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.

growth 2% to 4%. i feel like colgate-palmolive, so many of these consumer names are going through this wreps and in there markets. it is not easy. david: at the same time, they savingouble passing through the consumer. missing on eps at the lower end of the range, not good news. there is some suggestion that some of it may be weather. archer daniels midland is down. not good news. carol: exactly. we've got to talk about uber. last night talking about the ipo, it looks like it will be the largest of the year.

to $50.ion shares, $44 it looks like they've reigned it in a little bit. david: they have maybe a little bit because of lyft. carol: absolutely. since that initial trading day, it has pulled back dramatically. folks will say they are not the nonetheless, but these are companies that don't make money. david: uber has international. they are going to deliver all sorts of things. carol: uber definitely will be what investors are watching. let's take a look at the market set up on this friday morning. s&p 500 futures, a slew of earnings after the close yesterday, including some big ones like i'm is on -- like amazon and intel. we got that gdp report coming which will certainly impact the trade potential. take a look at what we are

seeing in the treasury market. really flat, 2.52. oil has been pulling back after an upward trend over the past few weeks. , $64 down about 1.8% .03 a barrel. david: time for the bloomberg first take. we are joined by michael mckee and rachel evans. we are going to start with amazon. let's take a close look at this chart. they announced earnings had record profits. at the same time, they will spend a lot of money on same-day delivery. weigh on the left, it shot way up, and then came down again. it is up about three quarters of 1% right now. still remarkable performance from this company. michael: one of the funny things i saw on twitter was people say amazon used to be no profit, but they were growing so fast we'd invest.

now they are not growing so fast, but boy, look at that profit. they've turned that story around. they did say last year they would spend a lot of money going into this year, but they didn't do it. do we see that spend that they are promising or not? one of the things is that they managed to control costs really well on the retail side. continuing to do that come up -- continuing to do that, keep getting people into prime. the question is how much they will be able to add to earnings. carol: goldman raising the target on amazon, looking at a 26% upside for shares. not everybody is as bullish. let's get the big picture been it comes to earnings. this week we've gotten a lot. there's more coming next week. in terms of the overall profit picture, in terms of sales and earnings, you can see in terms of revenues, we are seeing a bit

of a slight beat. that is the number we care about, right? when it comes to companies that can't muck around a bit, earnings are what they are. we are seeing some upside versus the first quarter of 2018, almost a 5% beat. that gives you an idea of what we are doing. rachel, let's talk a little bit about earnings. i think there was a lot of negativity leading into this earnings season. expectations were scaled back dramatically, so it made it easier for companies to beat. rachel: 100%. i think that is the reason you are seeing a buddies performing the way they have been after these big beats. everyone is looking at the future outlook, the expectations going forward. we saw intel falls significantly on its sales forecast. people are looking at amazon operating expenses this quarter if they are expanding their prime business further. everyone is looking at the future. we expect to see earnings recession or negative earnings

growth this quarter. people know that. they are prepared for that. but it is when we look to the future i think people are trading off of that. david: today we are also going to look at the present in the past, and that is gdp numbers coming out. that is our second story. this is mike mckee's chart. i want to get him credit. the consensus according to bloomberg economists is it will be about 3.4%, but the white line is the atlanta gdp, the blue line is new york, and the outow, which only comes monthly, is st. louis. but economists are all over the map. michael: the dispersion goes from a 1% forecast to a 2.9% forecast. carol: what does that tell us? michael: one of the things that happens was gdp as we don't know all of the numbers when they put the first report together. they don't have the inventory final numbers, and trade numbers are still coming in, especially

with the government shutdown. so the economists have to guess at it. it has been a real wild card because with the trade wars, so much inventory has been moved back and forth. we saw consumers drop off at the end of last year into january. so where does that number come out? what do we see in terms of trade? it is very hard to tell. carol: we are watching u.s. earnings, gdp, and also watching european banks. deutsche bank cut its outlook for full your revenue after suffering its ninth straight quarter of contraction. we got the collapse of the merger talks with commerzbank. royal bankhing for of scotland this morning. i feel like they are in a separate category from the u.s. banks, but deutsche bank also in a category all its own. rachel: it's had an awful lot of headline risk over the last few years. it's really struggled to break

through from that. if you look at the performance of financials, last year was pretty terrible for european financials. this year they have been more on the same pace, but this news of merger talks breaking down can only be a negative. but i would be looking for going forward is what happens with dws group, the asset management business that deutsche bank spun out a couple of years ago. they are looking to see if they can get merger talks going about being part of this asset management consolidation. it seems like ubs might be interested. it will be interesting to see. it shows you how much scale as needed to be a success in asset management and banking today. david: is it also a systemic story? if a prominent bank were having this here, the fed would be worried about the systemic story. michael: we are talking about a bank that is not profitable, but

they are not in any particular trouble. it is not like the greek or italian banks, where they are going to collapse. the government is trying to save a national champion, but not looking at one that is going to bring down the rest of the banking sector. the idea of a national champion is sort of the problem behind all of this. deutsche bank doesn't want to give up the lead in anything, and that is one of the problems with selling off dws. they want to retain control, but if you are the weaker bank, why do you get to be in charge. national?the problem as long as you have nationstates within europe, can you have a financial system that functions in this day and age with germany, france -- carol: it is very fragmented. michael: exactly. the one thing you can say is that because of this national champion idea, i think that is why investors are somewhat sanguine about it and haven't

sold this thing into nothing. they figure somehow, someway they will muddle through. david: and its name is deutsche bank. [laughter] michael: it is older than germany. carol: but they do -- but you do wonder if they are running out of time. david: at some point. thank you both very much for being here. a reminder that you can look at all of our charts by running g tv on your very own terminal, and even save your own charts. coming up, we will have more on earnings with charles schwab's chief global investment strategist. live from new york, this is bloomberg. ♪

viviana: this is "bloomberg daybreak." to $9ants to raise up billion in what is expected to be the biggest ipo of the year. the ride-hailing company plans to offer 180 million shares at up to $50 each. at the top end, uber would be valued at $84 billion. the company also said paypal will buy five hundred million dollars of stock in a private placement, putting uber on track to make its trading debut next month. renault plans to propose merging the french carmaker with its partner nissan. would have about 50% stake, with equal representation on the board. intel signaling an end to the long expansion that led to record profits. it also protected this quarter will be worse than analysts

expect, adding to concerns intel may lose its lucrative lock on the market for computer processors. that is your bloomberg business flash. carol: thank you so much. markets are certainly digesting the company results that came out after the closing bell yesterday. taylor riggs has a recap for you this morning. taylor: we just heard about news is raisingthat concerns for other chipmakers as well. we heard similar news from texas instruments, very different from what we heard from micron, where they were looking for prices to stabilize in the second half of the year. concerns about an oversupply any second half of the year coming back into focus. i want to look on the flipside of that. shares of ford up 8%. this is after they are seeing strong demand for their f

series, finally cutting costs to improve the bottom line. uber investing heavily in electronic and self driving cars. it $120 of concern is million loss in china. finally, with mattel, shares up 9.5%. best performer in premarket this morning. first quarter sales beating thanks to barbie and hot wheels. international sales are off 5%, surrealisti -- so really focusing in on the home market. david: for more on this earnings season, we welcome in jeffrey kleintop, charles schwab chief global investment strategist. thank you for being here. we start with a bar chart that shows not just this quarter earnings, but also what we are projecting through the end of the year. basically it says this quarter may well be in earnings recession, although i don't

think we are seeing that quite yet, but next quarter may be down a little bit, but europe may outperform. going out, europe does particularly well. take us through this. jeffrey: it is interesting because it is a little counterintuitive. europe has been the weakest from an economic perspective, but not from earnings. q1,e look at estimates for all major regions are expected to be relatively soft, although if numbers continue to come in better than expected, that may not be the case. in q2, europe is expected to actually post growth. perhaps what is even more surprising is if we look at the entire 2019, there is a strong rebound anticipated by analysts for the second half of the year, for europe, the u.s., and japan. i don't see that second-half double-digit recovery and profits that analysts are pricing in. carol: i am wondering if we put up revenue charts of the u.s.,

japan and europe, would we see similar charts? earnings you can kind of manipulate and maneuver to show some growth. revenues, you can't. what does the revenue picture look like in europe? it looks like the data says things are not so great. jeffrey: it is a little softer. 2.7% revenue growth. it comes down to how you are managing costs. europe has been far more focused on this than u.s. businesses have in recent quarters, and that has really helped profit margins. they have been widening over the last couple of quarters in europe even as they have started to contract in the u.s. carol: does that mean you would be suggesting investors look at europe in terms of opportunities? jeffrey: i think you don't want to write it off. i think there are opportunities, even in the face of relative economic weakness. reason we are

talking about more of a diversified perspective this year. to move back to retrench to what has been working. i think a more broad approach to markets now may pay off. david: talk about that diversification in the united states with respect to how correlated markets are. we are really at a low point in terms of correlation across the market. jeffrey: this is so overlooked. i think it is really important. it has been a generation since correlation between different markets around the world and different sectors were so low. we are back to where we were in the 1990's, the 1970's and 1980's. back in the mid-2000 and late to thousands, those correlations moved very high. all markets moved in lockstep with each other as we went through the financial crisis and aftermath, but it has come way down. this toppers of the case and is

something many investors have not seen in their lifetimes. it is a broader, more diversified portfolio across geography and sectors that may pay off now. carol: it just shows that markets are trading a be much more on their fundamentals than what global central banks have been doing. kleintop is going to stick around. coming up, what's next after merger talks between deutsche bank and commerzbank failed. we will speak to someone who called the failure of the talks. she's coming up next. this is bloomberg. ♪

♪ carol: deutsche bank is now a shadow of itself, cutting its outlook for full year revenues. what is next now that the merger talks with commerzbank have ended? .e welcome now elizabeth rudman

jeff kleintop is still with us. elizabeth, we are trying to figure out what is next. this is a big week for deutsche bank. we did get earnings results, not positive at all, today. what might we expect should be the next chapter for deutsche bank? our point ofom view, in terms of the ratings, the merger would have been a possible negative factor, so actually now they've got this merger off the table, so i guess they will be able to focus on executing the existing strategy, which they still got a long way to go. as you said, the q1 results were week in absolute terms definitely come but they were not bad compared to expectations , and it was a difficult quarter anyway for global investment banks. go jet has managed to deliver on

some of their targets in terms of the cost reductions, so i think we will have to see how they are able to deliver in the coming quarters and get the bank and perhaps a more stable revenue cost situation. then there is an opportunity perhaps to consider the next steps. david: that is the question. stability would be terrific, but it's going to have to move forward at some point. i will put up a chart here comparing jp morgan with citi with deutsche bank. it is really going nowhere. they will not be able to get that moving up with just cost cuts, right? elisabeth: yes. it is a challenge for european banks generally, and the interest rates environment hasn't helped to them, but there are other european banks doing better than deutsche bank. it is possible. they need to build up the diversification of their revenues because, compared to

the other european banks, they are more dependent on the more volatile investment banking, market related activities. have something of a home market advantage because the u.s. capital markets are so moreand that provides a stable revenue base for them. it is tougher for the european banks. carol: i do wonder about, with deutsche bank, in some regards as they look to do diversification, they also need to move into areas where they might be able to have riskier plays, and the potential for rewards. in their current state, they can't do that. regulators are watching them very closely. how do they grow into other businesses that might provide more potential and more growth on the top and bottom lines in their current state? elisabeth: you are right that

they have had to dial back as they've been stabilizing the .apital liquidity situation i guess it depends how well they are able to finesse the parts of the investment banking business areas where they have an advantage >> we will see help -- an advantage. we will see how well they do at that. , isd: jeff kleintop this a banking problem or a european problem? there are cost containment issues as well, which we know are coming up now in new fines and other issues, but they did ok relative to expectations. last year, the entire european financial universe fell nearly 30% peak to trough.

a bit overdone in terms of where valuations got to. this year, european financials are up 70%, not bad -- up 17%, not bad, because expectations were so low. that is helping to support the whole group. david: thanks very much. andabeth redman of dbrs jeff kleintop will be sticking with us. up, record first-quarter earnings and a new ceo is here to tell us all about it. this is bloomberg. ♪

carol: this is "bloomberg daybreak." let's get a check on your markets. a slew of earnings after the close. waiting on a few other big ones

as well on this friday. s&p 500 futures flat, down about a point. nasdaq futures up about eight points, also relatively flat. europe dealing with some european bank numbers in terms of earnings. ftse down about one quarter of 1%. there's a look at your dollar index. crude falling a little bit, down about 1.8%. two year yields to flee flat, along with the 10 year. american airlines crossing. david: you did it perfectly, right on the dot. they had a beat on earnings-per-share. beat-quarter earnings estimates. carol: we will wait for the revenue number to cross. we've been watching the airlines starting to report to see what we see in terms of consumer travel demand. 2.7%. they are up about they have a challenge when it

comes to pricing power. some say almost too much capacity. now they've moved into the negative as we been talking. we will be looking at profitability and margins for american airlines. they've got a big issue with the 737 max 8. carol: autonation also out. david: the country's largest car dealer reporting a nice beat on earnings-per-share. l welcome their ceo carl iebert. good to have you with us. what happened with revenue? we made a strategic decision in the first quarter to really focus on profit for new vehicle. one of the things was an opportunity for us to make sure we are ticking care of each and every customer in our stores. we liked what we saw in our profit per vehicle being up a

little over 7%. we saw that across all of the brands that we serve. while we made a strategic decision to not discount as much, we feel great about the start we've gotten to the year. david: let me ask about trucks. how much of that is trucks? i talked about the outgoing ceo for ford yesterday. they did well in large part because of the f-150 truck. this is what he had to say. >> north america and credit are the two pillars that have driven results for quite a long period of time. we saw a strong mix. we saw strong positive net pricing. our costs were only up a little bit, so we had very good leverage. within that, we got positive contributions from the new ranger and america's best-selling van, the transit. it was broad-based even within north america. david: so it was a lot about

trucks. is that helping you get profitability up for new vehicles? carl: yeah. based, -- it is regionally based, as you know. , in thereat to see ford middle of a transition to suv's, report yesterday. we like the lineup we are seeing from ford, but make no mistakes, trucks and suvs are a big part of our performance in q1. carol: i want to go back to the sales number, specifically first quarter car sales down 5%. analysts were expecting about 2%, so that is much deeper than everyone was forecasting. will that trend continue? ultimately, investors in the street care about growing that top line for sales and revenues.

carl: i think that's a great question. we are not sacrificing for earnings. one of the things we are working diligently to do is we know that this is the end of an economic cycle, so we are making sure our inventories are in line as we head into that cycle to make sure we have the right inventory in stock to serve our customers. in many cases, that means we don't have to discount as much if we got the right vehicle on our lot. we are focused on taking care of each and every customer in our stores, making sure we are maximizing that opportunity, and lastly, making sure we are offering some of the new things we talked about for the last , our brandrters extension strategy to serve them. i think as we continue to greatit will be a opportunity for us to keep the price volume mix which we are focused on. david: we all like to focus on selling right, shiny new cars. what about parts and services?

how much of that is driving the growth potential? carl: let me talk a little bit about our brand extension strategy. the first was really going after customer financial services. we saw a significant lift this quarter in execution inside of our stores. parts and services is a big part of the strategy, one of the reasons why the board selected me to come be a part of the autonation team. my experience with global supply chain work at home depot. we see that is a significant opportunity for us going forward. we have six distribution centers, two forward stocking locations. we are going to open another distribution center in may. we see it as a valuable part of everything we do in serving our customers not only in our stores and customer care, but also our collision centers. carol: i am also curious, you folks implement it a $50 million structuring earlier this year to prepare for the downturn. are you seeing the downturn?

carl: i think we are seeing that downturn. if you look at retail sales down, if you look at jd power, 6% or so, we can see that in the economy. supply is going up for the industry. we are prepared for it. one of the great things the leadership team did before i got here was really to lean this company out and be prepared for that downturn. what is really exciting is as we took the $50 million restructuring this year is it didn't impact our execution in the first quarter. i think that is the largest message we are bringing to our team. we can execute in serving our customers, and do it in a much more efficient way. david: at this point, something like 15% of profitability comes from new cars, and the rest is preowned cars. is that going to shift?

is that fundamental balance going to shift? carl: you bet. as i look at it, it is opportunity for us. we really believe in our one price strategy. we think in the used car market, provides an incredible shopping experience for our provides an incredible shopping experience for our customers. it is opportunity for us to continue to serve them in the way they want to be served. as we consider opportunities that we can improve upon and get better at in 2019 and beyond, it is executing our used-car ourtegy, and that includes wheel by your vehicles, which we finally rolled out to all of our stores. ticking car of our -- taking care at our customers in that market is a really fantastic opportunity for us when forward. david: thank you so much for sharing your time with us today, and congratulations on that newly minted ceo title.

let's go back to american airlines for a bit. carol: planes, trains and automobiles. [laughter] david: you can see why the stock is going down. they've adjusted their full year earnings-per-share estimate to dollars.ars to six carol: this is what is so important during earnings season. that is a significant revision. see the stock down about 2%, 3% in the premarket. secondso talked about quarter adjusted pretax margin going to 7% to 9%. that outlook will certainly shape the trade in the airline sector today. we will see what happens with southwest. i do wonder if we will see anything similar or not. david: the other thing is fuel costs. the price. of oil has gone up. that is certainly -- the price of oil has gone up. carol: that is certainly going story.

michael mckee.is still with us is jeffrey kleintop. michael: the consumer fell off at the end of last year, and i'll be stuff that was produced to sell to them maybe didn't get sold. there were so much concerned about what it would cost to bring things in from china that comedies brought things early. inventories were big, and propped up growth. they may still in this quarter profit growth, and as companies worked on those stocks, you would have a second quarter drag. trade also the other issue, for the same reason. we saw in march a narrowing of the trade deficit in the pre-luminary numbers. that could add to growth. that somee reason people marked their forecast for gdp. david: let's talk about the inventory issue. we have a chart that illustrates what mike was just saying.

how much of that will distort what we signed the first quarter and limit what we may see in the back half of the year? jeffrey: it certainly could weigh on the second quarter. we have not seen much of that inventory drawdown that built up. you could point to the fact that we had a fourth quarter stockmarket rout that might have weighed on the consumer. -- we had the government shutdown as well. the bigger picture is a broader global slowdown taking place. most analysts are pricing it in, a rebound in economic growth in the second half of the year. i don't see that. i think some of these issues related to inventory will continue to weigh on growth and keep it below average. carol: something we got from chinese president xi overnight, addressing a group of leaders, he said, "we attach great

importance to fulfilling multilateral and bilateral trade agreements with other countries." i think this is key as we continue to get through trade negotiations. that sounds to me like a bit of an olive branch. michael: it did sound to a lot of observers like he was setting the stage for some sort of agreement with the united states. he talked about addressing state subsidies, and >> will property rights, allowing more or an investment, and avoiding competitive devaluations, all things that the u.s. has asked for. what the details will be, how far they will go, and how it will impact u.s. trade is an open. other analysts say a lot of this may be cosmetic and moving things around, so we don't know yet. david: at least he is talking about the things we been wanting to talk about, things like intellectual property, foreign direct investment issues, and even subsidies. it is because medical not, but it is on the it is cosmetic or not,

but it is on the agenda. michael: that will have a market impact. we will wait and see what the economic impact will be. david: jeff, do you want to respond? jeffrey: mike is right. i don't know about the economic impact. these are broad talking points they've talked about for a while. it might mean we are closer to a deal than we were before. maybe we are closer to a deal. but china's trade growth has not been a drag. it has been a slowdown driven by domestic sending, and that has -- domesticround spending, and that has not turned around. they've already priced in a trade deal and may have gotten ahead of the curve. david: thank you very much, mike mckee mckee and jeff kleintop of charles schwab. now let's turn to viviana

hurtado with the first word news. viviana: today president donald trump meets with japan's prime minister shinzo abe a day after trade talks between the two countries resumed. both sides are hoping to reach an agreement that focuses on agriculture and vehicles. the u.s. wants to reduce its trade deficit with japan. it also once greater access to the country's agriculture market. japan once a promise it won't be had by auto tariffs. north korea's kim jong-un warning the current date top on the korean peninsula is at risk. d'etat on the korean peninsula is at risk, saying it could return to its original state. in spain, the socialist premised or has seen opinion polls move -- socialist prime minister has seen opinion polls move in his favor. on sunday, spain votes, and he will find out if his gamble pays

to work with his allies without the catalan separatists who helped put him in power. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm the vienna our tonto -- i'm the vr prado -- i'm to the on or try to -- i'm viviana hurtado. this is bloomberg. carol: there's been so much instability. david: and so many elections. carol: exactly. globally, we seen so much change in the political landscape. we are going to take a break. coming up, the rise of frugal -- frugalnsumers josh gen z consumers. that is coming up next. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour, kpmg chief economist. ♪ carol: happy friday, everybody. we turn now to the evolution of the consumer. gen z is about to become the world's biggest consumer spending force. who knew? born 1994 and later. that could pose challenges to retailers. it is the story featured in the latest bloomberg "businessweek." first of all, gen z.

reporter: basically the mid-90's forward, the children of gen x, the people who follow millennials. we spend a lot of time worrying about millennials and how to sell to them. people forget that after boomers, we have another generation come along, and that is gen z. do they have money to spend? and how? carol: because they are different. david: using about what happened, a dot-com bubble, a great financial crisis, 9/11. there's been a lot of trauma. reporter: they were reared in the recession, so they come out fromplace different millennials. they love avocado toast, five dollar lattes. gen z comes out to be much more frugal. that is not a good thing if you are a consumer brand or retailer. carol: so what are we seeing in

terms of their buying habits and shopping? reporter: they are much more frugal, and they are forcing merchants and brands to say i have a reason that you want to shop with me. in other words, they are much more value-oriented. they want companies to take positions on political issues. they want lgbt rights. they want things that used to not be part of the conversation. david: it is not like they don't carol: -- it is not like they don't -- carol: it is not like they don't like luxury, but they will buy it secondhand. reporter: that is one of the big changes. this group isf going to buy in retail shops. they view it as a sustainability issue as well. there are things out there that we are not going to waste resources, so why not buy a fancy handbag secondhand? david: they may have a point.

one of the things i took out of your piece is the start generational difference in japan. there is a dramatic difference 30 years ago as opposed to where you see it. james: japan had five recessions in two decades, so a lot of people grew up having to watch money. what happens is this younger generation doesn't want to spend. remember the 1980's, would we thought the japanese would buy everything? nowadays the younger japanese are saying no, we are not doing that anymore. david: it is also going to bars. out of thatg story today. apparently there is a change in that wanting to go out to drink with workers. it is historically you

have gone out after work and set up until 10:00, 11 a clock at night. carol: that is what david was doing last night. [laughter] james: a lot of people can't have family lives. younger people don't want to do that. a lot of businesses depend on that. one big brewer has decided they are seeing a drop in beer sales because young people don't want to go out every night and drink, so they are having to come out with new products. ofid: i was spending a lot japan when i was younger and super dry came out. carol: there's one other story you talk about, the chinese gen z and how they are shopping. a lot of it is they are watching tv, get a code -- and can buy -- getting a code, and can buy that

way. james: in china, it is massive. this year we are going to have almost $500 billion in social e-commerce, shopping through your social media app. in the u.s., only about $16 billion. it is because their payment system is built up a lot better for mobile, and also younger people much prefer to watch an influencer, push a button and buy it. carol: there's established retailers and brands have to watch out. gen z is shopping differently. david: james ellis, thank you for being with us. the latest issue of "bloomberg businessweek" is now available on newsstands and online. you can hear from the reporters every saturday here on bloomberg television and radio. coming up, it is the year's largest ipo. uber eyes and $84 billion valuation. this is bloomberg.

♪

david: today i'm watching uber. we sort of know what we think they are doing, which is not what they used to be thinking. carol: which is what i find interesting. you wonder about the lyft factor. now they are looking at $44 to $50. the prior value was $48 to $55. did they just say pull it back a little bit because they want a strong ipo? at a max are looking of maybe $90 billion. particularly after lyft, we can put up a chart showing a multiple of revenue. they have no earnings. this is where they are sort of coming out, just above lyft, but way below, for example, snap, which didn't do so well. interesting.s

i wonder, anybody who wants to come to market, thinking you could be a different second half, did they want to get it out quickly? david: there are bankers out there that are sort of helping this thing go on. they can eat some of this. there is money on the table. carol: you do not want uber to start on its first day trading lower. david: absolutely not. kping up, constance hunter, ng chief economist. live from new york, this is bloomberg. ♪

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exxon mobil earnings came out just now, and it looks like a little bit of a mess on earnings-per-share. chevron coming out shortly. on the rebound, economists expect u.s. gdp to come back, but disagree on how much. and amazon reports record profits, and will spend big for same-day delivery. welcome to "bloomberg daybreak" on this friday, april 26. i'm here with carol massar. alix steel is off today. that's good to exxon mobil. carol: we are talking about little change in the premarket as we speak. first quarter capex, these oil companies spend an awful lot of money, $89 billion. we will get into some of the analysis. you can see, no surprise because that big eps miss. david: on capex, of course they need to send a lot of money --

to spend a lot of money. the question for shareholders, are you going to give some of that back to us, or keep investing it? carol: exactly. there's always that issue of plowing into dividends and buybacks, which is what investors like to hear. david: we welcome now bloomberg intelligence's integrative oil and refining analyst, and constance hunter, kpmg chief economist. you can make sense out of all of this. it looks like a pretty big disappointment on earnings-per-share. reporter: a couple of weeks ago, exxon warned that they were going to have a very difficult quarter on the refining side. billionlined about $3.1 of differences relative to the fourth quarter. the biggest of that was a contraction in different roles between efferent types of crude oil in north america. you saw canada really compress a with alleven permian

of the shale growth collapsing. david: so that is downstream. they said they were going to have trouble downstream. did got good news upstream, though. shouldn't that help them? fernando: it does, and that has been a component of the good part of exxon. but as you mentioned earlier, they are outspending. they are down to under 4 million barrels, so they really need to reinvest into the business. when you look at exxon, there's a very large component of gas. some of it lags on six months, the lng component. it takes a little while for that peak in oil to really flow through. carol: crude oil on the about 55% from that christmas eve low. fernando: exposure will lag on a six-month basis, so we will see it in the second and third quarter a little more on the lng side. you are right, actually helped,

but last quarter refining was $3 billion of net income contribution. david: it is not just a two horse race, but chevron is about to come out in half an hour. dealjust had a big proposed with anadarko. fernando: they kept their permian acreage a long time ago. this is a legacy position. chevron never sold theirs, so they inherited that position. that is going to bypass a large acquisition, which they are now making, but will bring returns on our analysis. carol: you've got to look at the energy sector, look at all the players. with the bidding going on for anadarko, where is exxon mobil in terms of what they need to do on spending come on acquisitions -- on spending, on acquisitions, on strategy?

fernando: exxon moved early. they've done their movements in 2016, so now they are really spending to develop and bring production online and stave off the declines that have been hunting than this past several years. david: constance, talk about it in terms of economics and what is going on with the performance of these energy companies. constance: obviously oil prices are going up, and that is in part due to supply constraints. we have sanctions against venezuela, and the end of the exception to the sanctions against iran. this is causing people, if they are going to comply with these sanctions, countries like south korea, turkey, they get a lot of their energy from iran, are going to have to look elsewhere and get other supplies. it also takes supply off-line. iran exports about 3 billion barrels a day. it is pushing up the price of oil. this should help the energy

producers here in the u.s.. carol: because of his higher oil prices globally, have we seen any kind of global economic impact? constance: not yet, but i believe that will end up coming through. in the u.s. we are having a really interesting impact on gdp, which we will see in a little bit. we have not been importing as much oil in the first quarter, so even though the price has been going up, we look at the dollar amount of imports down significantly. venezuela went off-line. we import so much from venezuela. it is going to add to our gdp. david: that is the effect of oil on the economy. i will show a chart that is going on -- i will put up a chart that shows what is going on with the price of oil. that blue line is s&p 500 energy. it has gone almost nowhere, while the price of oil has gone up. how can that be right? fernando: investors are really demanding return to cash flow. for the longest period, the

majors have been very poor in the returns. we saw that 2008 through 2014 when oil went triple digits. returns actually compressed because there was not enough investment in the supply chain. this time around, investors are demanding more return on capital. it is something the industry hasn't done for a very long time. carol: we are going to hold the conversation and get back to you. david: fernando, thank you very much. constance hunter will be staying with us. carol: we do have a develop it in the bidding war for anadarko. de shaw urging anadarko to sell itself, great to people familiar with the matter, after occidental said it is prepared offer more than chevron. what is going on? isorter: we know d shaw , somewherethe stock

in the top 30 shareholders. they have spoken privately to the board and management of anadarko. carol: how much do they increase their position? know, but if they are feeling emboldened to go speak to the company, they feel they have a decent position. they said we don't think this process was done very well. we would like you to run an open sales process. we have a better offer in hand. we would like you to consider that seriously. . crucially, we do not want you to essentially make it harder for someone else to come in over the top. david: as i understand, they say should take another look at it. is the answer going to be the same for a reason having to do with balance sheet? line ways the yellow down there. this is before the deal. occi is way up here with the purple line.

this is way out of the band of normalcy for these companies. hold up this week , and they said they would get device to cheers back down -- the divestitures back down -- down through 2021. carol: we are going to leave it on that note. ed hammond, thank you so much. check out bloomberg.com for more on that story. let's get a quick update on the markets. we've had a lot of earnings this morning and after the closing bell. s&p 500 futures, little change right now. we are waiting for the gdp report as well. down about 2/10 of 1%. taking a look at the euro, looking at $1.11 at this hour. for the 10-year note, that is just coming in at 2.52 yield.

crude pulling back a little bit, cents% at $63 monday one a barrel -- $63.91 a barrel. david: now we will go to taylor riggs for a lot more. taylor: we are covering a little bit -- we are recovering a little bit off of the lows of the session, but a few comments from a press release. we are having a big mess on bottom-line and production come about within the press release, we are getting some reasons why for exxon. downstream and chemical results reflect challenging industry margin environments, weak fuel margins from high gasoline inventory levels, and narrowed north american crude differentials impacting results in this quarter. mentioning sales volumes increased from the prior year, which does reflect growth, but margins are made a challenge with continued supply from

recent industry capacity additions. again, shares off dust about 1.75% as we await some comments from the ceo. let's go over to american airlines. they are cutting full-year earnings-per-share guidance, noting that the grounding of the 737 max is affecting them. they are also seeing delays in deliveries for the a3 to one -- 321 aircraft. we saw that with southwest. colgate on a different story, beating on the top and bottom line, looking at organic sales growth of 2% to 4%. that is what we have seen from consumer staples, and better topline growth than eberly clark and procter & gamble. the ceo says plans to accelerate growth are starting to pay off. ascing is the key here,

we know with consumer staples. top performershe , saying this quarter sets them up for a positive start to the years. similar story from hasbro as well, saying that the momentum is building across the toy, digital gaming, and entertainment industries. this is all without toys "r" us. david: thank you very much. in the end, it is all about barbie. [laughter] carol: it definitely is. david: coming up, amazon delivers. profits surged on cloud computing and advertising. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." to $9ants to raise up billion in what is expected to be the biggest ipo of the year. the ride-hailing company plans to offer 180 million shares at up to $50 each. at the top end, uber would be valued at $84 billion. the company also said paypal stockuy $500 million of in a private placement. they are on track to make up trading debut next month. were no plans to propose merging the french carmaker with its alliance partner nissan. each automaker would have about a 50% stake. there would be equal representation on the board. nissan resisted merger efforts pushed by former chairman carlos ghosn. amazon trying to revise its main e-commerce franchise and ward off competition. this quarter, the world's largest online retailer will spend $800 million to reduce delivery times for top customers

from two days to one. amazon reported sales growing in the first quarter at the slowest pace in four years. that is your bloomberg business flash. david: thanks so much. amazon reported record earnings yesterday, driving the stock up after hours, then it came down, then back up again. we welcome scott mishkin, wolf research managing director of consumer research. he has an outperform rating on the stock. constance hunter of kpmg is still with us. scott, explain what is going on here. scott: we feel very bullish on amazon this morning after the call. all of their businesses outperform slightly on revenue. a lot of people were nervous on that. they absolutely crushed profitability. one of the things we've been articulating in our research about amazon is what is more dangerous, amazon not making money or that makes more money than god at this stage?

they are making so much money, and they are reinvesting into the business. one of the main places that is going to go is delivery times, consumables, particularly from the likes of a walmart or kroger. carol: if you look at their impact on the retail and consumer footprint, it is staggering. i do wonder about them spending more to do this in an environment of rising competition. all martin and other retailers have gotten better about faster deliveries. can they compete enough? is it worth the upfront cost they are putting up right now? scott: that is an excellent question, and a question i have been answering all day. we won't know for a while what the demand curve looks like if they push from to data one day. there's likely some elasticity here. what that is, we will discover over time. that is the problem.

wins,not whether amazon which we think they will. it is actually the path to them try and come is so negative for trying,untries -- them which is so negative for other companies. they will be able to deliver goods when, where, and how they want. if you want a blender, you can get that within hours, no problem. i hate waiting for that blender. [laughter] david: constance, we are talking about profitability and margin. let's talk about straight up revenue. there's an interesting phenomenon with amazon right now. there revenue rate of increase is coming down. they are still growing revenue, but not as fast as they used to.

are we getting to a point with e-commerce where it is getting saturated? constance: yes, i do think we are getting to the point where the rate of growth of e-commerce is not going to be the pace it has been historically. there are people, when e-commerce was first growing, that say eventually it will be 70% of retail sales. it is sort of capping out in the midteens. the question is, is it going to keep going? i think that it will come of it now it is going to be very slow. the pace is going to be much slower. carol: i think that is an interesting question because we still do most of our shopping brick-and-mortar. online is still such a small percentage. some will say that is opportunity to grow. do you see that there is a point where we kind of top out where we are in terms of online purchasing? you look in asian markets, they are doing everything on their phone. i wonder whether that translates to other markets. scott: it is an excellent point and question. if you look at a recent consumer

survey, we asked consumers, can you buy any more online? we were surprised at the number that said no, we are full. but the categories that have very low penetration, they are all in the consumables categories. people who buy a lot more online, that is where amazon is focused. if they can get them to engage them more in their everyday consumable purchases, there is a halo effect, so you can see them buying more computers, more tv's. that is why amazon is so focused on this because if they can get the eyeballs to get the advertising dollars, they also get a halo effect into other categories. incredibly important for them to sustain the growth rate. david: constance, categories is one way to expand. what about countries? amazon went into india, got into a little bit of trouble. china, not so easy.

is there opportunity to transfer the rest of the world? constance: i can't comment on amazon specifically, but if i think about the opportunity for e-commerce outside the u.s., sure. but your example with india, this is an example where infrastructure is not the same as the u.s., and not even the same as china. you talk about road quality. infrastructure on rail and airports. it is just not up to the level that i think any online deliverer would need to do something like even today delivery. it is going to be a challenge in a place like india. there are things that happen in emerging markets that we don't see in developed markets, whether it is motorcycle delivery could be an option. but again, you need infrastructure to do drone delivery. you need a certain amount of bandwidth in cell towers. you need gps. you need certain things to do

drones as well. carol: we will continue our conversation with constance. thank you for your insight on amazon. the european close is coming up at 11:30 a.m. wall street time. up, american airlines and southwest feel the pinch of high fuel costs andy 737 max groundings. more on that next. this is bloomberg. ♪

david: time now to look at three companies worth watching this morning. first of all, ford up nicely after a nice beat. i got to talk to the outgoing cfo yesterday specifically about europe, and asked him how far along they are on restructuring. >> there is so much more to come, so much more work, but also so much more of the basic redesign of the business.

we are in very early stages there. much more to come. that is why if you look at those ebay charges, a good portion of that is largely to be in europe. carol: what a different tone. speaking of different tones, intel down about seven points i've percent -- about 7.5%. the company cutting its revenue outlook. what is interesting about this is these been looking at these semiconductor stocks that have gone on quite a tear, and we are worrying. there are chips in everything. what does it say about the overall economy if we start to see a comedy like intel pulling back its forecast -- a company like intel pulling back its forecast? it is so important. david: third company is southwest airlines. we are going to turn to brooke sutherland to tell us all about southwest. brooke: southwest reported

earnings yesterday, and they were good. they were ok. they were expecting a pretty robust again in terms of pricing power, but a lot of that is becausebit of a false of the grounding of the 737 max . theye earlier year period, had some issues with a fatal accident and other issues that really drag down the results. it is difficult to read too much into those numbers. american airlines is out with its numbers this morning, talking about a $350 million hit from the 737 max 8, which is a very big number given the grounding. david: that is before you get to fuel costs, excess capacity, and yield factors. brooke: exactly. 0.05%an airlines saw

growth in pricing power, less than what they had said when they pre-warned on their earnings. a big disappointment for the markets today. carol: i do wonder about the impact on boeing and what this means for future orders going forward. brooke: both airlines have pulled the plane from the schedules through august. david: brooke sutherland, thank for being with us. coming up, we will get a read on how the government shut down weight on the u.s. economy. u.s. gdp numbers coming out, as well as core pce, just a few seconds from now. live from new york, this is bloomberg. ♪

carol: this is bloomberg daybreak right i'm carol master in for alix steel very didi point -- gdp report just seconds away. s&p relatively flat during the

ftse down .2%. the dax flat as well. marking time. a lot of earnings news last night and early friday. take a look at the dollar index. just a little bit lower and crew --nding lower during trending lower. 3.2%. the magic number is personal consumption was also better than expected, 1.2%. carol: lots of factors. we talk about the government shutdown, we talk about inventory, we talk about trade, this is a number that will be dissected but a lot of expectations because of those specific factors. david: corp. you see is 1.3%, which is lighter than expected is 1.3, which is lighter than expected. carol: taking a look at

treasury, definitely seeing a reaction. looking at a yield of 2.54. the two-year note, pretty much staying where it is. we are seeing some reaction it comes to the treasury market. david: let's bring in constance hunter as well as gina martin adams. initial reaction to those numbers. surprising, right? nce: we were expecting it to be stronger. i cannot see from my bloomberg what the components are but it is probably -- we got in addition for trade. we were not importing as much as oil so it is not that we demanded less, it just impacted trade and added to gdp where it has been subtracting and government spending kicked up. we had that is a positive

contributor. carol: inventories and trade boosting u.s. gdp by the most since 2013, so we were expecting this. isstance: what we want to do look through that and look to final sales to domestic producers, if you look at that -- i want to break chevron. eps, $1.39, nine cents better than what wall street was forecasting. david: a little bit better the next on mobile. -- a little bit better the next on mobile -- a little bit better than exxon mobile. we want to learn what they're going to do about anadarko. david: there is also a headline from ford. criminal probe of with respect to

emissions certification. let's go back to gdp. 3.2% as opposed to a survey of 2.3% and core pce was 1.3%. 1.2%: personal consumption compared to 2.5% the following quarter. david: that was a slowdown. the projection was 1.0%. the slowe of that is down affecting consumption in january and into february. we could see a bounce. gina, is this further fuel for the fire? gina: i think it is somewhat mixed. the key factor is the inventory line. what we are seeing the broader spectrum of s&p 500 earnings are the segments most affected to the bloated inventory situations , now they are stuck with too much on their books and starting to pick up, those are some of

the weakest players in the s&p 500. some of the energy companies, some of tech, we are seeing this in the semiconductor space. texas instruments and intel suggest we are stuck with a lot on our books and demand is not improving. this is one of the big keys to managing a turnaround in the earnings stream to manage this so company -- carol: i do wonder about the second quarter. do we see the numbers rein in significantly? gina: final sales for domestic producers was 2.5%. that is above trend growth if you look at potential gdp of two. we could see a slight downward trajectory in the second quarter but that 2.5 percent is a solid number. i'm looking at futures and we are seeing impact in terms of the treasury trade.

how would you anticipate investors role this in? gina: being an equity strategist , i think earnings are the most significant component for driving stock prices. i think they will look at gdp and say the first quarter was ok , that when you have just a slew of earnings news coming out that was the bigger driver of equity prices. mess,has a very big chevron seems to be expectations. is there a macro takeaway? what is happening with the broader tech sector earnings. a lot of give-and-take across the earnings. constance: big beats -- in the industrial space you had a slew of earnings misses but overall sales are still slow. i think there is a lot to digest and earnings that is going to be much more significant. i think there is an

interesting trend we were observing that a lot of consumer products groups were able to pass on prices. to me that is significant, because the inflation -- the expectation is that inflation is subdued, we do not have to worry about it. i hear news like this and i think maybe there is a surprise in store. david: i want to ask a slightly provocative question. when we talk to people from the white house, they say economist consistently underestimate the growth this administration can deliver, and recently they have been right. i am sure right now larry kudlow will be saying we told you so and you did not believe us. constance: you have to scrub out the noise and that is why final sales to domestic producers as such a key component of the gdp report to look at and look at how that has been trending. yes, it grew dramatically in the second quarter of last year. it has been coming down.

this 2.5% number is consistent with the moderating pace of growth after the surge of fiscal spending and the tax cuts. we do expected to go back toward trend growth. this headline number, when you dissected down, it is inventories and trade, that is not indicative of the underlying economy. blog don't a great through the gdp number. net trade had its biggest contribution -- david: you call that. constance: it is because of a shock of supply, we were not able to get the supply we wanted. david: you would say idiosyncratic. everybody has their book that they are talking. gina: genome -- david: martin adams and constant hunter, thank you very much. chevron is out with earnings.

they beat, as opposed to chevron. i misspoke when we were announcing the chevron earnings. occidental could up their bid. we have not heard from chevron about whether they would up their bid, but we will be listening on the earnings call. chandra is here to take us through the headlines with chevron. emma: it beat earnings per share beating estimates. seeing a little bit of weakness in the shared reaction in terms thoughtrices, also we over at chevron that worldwide production came in lower. weakness downstream. that is something similar to what we saw at exxon, seeing a bigger drop for exxon because there was a much bigger miss their. net income fell from 49% year on year. the real weakness was downstream , refining and chemicals, they say all loss of $256 million.

the issue is margins. the company had warned downstream was going to be an issue, but the miss there is incredibly rare and will lead to investor questions. upstream should be doing much better for both of the big oil companies. since the are 40% christmas eve low. why higher crude prices are good for the big oil companies, there will be something of a time lag and bloomberg intelligence will see the benefit of those higher crude prices until the second or third quarter. now attention turns to the earnings calls for both those companies, particularly when we calla look at chevron's which starts at 11:00 eastern time. the big focus will be on m&a. went publicetroleum this week with its plans to buy

anadarko, a higher bid than the one that had been accepted by chevron. chevron saying they were still confident the agreed transaction would go through but analysts will be looking for more clarity on the earnings call, especially if it involves them increasing their offer. the chevron ceo will be on the earnings call to answer questions. usually just attends or since it on the first half and for your call. he will be at the call starting at 11:00. david: thanks a much to emma chandra. nell is given of date with what is making headlines outside the business world -- now let's get an update on what is making headlines outside the business world. theana: bloomberg learning chinese proposal would give less protection to u.s. pharmaceutical products they receive at home. strongerd give china a mechanism to force down prices of the world's most expensive

drug. north korea's kim jong-un warning the current detente on the korean peninsula is at risk. kim used his meeting with vladimir putin to accuse the u.s. of bad faith in nuclear talks. he told puritan -- he told the dispute with the u.s. could return to its original state. time is running out for theresa may enter plan to keep the u.k. out of european elections. she is unlikely to put her brexit deal before parliament probably will she not that ratified before the european parliament elections on may 23. that is likely to mean losses for her conservative party. 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. carol? carol: thank you so much. coming up we will talk about the small-cap space as a canary in the equity call mine. we will dig into the russell

2000 underperformance and talk about what it could say for the broader market. as we had to break, let's recap those gdp numbers. you as growth accelerating by more than expected, coming in with a 3.2% gain competitive to the 3.3% analyst number. --re was a big boost something to keep in mind as we go through the numbers. there is a look at your futures trade. still flat. that is the trade we have seen all morning long. the dollar trading a hair lower. this is bloomberg. ♪

viviana: this is bloomberg daybreak. i am viviana hurtado in the hewlett-packard enterprise greenroom. coming up on bloomberg markets, bob swan, intel ceo. this is "bloomberg daybreak." archer daniels midland reporting earnings that fell more than expected. one of the world's largest agribusinesses was hurt by bad weather in the u.s. and the u.s.-china trade war. adm also saw margin shrank. the company plans to create a new ethanol subsidiary that could be spun off. shares of american airlines are lower. the carrier cutting its forecast for the full year. a $300ing it will take million hit the earnings because of the data of the 737 max 8. the airline also boosted its

estimate of fuel costs. starbucks growth is holding charge in u.s. and chinese markets, but that is coming from higher prices, not an increase in restaurant traffic. same-store sales beating estimates in the recent quarter and in asia-pacific and china. starbucks raising its profit guidance for the is the year. that is your bloomberg business flash. david: part of the story is not just same-store sales going up in value, it is almost the number of stores there adding in china is astronomical. they can keep going forever. carol: and the potential, this is a market everybody wants to be in. david: they are trying to change all 1.2 billion people in china from t to copy -- from tea to coffee. johnson at kevin about kevin -- at about 10:00 eastern time on bloomberg. today we will take a look at small-cap stocks, which have not

kept pace with their larger counterparts. we welcome frank gannon, royce funds ceo. what is going on with the small caps? after president trump got elected they shut the lights out and since then it has been downhill. >> small caps have rebounded nicely in the first quarter of the year. i think what is happening is the earnings outlook. small caps a more domestically based. some of the sectors have had problems, health care being one of them, financials being one of them and that is put pressure on the index. the index has returned toward 16%. carol: and it is fairly on par with the s&p 500. francis: it is. it is still below its highs, we are about 8.5% below the highs. of folks look around the world and say they still like the u.s. market in terms of equity opportunities in

terms of what is going on around the rest of the world. francis: the opportunity in the u.s. is actually exciting, given the fact that many of the earnings profiles of the companies we look at generate more of their revenue from outside the united states. because of the composite, the way the index is made up, financials are a big part of it, health care, all of those are great domestic businesses. as i look at our market, the small-cap market, i see a great opportunity within small caps, especially within the value side of the market, especially with more economically sensitive businesses. david: to the need to generate that revenue to pay their debts? we are hearing there are more companies in the russell 2000 that do not have the -- francis: there are companies within the small-cap space that benefited from the policy world. theirave not changed

serial leveraging style. that has not changed. they have not fixed to the debt issue and that will be a problem going forward. carol: i'm curious about the trouble spots. have you been allocating money? thecis: health care in small cap space is one of the areas that does not have any revenue within the small-cap space. you think biotechnology companies, most people think of the large companies. in our space these are smaller companies. about 80% of the biotech companies have no revenue. carol: but they can be the potential for targets? francis: without question. the opportunity set is better in these other economically cyclical areas of the market. these ones have gotten hit because of the economic growth scares. you see 3.2% gdp growth this morning, it is a rearview number, but what we're hearing from companies, to me that is a

much more exciting area of the market. david: you make a fascinating point. if you look at the age of the companies in the russell 2000 as compared the s&p, maybe that is where the up-and-coming companies are. francis: that is a fair point. one of the things people do not realize about small-cap companies is they tend to stay small for a majority of their lives. not many grow up to become apple or microsoft. they stay small. they change. they might be acquired or spun out, but small-cap companies are not as young as you think. carol: how do we look at it? we were concerned about not seeing you move up in small caps we have seen in the large-cap space. is that a barometer of things to come? should we be worried? it sounds like you are not. francis: we are to a point where i would not be surprised to see consolidation. we have a dynamic economy in the united states carol: say that again.

robust economy in the united states. francis: not from a growth number. i think you have to look from our perspective is there always pockets of strength within our economy and always pockets of weakness. we had a time where we had rolling recessions. your financials doing poorly, energy is doing poorly, but you had opportunities. as active managers, we are trying to take advantage of those. where we found the opportunities , because of these periodic economic growth scares, which is what the fourth quarter was. capsear market in small reflective of the recession people priced in the market that has yet to materialize. david: we've been talking about earnings. what about job creation. that is where most of the new jobs are coming from. small companies. are they adding jobs or are they contracting? francis: many people believe

innovation is the sole province of the tech company in california. there is emergent -- there is innovation and smaller companies that are adding jobs and coming up with new technologies on the industrial machinery floors of many businesses in the united states that i do not think small-cap value companies get the credit for. will the political environment be supportive of the small-cap companies? francis: the political environment will be volatile. to be determined on that one. another piece of noise we will have to watch. carol: thank you so much. have a great weekend. frank gannon of royce funds. we will take a look at what is on deck next week. appled decision, earnings, more on what i am watching on this friday. this is bloomberg. ♪

carol: here is what i am

watching. we have to start with the gdp numbers. when that number crossed much stronger than forecast. we expected a strong number. 3.2% our first reading. 2.3% was the forecast. there are nuances. there is trade, there is the inventory bill. david: a lot of defense spending. carol: we have to parse those things out to get a better rate. what i'm watching is the markets and how it is taking it. s&p 500 futures, very little change. lots of big earnings this morning and last night. david: the s&p 500 has been running up quite nicely. carol: it is fascinating to see -- here is the market, i'm curious how will close on this friday. don't forget, there's so much going on next week. we have the fed meeting on wednesday, big earnings, alphabet on monday, apple also coming out, the goober roadshow begins. -- the goober roadshow -- the

roadshow the uber begins. also an infrastructure meeting with the president as well. avid: a lot for the -- carol: lot for investors to take in. overall is encouraging, better than we thought. carol: a busy friday. coming up, janice henderson cohead of global bonds. this is bloomberg coming to you from new york. ♪

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

jonathan: coming up, u.s. gdp delivering a big upside surprise , topping all forecasts. elsewhere, intel joining a growing list of american companies warning about intensifying headwinds from china just as the chinese president signals he is willing to bow to president trump's trade war demands. 30 minutes until the start of trading. we go higher on a headline gdp number and move lower as we start to kick the tires. futures still positive on the s&p 500. yields coming in for basis points to 2.50 on the 10 year on dollar weakness. euro-dollar 1.1148. the u.s. looking like the best house on the block. >> if you look at the underlying economy. >> the underlying economy is doing well. >>