese consumption should continue to do very well. because the stimulus, which seems to be good enough to stabilize, if not grow the growth rate, should boost the consumer stocks. this is what we are focusing on at the moment. francine: but how do you manage the trade concerns? we heard that pharmaceuticals may not be protected in china as they are elsewhere. how do you evaluate the trump card? we are listing to not only china, but japan, german companies, it remains in the background. think this is the

story we are currently working on. it is focus on one or the other sector, focused on the balance between what trump is asking and what some companies can bring as a response. it is focused on the general caution we should have, much more focused on the trade war theme. francine: thank you so much, diana from j.p. morgan and alain from societe generale stay with us. up next, rbs shares are falling as much as 5% as the bank warns about brexit uncertainty. this is bloomberg. ♪

economics,ncine: finance, politics. this is bloomberg surveillance. let's get a look at what is moving in the markets.

a dani burger has more. movinghere was a lot today. we are in the middle of a very busy earnings day. rbs moving to the downside. they've been falling for five days. waserday we heard the ceo resigning, giving his 12 month notice. earnings beat profits today but the company expressed challenges with brexit saying it will make a challenging growth environment. bloomberg intelligence saying investments may pull back because of the delayed brexit. glencore with a corruption investigation. they already had an investigation by the doj that is to the so this adds negative sentiment. the biggest drop since january. theejo -- valeo one of upside gainers. profits beat estimates. ,ompared to their global peers really strong earnings.

bloomberg intelligence also saying that the second half looks positive going forward from here, francine. tom: we will have plenty more on the markets throughout the day. get to the bloomberg first word news. viviana: the merger with commerzbank was not worth the .isk from deutsche bank ceo this comes at the lender cut the 2019 sales outlook. after it pulled the plug on merger talks with commerzbank. the u.s. is reportedly considering a concession on drug protections in trade talks with china. the move could draw strong opposition from the american pharmaceutical industry. the agreement would give companies would give companies a is a regulatory protection in china compared to the 10 years the 12 yearsor they get in the u.s. uber is estimating evaluation of 80 billion dollars to $90

billion. ride-hailing company is looking for $44 to $50 a share. the pricing might still change. uber could set the terms of the ipo as early as friday. an $800 million investment from amazon to reduce delivery times as the e-commerce giant is trying to ward off increased competition. the company posted first-quarter profits that beat expectations, demonstrating amazon's focus on cloud computing, advertising, and other high-margin businesses. trying to keep out of european elections next month looks all but dead. to foot the bill to parliament -- bring her brexit built of parliament -- her bill to parliament. bey threatened to particularly damaging for her conservative party.

global news 24 hours a day on-air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado this is bloomberg -- i'm viviana hurtado. this is bloomberg. francine: the pace of the economy might have picked up in the first quarter. to a bloombergg survey of economists. rising inventories and a smaller than expected trade gap boosted growth. still with us are our guests jpmorgan. are we likely to see cuts from the fed because any kind of dollar strength would be deflationary potentially? diana: for now, that is unlikely. we did not buy into the view that the u.s. was in a recession . us of the pickup and activity we have seen is in line with what

we have expected. as the u.s. economy continues to grow on trend for the rest of the fed is probably watching to see what the group is signaling. thing for them is inflation. there has been a lot of discussion about then moving to the average inflation and wanting to maintain long-term inflation at a particular level. they have been undershooting their target for a number of years. if we buy into the view that the fed is focused more on inflation this cycle, it would imply they have a lot of leeway to have inflation pick up and be above trend for a significant amount of time before they are forced to do anything. tom: when you look at gdp -- francine: when you look at gdp and you put it next to earnings, one is lagging. earnings are pointing to a better start. his world growth and u.s. growth going to get better as you look

at guidance? issues.ou have two one, you have relief from november last year. a very significant downgrade to earnings. it started in 2011 and we are currently at plus 3.5. and the continuation of that trend may go negative. so you can look at the earnings downgrades to get an idea. and the equity markets are very efficient. they are trump to price in the next chapter. to the second question. line, then this would be against expectations. q2 is going to be even better. so onee a slowing down, of the most important features

is indicating that they have collapsed all over the world. in the real economy is bottoming out in europe. how do you convert? it seems like the real economy is bottoming out. because they are softening, they may be creeping up. francine: what does this mean for treasuries? diana: in means we have to look at the environment. -- it means we have to look at the environment. we had the shutdown at the start of the year. q1 tended to be weaker. the market may have the symmetry to explain a weaker trend. whereas the summer may put pressure on things like the 10 year treasury moving slightly higher. but we do not see at the current

environment, given what is happening globally with the rest of the world and the ecb looking more dovish, growth looking lackluster, 7% for bonds and negative yields, it is hard to make a case for sustainable higher treasuries. we estimate around 2.9 for the next quarter. francine: you mentioned europe. worry because of an ecb mistake? alain: the ecb has done a lot. they have done -- moved away from tightening. more. needs to do at this stage, the cyclical indicators have bottomed out. if we happen to be right in realize the

situation we are living in germany currently -- [indiscernible] in the global economy, germany was one of the biggest casualties last year. that itll have you know will probably be japan, too. we have cyclical averages on the trade. , stayne: thank you both with us. let's take a look at how banks are doing today. has profitnk warnings. rbs is down. share prices down between 4% and 5%. this is bloomberg. ♪

bloombergthis is

surveillance. i'm francine lacqua in london. let's get straight to the bloomberg business flash with viviana hurtado. glencore says they are under investigation for possible corrupt practices in the u.s. this is the biggest headache for the world commodities trader. ofy are facing a host corruption investigations from brazil to the u.s. another company compensating for a drop in oil prices. the french energy company says they are recovering from a deep downturn. the chief executive sounding a positive tone, due to cost cuts, he thinks the company can thrive even as markets remain volatile. signaling moreis berkshire hathaway buybacks are on the horizon. they made $1 billion in in 2018 but the

oracle of omaha says they could reach as high as $100 billion. berkshire would become a significant buyer of its own stock. that is the bloomberg business flash. are just getting some breaking news out of the chief executive of deutsche bank who was on the first quarter earnings analyst call. one analyst asking him if he had flexibility on cost should revenue decline further. ourre following it in real-time market commentary. he says he wants to be clear that there is one cost target, 21.8 billion euros. he is confident that can be achieved. joining us to talk about banks, our finance team. and our guests from jpmorgan. deutsche bank no longer merging .ith commerzbank it they mean business and their turnaround plan will work this

time? why would a shareholder believe that? they can't explain it, i'm not sure that i can. but this is a fairly disastrous set of numbers. i'm watching these headlines go and he's saying he won't be on what the next strategy will be. there have been five turnaround plans and three years. disclose what to number six will be. we see regulatory headwinds of 40 basis points not yet included in the capital ratios. some of the businesses are not as profitable as they used to be. and there may be more regulatory headwinds to come. onlyine: some say the thing he can do is investment banking in the u.s. -- can they shut it down or partially shut it down? keith: i haven't gone to the headlines closely enough to know, but it seems unlikely.

they still have a big presence there. if they did merge with somebody, you would have to figure that is an asset. the advisory revenue was one of the bright spots. the other banks had worse markets.n debt capital some of the trading numbers were pretty terrible. fixed income down 26%. think about barclays yesterday that saw some structural challenges that deutsche bank had to a lesser level. they managed to put an increase. 26%.4%, deutsche bank down keep talking about rbs. how much difficulty are they seeing in brexit? keith: it was interesting. ross mcewan runs that bank and has been banging the drum for a while. brexit has become more of a problem for the u.k. economy. they went out of their way to

stay very high up in the air, people putting investment on hold. they working to talk about this as well. it was interesting that they did not put in more provisions for whatever loss this will entail. it is very much on their minds. thank you for coming, and both of our guests will stay with us. earnings season is in full swing. we will take a look at some of the companies flying high. this is bloomberg. ♪

this is bloomberg surveillance. we are just getting breaking news because there is quite a big swing when it comes to brexit. than one dollar .or a day low of $17.25 it looks like a big move but if you put it into context, we see oil in general heading for the longest weekly winning streak in almost four years. we need to put this into context. the fall seemed quite abrupt and

i can't see any news to prompt why it would false oh sharply. but we will keep -- fall so sharply. but we will keep an eye on it. brent crude down by more than a dollar which is quite a big move. markets are about to take a long spring vacation but this may have regulators worried. wrecks market volatility, cash shortages, and currency flash crashes. those are the risks on mind as they go on break. japan is the most generous country when it goes on holiday. the crown prince is in the mix along with the usual constitution, greenery, and children's days. stretchlt is a ten-day that wipes out six trading sessions in a row. it is the longest market closure since the end of world war ii. while japan grinds to a halt, it

is business as usual elsewhere. economic data is on the agenda. francine: that was a concern of traders and regulators as markets take an extra long spring break. the season is in full spring -- swing. but before you celebrate, the bar is low end results are skewed by a handful of companies. joining us, our guests today that are still with us. what is doing great? what is doing badly? the keyou mentioned factors. it is looking pretty good so far. the beats are running two to one. we have a case of profits being better for most countries for most sectors. it feels like it is a good start. but there are caveats going on here.

as you mentioned, there are a handful of companies in each country that really skew results. airbus in total going into france would show 15% earnings growth. but if you back those out, it is about flat on a year on year basis. we need to take this limited where halfer period of european companies report earnings with a bit of a grain of salt. francine: how many shareholder buybacks are people giving back? are the sectors you worry about giving too much back to shareholders and not enough investment in their own infrastructure? the trade-off -- so the start of your question is difficult because -- [indiscernible] condition andd you think about profit generating from this list. then there is a trade-off, if

you invest in your business, you need growth. you need to believe growth is coming. operating for this is for the next few years, the rates after lower what the ecb has mentioned the last few months. the trade-off seems to be in balance with ordinary dividends, buybacks, or investment. investment is not bad. you have corporate investment. but there is a trade-off that goes more into certainty. what about repricing german books? it is coming, it is coming, it is not coming? i think it would take growth. sustained growth in europe. it would mean inflation. things in brexit

would have to be trading out. until we have resolution on those issues, i think bund yields remain a safe haven. francine: we just had a blowout tech earnings season from the u.s. is that translating in europe? tim: it is robust and point of s&p that had significant results. they're a good growth and is hoping to not only drive the sector but germany itself. it is one of those interesting cases that the company can make a market to a degree. keep ing you have to consideration is up is less than europe isindex -- less than 5% of the index. it has a limited impact on the overall european markets. francine: i want to go back to this idea that the hard data was kind of on a backwards trend or kind of flat. not doing great.

or bottoming out. but you say soft indicators like pmi were down at some point but will recover. does that also mean higher inflation or does the world have a deflationary problem? think that we are in any kind of deflationary environment. we are seeing more companies trying to put pricing power in place. this was indicated a few minutes ago in the interview you had. i think the soft core inflation numbers that we have at the moment, it just takes longer. if that is the case, it opens the door to what diana was mentioning about the fed. market is leading the and they will have the chairman of the fed on two or three occasions to communicate on

exactly what they are doing. at this stage, they are working on exiting competitive pricing. a reduction on the balance sheet , which is monetary expansion. and the next thing is about what they want to do. to come to the market by summer, we are waiting to do more. that very day is the day to switch away from asset allocation standpoints. you have nominal gdp growth. francine: do you worry about central bank independence with the fed? surprised mario draghi mentioned it at the imf 10 days ago. diana: i think central banks are worried about central bank independence. you see governments trying to push central banks to do more to promote growth.

that is moving to the developed market space where governments are pushing into the u.s. , but in theheme bigger markets, they are strong enough for that not to be a problem just yet. francine: great perspective. us, head of global asset management of societe general and our guest from jpmorgan asset management. coming up, i will be joined by tom keene to talk politics, oil, and of course we will be talking earnings. this is bloomberg. ♪

amazon delivery, the

company pledges $800 million to reduce delivery times. unmoved. remain at deutsche bank -- and deutsche bank cuts revenue targets. rbs warns on near-term growth due to brexit uncertainty. and uber's ipo comes down to earth. the ride-hailing service aims for a valuation of as much as $90 billion, taking a more conservative approach after the listing fell flat. everyone.ng, good afternoon if you are watching from asia. francine lacqua in london, tom keene in new york. gdp in the u.s. is what we are looking out for and brent moving a dollar lower. morethe markets a little stable after the joy we saw yesterday. i only have one data screen as an example here, but the theme of the week is a stronger dollar. the gdp report today will be a real mystery for economists. francine: we will have a lot

more, of course, on the gdp reading. it's get straight to bloomberg first word news with viviana hurtado. time is running out for british prime minister theresa may enter plant keep the u.k. out of european elections. may is unlikely to put her brexit bill before parliament next week. she probably won't get it rectified before the parliament elections on may 23. that likely means losses for her conservative party. north korea's kim jong-un warning that the korean peninsula is at risk. he used his meeting to accused the u.s. of bad faith nuclear talks. the dispute could return to its original state. the american drug industry may be unhappy with the u.s. considering trade talks with china. the chinese proposal would give less protection to u.s. pharmaceutical products than they receive at home.

it would give china a stronger mechanism to force down prices. bloomberg has learned uber hopes to get a valuation of up to $90 .illion in the upcoming ipo it would be just about the last private funding round. the ride-hailing service place to start marketing shares to potential investors at a range of $44 a share. to $10could raise up billion. and the royal bank of scotland -- uber could raise up to $10 billion. and the royal bank of scotland to seeing the brexit challenges get bigger. rbs sees consumers cutting investments as they near exit from the eu. global news 24 hours a day on-air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. tom: let's get right to the data

. equities, bonds, currencies, commodities. i have one screen. 11140. kind of dusting off the gloom of 24 hours ago. .rancine: i'm looking at brent it brent had a significant move. looking at stocks and equities moving lower. we had better-than-expected news out of the tech sector and we have disappointing news elsewhere. the dollar steady. all about gdp. and the 10-year practically unchanged at 2.52. tom: bury quickly, a chart on deutsche bank. on the bloomberg terminal, we have some great insight on deutsche bank. ,t is a 12 months trailing agony ending in the year 2018. will retouch where we were --

will we touch where we were on deutsche bank ech? francine: china will not engage into cushy asian that hurts other countries. that is from the road forum in beijing. >> we will not resort to the practice of devaluation. we will continue to improve the .xchange rate regime the marketplace a decisive role and we will keep the r&b exchange rate basically stable at an adaptive and equilibrium level. this will ensure the steady growth of the global economy. kathleen hays joins us from beijing. xi spent a lot of time addressing intellectual property , foreign investments, and devaluation of the yuan. is this a soft spot for

president trump? kathleen: the speech was billed as belt and road 2.0. time for a reboot. time to it knowledge there have been issues and change it. -- acknowledge there have been issues and change it. of the way to the speech, he was talking about opening markets, opening financial markets. you can sell us more goods and services like we were selling to you. -- and we can be selling to you. thinking, mi hearing from a g7 meeting -- am i hearing from a g7 meeting echo he started talking about isitive spillover effects -- started thinking, mi hearing from a g7 meeting -- am i hearing from a g7 meeting?

he was talking about making the u.s. trade deal his own. it was an interesting moment to see that speech. kathleen, you have been covering this for months and months. what is your judgment of the support of president xi from the communist party in general? do they have his back on the challenges he has? i would say of xisident x -- if president were taking this stand, he would make sure that they are in line behind him. he is the leader behind china. -- he is the leader of china so you have to believe his team is behind him. closer and itng

takes time. maybe they've gotten to the point where the chinese have acknowledged that they are not the same china of 20 years ago or 30 years ago. a have a larger role in the world. and they have to take new steps. is giving a xi speech on a day everybody is listening and watching, we assume everyone is behind him. francine: kathleen hays in beijing. joining us on set is patrick armstrong, chief investment officer. and our chief european economist. thank you for joining us. this -- china,t first of all. think that we will get a trade agreement with the u.s.? >> i think the chinese economy is doing quite well. stimulus is important. they were trying to move away

from a credit bubble six months or nine months ago. they have taken measures to promote credit growth again. you have seen some credit expansion. andices have been strong manufacturing started to pick up . the chinese economy is indicating that it is performing as you would expect. and that trade deal is coming probably fairly soon. mean --: what does that if there is a u.s.-china trade deal, will the u.s. go after europe? >> that is the big question for europe. does, is a trade deal is he takes issue with the auto sector and imposes tool,s as a negotiating europe will be in big trouble because growth in europe will be essentially as is, close to

1.5%. in that scenario where they , it will falliffs closer to 0.5% or 0.6%. we are talking about a meaningful impact. weekend,g into a long do i take available cash and buy equities this morning? that's all i want to know. patrick: i would not be chasing equities. there are better entry points. we are sticking with what we've got. i've not a -- then an active buyer of equities. francine: we will have more with patrick and antonio. it has been another busy week with corporate results over in europe. banks are taking center stage. on chief executive was wednesday. barclays,ts for

rising 4% yesterday. and the big story, deutsche bank collapses the proposed merger with rival commerzbank. but now updating everybody on revenue. the share price is down 4%. we break down all of this banking news next. this is bloomberg. ♪

viviana: this is bloomberg surveillance. i'm viviana hurtado. it let's get the bloomberg business flash. profitsing out with that missed estimates. the japanese company withdrew -- sony cited a tougher business environment. the ceo faces the real prospect of shrinking profits. investorsive activist an opening for stock buyback. -- signalingoing

an end to the year that led to record profits. the largest -- second largest semiconductor maker addicted this quarter will be worse than analysts expect. intel may lose the lucrative lock on the market for computer processors. and more of the same for a ninth bank, reporting straight month of contraction. the lender cutting their target for revenue. they expect business to be flat this year. the investment banking division have the worst first quarter since the financial crisis after talks with commerzbank collapsed. and francine stays on the bank story. francine: we sure are. so much banking news out there. for more on that story, the collapse of merger talks, matchmaking financiers may end up forging a deal.

ing has reached out to the lender and the german government to make talks. unicredit considering a bid. bnp paribas spoke to officials at the same time. it may rise as a suitor yet again. thatberg has learned santander and societe generale has expressed -- have expressed interest as well. our guests are still with us. this m&a, theat cross-border possibility, names are being thrown out there. banku can't get deutsche and commerzbank done, why would the others have a chance of getting through? >> it is business catering to the backbone of germany's economy. that is what everybody is after. i'm sure you have noticed that there are many suitors. what we have not heard yet is

that the business would lead to other combinations across europe broadly. tom: i want to go to the screen, .liv i want to give the audience a window into the jewel of bloomberg. this is allison williams who will join us later. she listens to the conference call on deutsche bank. you get a running stream of commentary. what i see is the greatest amount of nba speak i have seen since the mckinsey conference two or three years ago. let's start with the dumbest phrase. what is controlled growth? are absolutely right. management is doing a careful job of signaling that it will react to whatever the markets present. whenever the revenue will be. it could potentially be cost cuts.

but they stopped short of acknowledging the bank needs to do anything more to boost profitability. they are responding to the markets without committing to a more strategically radically different plan. they are trying to do both at the moment. they are doing both at the moment, but within all this, is the urgency necessary? the conference call, a huge aboutents -- impatience "get going." inl we see a "get going" may, june, or july? elisa: i believe so. they are being pressed very hard and the revenue outlook has fallen compared to what it was 60 weeks ago -- six weeks ago. comewere expecting them to up with a fresh view, a fresh take on what they want to be.

hence the frustration today. management at the moment doesn't want to commit to that just yet. look at whatn you regulators want, with a push for cross quarter mergers -- cross-border mergers? or would it just make dinosaurs, too big and systemically risky? elisa: on the one hand, regulators would want institutions in europe to become more diversified. that could entail -- [indiscernible] on the other hand, there are regulatory hurdles that would make that difficult. exit have to maintain certain levels of capital and liquidity. that makes some of the cross-border deals very difficult. in. , it would be welcoming -- in theory, it would be welcoming, but we have not seen more of that so far. tom: when you think of what

--liminary adjustments mean, perimeter adjustments mean, let me know. perimeter adjustments. francine, that is what you and i will do with our offspring. perimeter adjustments. we have amoving on, bit of breaking news, tom. if you don't clean your bedroom, there will be perimeter adjustments. francine, i will let you translate this important headline. you are better at this than me. tom, a lot being put into question when carlos ghosn got arrested late last year because there was a three pronged alliance. pushow renewing the nissan -- at the time, there were conspiracy theories that carlos ghosn have gotten arrested

because he was pushing too hard for an actual takeover or merger with nissan. now we understand run out -- renault may push for that through another company. back.e are going to come there is a lot of news flow and good conversation with guest. -- guests. i can't keep up with this. is mr. gosn still in jail? good morning. ♪\

the ongoing transformations, the necessary transformations we have to do in our country can't be stopped. they have not been quick enough for some, not radical enough. but i think the decisions in these first two years were, in many ways, fair. french president emmanuel macron speaking at a news conference yesterday. sticking to his guns on spending implementing measures to placate yellow vest protesters. it is the third time in four years that spanish citizens will vote in an election. box may become the first party win congress since the dictatorship in 1975. to discuss the spanish election is patrick armstrong and antonio from barclays. we cannot mention the polls.

we are not influencing anything. but the current prime minister looks like they will stay in place and form an alliance. how will the policies changes that comes to be the case? thatck: -- antonio: appears the more likely outcome but it depends on how many seats they pick up. you have a number of seats that might be below 40 for podemos. and you have a very junior coalition partner. morehen you will see policies, but nothing too dramatic. if you do see a big outcome for have more ofthey the same, they have been talking about rolling back some of the reforms including the labor market reform which has served

for competitiveness and have improved labor market conditions. that, to me, is the big issue for markets. think the government will be formed for a long time. francine: what does that mean for spanish assets he act a is there anything in the periphery that you like at the moment? patrick: not so much right now. the periphery is not over loved, but it is not under loved. the bonds that we were buying last year that seemed scary at 3.6% yield, it is 2.6% right now. fearfulre rightfully about the periphery. i think it is growing 2.2 percent. i think you will get a coalition that is left-leaning. we are not really chasing the

periphery right now. there are enough things that are negatively offsetting valuations. tom: patrick and antonio, thank you so much. a really nuanced spanish election. spectacularnstein's interview over on bloomberg opinion on the spanish elections as well. the tech earnings season is always interesting. i am finding this season to be fascinating. some of the price changes into friday, interesting to see what amazon publishes this morning. stay with us worldwide. this is bloomberg. ♪

♪ "surveillance," francine lacqua in london, tom keene in new york. a nice conversation on amazon in a bit.

right now, your friday briefing. viviana: president donald trump meets with shinzo abe a day after trade talks between the two countries resumed. both sides are hoping to reach agreement quickly that focuses on agriculture and vehicles. the u.s. wants to reduce its trade deficit with japan and wants greater access to the agriculture market. japan wants a promise they will not be hit by auto tariffs. xi jinping vowing to clean up his belt and initiative. xi is promising to get rid of corruption and sign high standard free trade deals with more countries. -- trump administration is that is because of opposition from republican politicians who

represent coastal areas. selling new drilling rights would cost them votes. joe biden is tapping president obama's biggest financial backers. the former vice president announcing he is running for the democratic financial -- democratic nomination. list, google chairman eric schmidt and rupert gifford. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. tom: thank you so much. michael mckee makes it very clear to me there is a huge disparity on economic growth in the u.s.. i want to make it clear on the bloomberg, what the pros look at on this arch difference of opinion.

the high and low estimate this 1%.ing is between 2.9% and what is fascinating is this entrenched gdp low call, well under 2%. and iare some optimists would say it has been extending higher. with us, antonio garcia pascual and patrick armstrong. help me with the barclays call. what is the migration of barclays american view? a tendency to a more optimistic view? antonio: yes, it is. if you look at the drivers of growth, it has been mainly domestic demand and within that data recently, housing sales, durables support that view. we were discussing before about trade. the message from trade is mixed

and exports are the component. that brings you to the tail results we are discussing. a lot of the trade is still weak , so that could bring a surprise. domestic manned remains very strong -- demand remains very strong and resilient. we think 2.5% growth is the most likely outcome. tom: let's go to the bloomberg and look, barclays capital. here, 1.8%ng down and our own carl riccadonna with a sub 2% call even though he is optimistic into the end of the year. can you invest in the united states given the shift to a more optimistic town? patrick: the economy is doing well. 2.3% is where we think we will

come for the quarter and the year, which is above capacity. 2.1%.ave it at 1.9% to it is still above potential. growthd to get revenue in the s&p around 4%, 4.5%, and revenues growth, 2% for the whole year. you can buy companies that have cyclical exposure that will get revenue growth, but i would not chase higher multiple companies. francine: are you expecting the fed to cut rates this year? patrick: no. would you cut rates right now? you have unemployment below 4%, wage growth 3.2%. it is not the time to cut rates. fed funds futures are pointing to a cut.

economists will not. the only way they will cut is if there is an equity market selloff. that provoked the last change course. francine: what does the dollar due to the u.s. economy? if it continues from strength to strength, how does the fed look at it? patrick: a strong dollar suppresses inflation so if you get it, that will keep inflation under wraps. if you see a weak dollar, that may import inflation. we think we are in the suite zone where we have a steady dollar. the european economy will probably approve and the second half of this year. tom: i have never asked this question, or at least in the recent months -- is chairman powell central banker to europe? draghi is getting accolades now,

but it is the european dynamic, the economic dynamic, is it dependent on the american central bank? not just that but all central banks. looking at how the emerging markets banks followed. weaker than expected inflation and core inflation. within the u.s., core pce below 2%. in europe, core inflation below 1%, maybe globally. there is an influence. there was a change of course of the fed that influenced the ecb but there is this common low inflation that is persistent in changing the tone of central banks. tom: i look at the tone of the central banks and the dynamics

the last couple of weeks, what i would note is a shift on optimism on gdp in the u.s. we saw that clearly in the fed atlanta statistic. call one a great mis european gloom? antonio: q2 and the second half of the year look a little better. you will have a more economic fiscal stance. probably the big three or four euro area countries, probably that will be helpful. the key is to discuss at the beginning, what will trump do with europe if they stop the war with china? well they focus the attention to europe? if he does, could be painful. ,ssuming that does not happen with better fiscal, china will

be better, you should have a better second half of year for europe, not dramatically better but better. i tell you, this is a classic example of if you have to ask what is down the road, the chairman of german bayer, we have the fullest trust in him. let's bring up the chart, the bayer chart. the 20 and 30 year excellence of bayer, and let's call this the monsanto rollover and shareholders are not happy. they are relatively happy with starbucks, who did that are then good on earnings. my sundry children are keeping them singularly in business at a select group of starbucks in manhattan. kevin johnson and the 10:00

hour. this is bloomberg. ♪

♪ viviana: this is bloomberg "surveillance." first quarter profits following 60% at the parent company of mercedes-benz. daimler was hurt by a decline in deliveries combined with rising expenses on new models. they expect earnings to rise slightly this year. the longtime ceo steps down next month. asian airlines wants to change their orders with boeing. they are holding talks to convert their order to other boeing models. deliveries.eed up

amazon is trying to revive main e-commerce franchise and ward off competition. they will spend $800 million to reduce delivery times for top one.mers from two days to sales group and the first quarter at the slowest paste in four years -- pace in four years. francine: let's focus on japan as it is about to take an extra long spring vacation known as golden week. what might sound like a relaxing break has traders worried. volatility, cash shortages, or currency flash crashes are some of the risks as tokyo bosses go on break. japan is among the most generous of countries for holidays. mixnew emperor is in the

along with the usual constitution, greenery, and children safe, a 10 day stretch that wipes out six trading sessions and arroyo, the longest market closure since the end of world war ii. major events and economic data on the agenda. francine: markets in japan take the extra long break and shinzo abe is hard at work meeting with donald trump. they are expected to touch on trade and other bilateral issues. parallels about europe becoming more like japan, learning mistakes that japan and governor kuroda puts it, so we do not repeat them. demographically, we are may be becoming more like japan but the differences are startling. antonio: we were discussing

inflation before and that is one of the factors that you do not see in the day today and they are there. they are driving core inflation down and that is driving interest rates down, a big part of it. longevity changing long-term issues we do not discuss everyday is something that is making us look like japan. it is having a global impact, not just europe. the u.s. is also a force. francine: when you look at what japan did with negative rates and the impact it had on the banks, should europe stay away from it? patrick: from a banking perspective, definitely. it is not good for the banks on the revenue and profit margins, and you want a healthy bank to facilitate the next expansion. that is something the ecb is talking about. a few want negative interest rates, how do you make sure the banks will level out?

lending out money for nothing is not a profitable structure. the fact that we do not have an answer yet, that is not good news. tom: we have a chart to show the japanification of japan. it has been there. the reality is, it is wrapped around subdued nominal gdp, interesting population dynamics. can you invest in japan, given their gross macro cultural and social issues? patrick: you can, because it is an exporting company -- country as well. korea, china, and depend have probably had a terrible q1 and we expect that to pick up. other countries will be beneficiaries of the. corporate governance over the last two to three years has

really improved in japan across shareholdings, marvin emphasis on returns for equity holders is -- more ofhat will an emphasis on returns for equity holders is something that will drive. francine: what should governor kuroda have done differently? antonio: good question. ways, there was the issue of delaying too much. the negative rates indeed is an issue for banks because it sends a bad signal. you are trying to give forward guidance that could bring year rates lower because you have seen the situation, you are able to move out of their. morenk probably coordination between monetary and fiscal would have been better, but this is something in the hands only of the governor

of the central bank. say, thes will negative rate policy is something that has not been fully appreciated. francine: do you see value in japanese equities? patrick: i do, actually. francine: you have for a while. patrick: we started buying in february, and it is the one region showing up very good on earnings. japan is at its fourth percentile. it has never been cheaper on earnings. ebita is quite cheap as well. a lot of the reasons tom has mentioned about the impacts of the economy and the demographics are not news, but on valuation, good, even on dividend yield. they are getting 2% dividend yields in japan, so on value, japan does take out. thank you so much,

antonio garcia pascual with us. i have a bunch of questions for eileen burbidge on the ascendancy of some of these technology tech stories, microsoft, certainly what we saw with amazon yesterday, and there is the upstart actually trying to gauge the disaster of lyft, but uber will do. this is bloomberg. ♪

♪ >> whenever the markets have done well, tech has done well. >> keeping a close eye on tech. >> technology. >> high-growth faang stocks. >> these are delivering the numbers we need. >> the bar has been brought down dramatically. >> analysts cut down their expectation so far. >> very low expectations. >> the market will give many of these names a path. >> the markets are buying into a second-half rebound. >> back half of the year will be

meaningfully better. >> relatively ok. >> the markets will look at that and move higher, no doubt in my mind. about,at is what it is great conversation on the technology revolution we are living. hours, the last 12 morgan reduces their price 2100, on amazon, down to a fractional move. pause, nonley giving doubt on the future of revenue growth. goldman sachs with a jump up in optimism, 14% increase in their price. piper jaffray also raising their .rice target 7% our target is eileen burbidge with passion capital. she synthesizes all that is going on in technology. i want to talk about amazon.

companyn a technology or are they delivering cardboard boxes? eileen: great question. they are definitely a technology question because their fastest-growing areas are in technology, for instance their cloud services. it was one of the strongest growth areas for the company and it grew 41% year on year. it is a big part of everything we see. -- are less revenue as our services. the drinking game in silicon valley, every time someone says they want to be the next amazon, ignoring profit and looking at revenue growth, everybody has a separate of some green tea i do not want to drink , how many people are out there

that can be in amazon, ignore profits and only grow revenue? eileen: i think there are too few. that is the direction that lyft and uber are taking that i do not think many can pull it off like amazon. they have the reputation to prioritize growth over profit but they have posted six consecutive quarters of more than a billion dollars in profit . we can no longer say they are not profitable. that is a bigger threat for every other company than what they used to do. company: is uber a tech and does the valuation seem better now? eileen: uber is also definitely a tech company, but it will be pressed on non-tech issues. it will have to lower the amount of money that it shares with its drivers or increase fares, otherwise it will never have a chance for profitability.

all of these companies, ridesharing or related to vehicles, they are counting on technology advantages they will bring to the market whether it is autonomous, self driving, or other innovation. you will give them a p/e ratio like you would normally give to tech companies. francine: when you look at facebook, snap, uber, twitter, is there anything you like? patrick: amazon, facebook, alphabet all have areas where they totally dominate and you can justify growing revenues and the pretension to carve out future earnings. uber and lyft are moving into a hypercompetitive market and have disrupted the market, but in the next five years there will be more disruption to disrupt them as well. to create barriers to entry, that is a feasible strategy.

to dond lyft have no plan that, so that is why i have worries. tom: thank you so much. i will load the boat on equities this weekend and if i lose money, it is your fault, patrick patrick. eileen burbidge as well. a lot of talk of mop up the earnings, looking at the european banks including deutsche bank, it really the placement of bonds and equities within your portfolio, something to think about. shalett, stay with us. ♪

♪ tom: this morning, the banknalization -- deutsche

goes in search of "controlled growth." growthsucceeds in profit, the goal, get that box to you in one day. president she speaks and the white house is listening -- xi speaks and the white house is listening. many different views of american might. the optimists have the high ground. this is bloomberg "surveillance." tom keene in new york, francine lacqua holding court in london. the tech earnings are extraordinary, but i'm distracted by deutsche bank. it is a standalone strategy. francine: yes, you are right to focus on deutsche bank and we will continue focusing on deutsche bank.

we are hearing from the chief executive also saying he expects to take part in deals regarding asset management. the story i am following closely as if you look at what president xi was saying in his speech, he seems to be signaling he will give trump what he wants in the u.s.-china trade war so things could be moving in the right direction quickly. tom: maybe they are saving face. right now with our first word news, here is viviana hurtado. forana: time is running out theresa may and her plan to get the u.k. out of upcoming european elections. she is unlikely to put her brexit bill before parliament next week so probably will not get it ratified before the european elections. that vote will likely mean losses for her party. kim jong-un morning the current

-- off the korean peninsula is at risk, accusing faiths. of being in bad in negotiations. industry maydrug be unhappy with concessions the u.s. is considering in trade talks with china. the proposal would give less protection to u.s. far tsuda called that pharmaceutical products than they have at home which could force china -- which could allow china to force down prices. that would be just above its last funding round. willide-hailing service start marketing shares at a range of $44 to $50 a share and uber could raise up to $10 billion. the royal bank of scotland

posting first quarter that beat estimates, but they see challenges from brexit getting bigger, rbs dealing with nervous big -- business customers. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: let me get to the data, i have one screen. remarkable after the moves yesterday, stasis, a little bit of a giveback. lots of talk yesterday through to a 1.10 level or weaker euro. that is all i got. i am failing at the data check. francine: european stocks, equity futures in the u.s. lower. markets across the world are worried a little bit about gdp in the u.s. and the economic

data out of asia. 2.52% and0 year, crude oil, 64. we had big moves for brent as well. bank, we will do much more on that, alison williams is here. she was on the call. decidedwant to do, we we just need to stop and consider technology. decadesdo that with the of experience of lisa shalett at morgan stanley wealth management. we are going to do tech with lisa shalett and we can drag in mandeep saying -- singh.

i am going to give you an open question to start, your thoughts on the juggernaut of microsoft, the juggernaut of profit amazon versus other platforms that are failing? mandeep: when you look at wilbur and compare them to amazon -- uber and compare them to amazon or microsoft, there low cost structure does not scale. amazon has a fixed cost structure up to a certain threshold. they will get remarkable product they increaseonce the subscriber base. uber,s not the case for so it will not have the same level of profitability. tom: i am thrilled i get to ask you this question. credit suisse, you may have heard of it. michael abu see in and credit suisse a decade ago wrote a

paper that said it is going to be few winners. can our society allow that? can we allow microsoft to be a dominant winner, apple to be a dominant winner, and amazon to own retail? lisa: i love your question. it is a fantastic question. fundamentally, one of the things happening and if we think about income inequality, we think of these monopolies intact and reflect that against politics. it is very clear that one of the things affecting our economy now is because income inequality has gotten so big, the marginal ,bility to grow off of that those gains, as small. when wealth gets too concentrated. when we start looking at the tech sector, it is one of the

many things we have said is making this sector very vulnerable. it is starting to look very 1999 to us. tom: here is a micro piece on technology. this just came across. amazon to open a fulfillment center in keg worth, east midlands to create 500 new jobs. jeff bezos's would say he is doing something to help brexited england. francine: it depends on whether it is quality jobs. whether it is loading things onto trucks or building part of the service where. he could argue he is doing something for local communities. away from amazon, who has a barrier to entrance? patrick armstrong does not feel comfortable uber or lyft can keep competitors away. mandeep: uber with its scale,

people keep discounting the fact uber has a lot of data they can harness around cities, demographics, riding patterns, and they are working with haslators so over time it become a source of competitive advantage in scale and their network effect. it is not easy for a new player to enter the market and compete at that scale. focused and niche could struggle with competitors who focus on specific niches. that is the risk. francine: is there anything in the earnings that made you feel uneasy about what is to come? we seem to have had spectacular earnings from cloud computing, twitter, and facebook. what could go wrong? mandeep: in the case of cloud, and because these companies are subscription-based, the business

model is remarkably predictable and that is why these companies trade at premium multiples. what could go down as -- go wrong is a decrease in tech spending. once the tech spending slows down, you will see the trickle-down effect for the growth rates of microsoft and amazon as well. for now, the consistency and predictability of the business model is what makes them so attractive versus uber and lyft. singh, andandeep lisa shalett is sticking with us. european banks on watch after the collapse of talks between deutsche bank and commerzbank. this is bloomberg. ♪

♪ this is bloomberg "surveillance." bloomberg learned were no plans renault plans to propose merging with nissan. each would have a 50% stake with equal representation on the board. nissan resisted a merger pushed by carlos ghosn. to theignaling an end years long expansion that led to record profits. they cut their annual target and predicted this quarter will be worse than analysts expect did. that is adding to concerns that intel may lose its lucrative -- on the market. deutsche bank reported a ninth straight month of contraction,

cutting their target for full-year revenue and saying they expect business to be flat. deutsche bank's investment banking had its worst quarters since the financial crisis, all this after merger talks with commerzbank collapsed. francine: back to some of our top stories, china will not engage in currency depreciation that harms other countries. that is a message from xi jinping as he spoke at the opening of the belt and road forum. >> china will not resort to the process of renminbi devaluation. we will continue to improve the exchange rate regime. we see the market plays a decisive role in asset allocation and we will keep things at an equilibrium level. this will ensure the steady growth of the global economy. tom: interesting body language

from president xi, really extraordinary. i would suggest off the radar in china and the united states, and europe comes back on the radar with trade in the next two weeks. francine: president xi could go to the u.s. early june. it was clear when he was talking to those world leaders at the belt and road initiative, he was addressing president trump because he spent a lot of his speech addressing demands the u.s. had asked such as protecting intellectual property and allowing foreign investment. tom: a conversation which is really timely for a friday, people are shellshocked about the bond and equity markets. george bory is with wells fargo. he has done fixed income research. stanley'stt is morgan

senior vice president of headaches, looking at wealth management come up looking at this giant will market. they will be in your head saturday when you are arguing with your beloveds about what to do next in the market. george bory and lisa shalett are your worst nightmare. wonderful to have you here. can you own bonds now? as a icam, but only complete defense against a declining stock market that will be led by a meltdown in tech. world, issa's dividend growth a substitute for the land of yield? george: it has been, and dividend growth becomes important. income streams are hard to come by so you have to take them where you get them. increasingly we see fixed income investors buying equities for the yields. tom: francine?

francine: is there a danger that by buying dividends, companies in specific sectors do not reinvest enough? lisa: absolutely. that is one of the biggest question marks that we have as we look forward over the next three to five years, that we have not invested this cycle aggressively. we think returns will be suboptimal. runave had an extraordinary last decade. believe in mean reversion over the long-term and that is one of the ways we are going to pay the piper. francine: where is the biggest concern? i don't know if it is a sector such as oil. is there a sector that will significantly decrease in value if they do not step up investment? lisa: our view is that is not a question of stepping up

investment, but valuation, and that is technology. in the energy sector, it is quite fairly valued. if you look at the dispersion between oil prices which have rallied, and the stoxx, we see a 20 -- stocks, we see a 20% diversion. technology, we are starting to look like 1999 type valuations. while there are leading killers, category subscription-based models that are quite unassailable, the reality is that unless you truly believe interest rates come along interest rates and long-duration will remain below 2% forever, which we do not, it is hard to justify these pe evaluations. 1999, itour world like is a frenzy of bond issuance.

in thees george bory see frenzy of new money coming in, in the fixed income world? george: money is flooding into fixed income. that has a lot to do with negative yields around the world and people looking to have any incremental income in their portfolio. it pushes people out the yield curve and down the rating spectrum. it is difficult to generate a sustainable or substantial form of revenue in the fixed income market. hasflipside, bond issuance been pretty punchy over the last couple of years, but you are issuancehat treasury might be less than people expected a few months ago. corporate bond issuance and the growth rate is going down, not coming up. nightmare on saturday morning, that lisa

shalett, a chart showing the collapse of tesla and the bond of tesla coming down in price as well. mentionot have shalett tesla specifically. do bonds help you understand equities better? lisa: absolutely. you cannot understand equities until you understand what will happen with real rates. it is the cost of money. tom: we will come back, george bory with us and lisa shalett as we try to figure out what to do in the most unloved bull lift since december 26. witherro in conversation misra, assouri -- time economy station -- timely conversation. ♪

♪ it is sunny but there are clouds gathering on the horizon. a beautiful picture of parliament overlooking big ben being done up. outre getting breaking news of the spokesperson of theresa may, the prime minister will attempt to stop britain taking part in european elections. part more likely to take

in these elections. she was trying to find a way of getting her deal through parliament so she did not have to face a humiliating debate -- defeat. it seems to be gathering momentum in the european elections and it is hard to imagine that theresa may will avoid defeat. tom: brexit is back. francine: it never left. tom: it is back with a vengeance. also back with a vengeance, kevin cirilli. an article on the senator from ,elaware, the morning must read this captures some of the dynamics. biting represents -- biden represents a return to the feel-good -- the head of state is often an affable and reflected -- respected figure in

locations, while the head of government is usually a hard-nosed dealmaker. the president is required to be both at the same time. skew feel-goodto bipartisanship and elect a firebreathing liberal. kevin: joe biden has a tall task attempt them, as they to navigate a crowded primary. bernie sanders and elizabeth warren have tried to raise issues of his record and a new era of the financial -- the democratic party. delaware, home to large financial institutions. how will that play on the debate stage? setting theer just ipo terms, 180 million shares

will be sold, the price range between $44 and $50 each. we understand they will offer the shares on the nyse under the ticker uber. tom: i am looking at the million page document, and we have to go through it. paypal entered into an agreement which it pursuant to has agreed to purchase 500 million in a private placement. this is one example of the detail. the news flow is extraordinary today. this is bloomberg. ♪

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lyft, i don't know what that means. uber out with their transaction. what is your first observation? francine: the first one is the news coming out now, huber said paypal will buy some -- huber said paypal will buy some 500 million and will extend their global partnership. they will explore a collaboration and this is significant because we were trying to figure out what the barriers for entry are. i do not know whether the payment system is part of that, but they set their ipo at 180 million shares, $44 to $50 per share. tom: you look at this historic 3m.of google, maybe i do not think they have a slogan. reignite opportunity by setting

the world in -- we ignite opportunity by setting the world in motion. what is it about technology that people have to have a stupid phrase on their document? mandeep: that is one way to grab attention, when it comes to disrupting the sector, trying to do things in a new factor. tom: the risk factors begin on page 32. what will you pay attention to? .andeep: the variable cost if you have a business at more than $10 billion revenue rate and it cannot scale operating leverage, that is the problem. greatou nailed one of my themes, conflation and confusion of variable costs which are fixed costs. that is a real risk. amazon: compare them to

with fulfillment centers they have invested in, and they are reaping the benefits. transaction costs are minimal for amazon whereas with uber, the costs keep going up with more rides and there is no leverage. francine: is this a conservative approach to their valuation? mandeep: definitely, i think they are trying to price the ipo according to where lyft is trading. timess around eight trailing 12 month sales so with this initial range, that is what they are targeting. you may see a revision higher, but i think they will be didervative because lyft not leave any room for ipo investors to participate in a pop in the stock. francine: paypal is a big-name investor. there is a private placement for 500 million of shares and the

two groups working closer together. what does that mean for uber? mandeep: it goes to show there is appetite for this ipo, the fact that institutional investors and everybody who cares about ridesharing as a .pace -- just still early stage earlyopinion, it is still stage and has a lot of runway in terms of topline growth. in terms of topline growth, every big investor wants to participate and i think uber is the best bet. tom: let's bring up the table. six continents, three platform offerings, 700 plus cities, and their service is suspect to say the least -- not that i would editorialize on that. i know you cannot read it. it is an s-1.

who reads that? you and i have been to too many roadshows. if you are having rubber chicken with these guys from silicon valley, what is your first question? lisa: how do you generate operating leverage? what is the long run view on profit margins? what will it take you to get there? tom: that is cost control, which sometimes you could glean in the old days a red herring. that is a document that people use to read long ago and far away. it is about expense management. do yout is also about, understand your business well enough to understand where that inflection point is in scaling? when do you hit where your fixed costs and marginal costs crossover, and when do you start turning a profit? francine: in the last 10 minutes

or so, huber saying they will raise as much as $9 million in the largest ipo -- huber saying they will raise as much as $9 million in the largest ipo and paypal will buy as much as 500 million shares. there is a headline that just crossed saying 3% of shares are drivers.from some u.s. how important is it, how they treat their drivers? mandeep: that is a paramount issue for them, the driver retention issue because at the end of the day, when i look at software companies, they add a subscriber and customer and hold them for the next few years. rider or aadd a driver and the retention rate is low. if they can show the consistency and predictability and driver

retention and rider retention, that goes a long way in addressing the variable cost issues they have with subsidies and kind of tamp down the variable cost, which is a big problem for them. francine: we talked a lot about the left bank -- lyft ipo. what will be the difference between lyft and uber? shown i thinkhas with the ramp up with food delivery, it is the largest food delivery vendor now, surpassing grubhub. they have the scale to enter any market where there is need for transportation. they can use the smartphone user base of 100 billion, potentially it could go up to a billion. we have 3 billion smartphone

users so if they keep growing that base and are able to tag on ancillary services like food and freight, you will see that upsell. tom: there you go again with that goofy silicon language. what is upsell? mandeep: if you have a rider on your platform, they can use you for ridesharing, food delivery, or any kind of service, and your average revenue per driver goes up over time. tom: finally we know what everybody is tipping. my wife says i and not tipping huber and i am a bad person. 1.5%.p of uber drivers is 1.2 billion dollars off a $78 billion base. they talk about the international component including cars and auto rickshaws.

the huge distinction is the complexity of uber. , is a financial standpoint complexity a friend or enemy of investors? george: i look at this in a couple different ways. at the macro level, capital markets are wide open. that is a key assumption at this point in the cycle. capital markets were not open three or four months ago and they are wide open now. companies are getting relatively attractive valuations and very attractive cost of funding because bond yields are still low. are very complex or do not have the profit margins you might want to see are still able to tap the market and secure attractive financing. that is a pretty strong positive. s-1 onjust found the page 42. this line, there is this goofy

line. i talked to paul smith at the cfa institute. .ore platform of margin translate. mandeep: it is how they give you the gross margins and core platform is there ridesharing. tom: rickshaws. keep going. mandeep: this is the growth margin for the business, around 50%. tom: in doing your job. i expect a bloomberg intelligence finder fee, up 18% a year ago. they are coming with a core platform contribution of margins that is going the wrong way. how will that go down? mandeep: they keep giving up more subsidies. tom: now my radar is up, tesla guy. mandeep: look at their ramp-up

in food delivery. they have gone from nowhere to $1.5 billion in food delivery revenue. that is all because they are using subsidies to expand, to partner with restaurants and be like starbucks. tom: they are partnering with my youngest daughter. his food really going to work? i am going to buy this blue-chip stock based on food delivery? mandeep: what they are trying to do is add on services to show the effect of the platform. the fact that they have 90 million plus riders, that can do a lot of services. tom: i am begging for you to go to london -- go public to the london taxicab system. francine: they are under a little bit of pressure for a small thing called uber. russia came out with its key interest rate decision, holding

rublete at 7.75% as the surge we saw over the last couple of weeks seems to be taming inflation. this is the third time in a row the bank of russia has kept interest rates unchanged as the threat of u.s. sanctions seems to be abating. ,ooking at longer-term ruble 64.80. we will get back to ruble and uber. singh, andandeep george bory and lisa shalett staying with us. ♪

♪ "surveillance,"

tom keene and francine lacqua. right now, your first word news. viviana: president donald trump meets with shinzo abe a day after trade talks with the countries resumed. both sides are hoping to reach agreement quickly on an agreement that focuses on agriculture and vehicles. u.s. wants to reduce a trade deficit with japan and wants greater access to their our group culture market -- agriculture market. to clean upowing his belt and initiative program, accused of causing poorer nations of going into debt and making them dependent on beijing. the trump administration is delaying its bid to expand oil drilling to new u.s. waters until after the election. that is because of opposition

from a public and opposite -- representatives. as joe biden is tapping barack obama's biggest fundraisers in a round of fundraising, announcing he is running for the democratic presidential nomination. next month he heads to a fundraiser. on the list -- jeffrey katzenberg and rufus giffords. more of the same for deutsche bank, reporting a ninth straight month of contraction. the german lender cutting their target, saying they expect business to be flat this year. there investment banking decision had their worst quarter since the financial crisis, a day after talks with commerzbank collapsed. 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. hurtado.ana this is bloomberg. francine: thank you so much. for more on banks, deutsche bank and commerzbank, the collapse of merger talks, commerzbank may end up forging a deal first. ing has reportedly reached out to the lender and the government. officialss spoke with when it bought a stake in commerzbank, fueling speculation that may arise as a suitor. representatives at socgen and santander have expressed interest. joining us is alison williams. if you look at what deutsche today, theut with share price is significantly lower. how do they reignite investor

appetite after the botched merger deal? alison: the deal with deutsche bank given the share price over the last several months, they need to shore up confidence. it is good that we got the commerzbank option out of the way. i don't think that solved anything. there were a lot of legal and regulatory issues, combining two businesses that in and of themselves are inefficient because they have never -- not been able to cut costs. optionood to get the bad out of the way, but the clock is ticking in terms of introducing a new option. the markets have not helped. we saw improvement throughout q1. april, everything is great. we have seen this once or twice before where we need a sustained revenue environment. for deutsche bank, fixed income

trading is a big portion of their business. there is a lot of focus from investors because it was not profitable for a long time. toy probably took too long restructure and make the changes amid all this weakness. it has hurt them even more. tom: what a bunch of mba speak. you were on tliv, you and a bunch of pros. in trading, they are making perimeter in justman's -- adjustments. what are they doing? james dimon, brian moynihan, these guys do not talk like this. alison: when things are not going great, there tends to be more explaining to do. they are referring to the restructuring and cuts they have made, pulling back on business. your revenue will be lower.

there was not a lot new on the call. a lot of the news yesterday, but one of the more interesting comments was the ceo kept coming out and saying, we are not going to be baited and talk about an option stock, but we are committed to the global bank, committed to u.s. and asia, committed to asset management, but remember we spun that out thinking we wanted to do deals. tom: a six print on the stock. new lows? alison: -- before they get there. tom: alison williams and our tliv team. how about single best chart? let's chart it out. it is an equity chart. here is u.s. equity bank recovery. here is e.u. bank failure.

is there bond opportunity? george: the bond opportunity is the capital base of the two regions. one of the success stories of the u.s. banks has been rapid and consisted accumulation of capital over the last decade. that trend has topped out. u.s. banks are pretty fully capitalized and bond investors have been happy and rewarded by investing. europe is a different story. which isccumulation, your buffer against losses that gives you the strength of a banking system, has been hard to come by in europe. the news on deutsche's is an indication on how challenging it is for these companies to make a sustainable profit, accumulate that profit, and defunct their capital base. the vicious cycle versus the virtuous cycle. much, georgeu so

bory and lisa shalett. please stay with us. this is bloomberg. ♪

tom: breaking news, widely expected. to bethe headline has this interesting agreement with paypal. francine: this is for a number of -- it may give this indication of investment interest. if you look at what we heard from uber including the addition of stock options, the valuation at $84 billion could top $91.5 billion. tom: so many stories we have been out with today. when you have taylor riggs on the story, you need to have something that is against dutch under the radar. taylor: shares are lower this morning. we have seen a diversions within the chipmakers. some are forecasting slowing demands.

expects chip prices to bottom out and supply and demand to balance out. there were a lot of concerns that tech and particularly, we look at uber, has been making record highs but has not really been in coincidence with the big faang stocks we see. gina martin adams says the rest of the market looks good so as long as the fundamentals remain strong -- which they do, and uber as part of that, 40% topline growth. the ebit margins look concerning and part of that brings in the paypal conversation, trying to lower credit card payments via a partnership could turn the ebit daw margins back to growth -- ebita margins back to growth. francine: there is quite a lot

going on when it comes to markets. there was a big move in oil. brent lost one dollar in five minutes. look out for gdp figures and oil. tom: a lot going on, a lot of good conversation, and we thank lisa shalett and george bory for framing the decisions that have to me made -- have to be made over the weekend in this truly historic bull market. aret now year to date, we up 17% on the s&p 500. the nasdaq composite up 22% year to date. this is bloomberg. ♪

w?w?uhi?só'ñó ♪ amazon silly -- amazon

takes the lead. another day of record u.s. earnings. economists expect u.s. gdp to come back, but disagree on how much. lower revenues to come as deutsche bank figures out what it is going to do next. welcome to "bloomberg daybreak" on this friday, april 26. david westin, here with carol massar. alix steel is off today. lots of stuff going on. carol: let's talk about earnings. , a penny better than what wall street was forecasting. first quarter sales a little bit stronger as well. key,ompany, and this is still seeing mid single-digit decline in eps for the year