powell's patience while trump once a 1% rate cut. blue skies for apple. the market focus is the sales outlook, rising services revenue, and more buybacks. trade talks productive. trade secretary steven mnuchin -- treasury secretary steven mnuchin tries to drive the deal home. david: welcome to "bloomberg daybreak." i'm david westin, here with alix steel, finally. good to have you back. alix: i felt like i was gone for a year. [laughter] beat onvs has a nice earnings-per-share and revenue, and maybe even more important, forward guidance up more than before. data point says it is going pretty well, up almost 5% in

premarket. alix: young also up. 4%, so pretty up strong company numbers when it comes to yum. that.l be looking into it looks like it is indicated higher, but we haven't had a real percentage move. david: glaxo out as well. it has a beat on .30nings-per-share, $0 lower. in the premarket, they are down just a tad. alix: running out earnings over the last 10 minutes or so, first quarter revenue is about 3% below the average analyst estimates.

you saw killer eps, though. we don't know if it is actually comparable. be it is point know when it comes to revenue, so we will see how southern co. starts trading when it opens. a little lighter trading, a little lighter liquidity. part of that is europe closed, and japan and china will be closed for the rest of the week. apple helping to euphoria in tech stocks. the dollar makes on the day. euro-dollar up by -- mixed on the day. euro-dollar up by 2/10 of 1%. how much of a dove is priced into the fed? david: we will hear from mr. powell today. we are joined by romaine bostick and gina martin adams. we will put up what apple is

doing right now in the premarket. it, thanks toaid apple, they may be bailing out the faang a little bit. it was not as bad as we thought it would be, but is this really performance of the company, or dividend and stock buybacks? : we have some sense of just how much the buyback program contributed to apple's run-up, so it is definitely a factor here. as far as the actual performance, they've had back-to-back revenues decline come but the forecast seemed to suggest they will return to revenue growth for the current quarter, so they might be rallying on that as well. alix: less bad in terms of the iphone sales. , this isll techworld

$100 billion in market cap loss. is apple enough to stabilize this? just a think it is spotty season for tech. multiple were anticipating massive beats when we came into the season. -- then you my suit get microsoft beats, intel misses. tech was expected to post pretty dismal earnings growth this year. the season is confirming that that anticipation is correct. the stoxx, therefore, our remaining -- the stocks therefore, are remaining relatively afloat. when you look at the entire space, only two have made new highs, microsoft and alphabet, and alphabet's was quite fleeting. returns to thef s&p 500 were roughly double last

year. the index itself is not necessarily as reliant on faan g's as is popularly believed. weakish portion of the market now. david: we want to take a look at what is being priced into the marketplace for the fed, which is a cut, although most people don't think they will be cutting today. romaine: i think it is common knowledge the market is way ahead of itself here. on the front end, you look at short-term treasury futures, on the aggregate basis you've got something like 400 million contracts outstanding right now, higher than what we saw at the last fed meeting, and even at the last december meeting. that shows you that the positioning right now in this market is way out ahead of itself, particularly if nothing happens. then you've got people locked into positions and you don't get

that movement with regards to other the fed funds rate or the ioer. david: getting closer. alix: to that point, what is priced into the market in terms of a dovish fed? they can't get anymore dovish unless they cut. luke: that is -- gina: that is a tough question to answer. i don't think it is accurately market.nto the equity i think the vast majority of investors i speak to are not expecting anything from the fed this year. they are not expecting the cut. that said, multiples have rallied jan what our models would suggest they should be following the direction of the 10 year. the two-year has rallied to 2.6%. that has allowed for a degree of multiple expansion in the equity market that may not be sustainable, especially if the fed starts to guide toward day hike data this year -- guide

towards a hike later this year. they might acknowledge that inflation pressures are moving higher. alix: think about those tweets that will happen. [laughter] david: the president of the united states, very subtle. at fed decision is coming up 2:00 this afternoon eastern time. alix: our third story is china and trade. mick mulvaney, white house acting chief, talking about where china and the white house are. mr. mulvaney: we are close to getting something done. on the other hand, you throw your hands up and say this is never going to get anywhere. i think you will know one way or another the next couple of weeks. i think that is probably fair. alix: reports say that might actually come at a cost, that the u.s. is backing off on some of the big sticking points like ip theft. what will happen to the market if a deal comes, but not as strong as we thought? gina: i have a bit of an alternative view on how the

market is interpreting trade right now. i believe as long as the carrot is dangling that we might come to some agreement, stocks will move higher. it is an agreement of any sort that removes the carrot from the overall language. we then have priced in all of trade and there is nothing left for us to move forward to. i don't think stocks are necessarily anticipating some widespread reaction of this magnificent trade agreement. i think we've priced that out of expectations last year. instead, it is the concept that we continue to improve incrementally towards a better relationship with china and our trading partners globally that keeps this bid. once that story is gone, we no longer have that to look forward to. i kind of romaine: agree with that, too. people are guarding for the possibility that there isn't a deal. you have to ask yourself, how much of the potential upside was priced in? if mulvaney's words come true

and the u.s. walks away, what would be a negative market reaction? you might see an immediate knee-jerk reaction come about long-term, it doesn't have legs. next week coming to the u.s., over 100 coming to washington, d.c. from china. i don't know what that says. i think they are going to outnumber us come at the very least. alix: guys, things a lot. you can find all of the charts we used in more. -- go to jide on-- go to g tv your terminal. david: now looking at theresa may, still trying to get a deal done. alix: i did not miss brexit while i was away.

david: meantime, cvs up in the premarket. they beat on earnings-per-share --e up dollar $.62 $1.62.s-per-share, this is in the wake of the aetna merger, so everyone watching this closely. alix: coming up, more on apple's upbeat forecast following a bruised holiday period. what it means for those faang stocks, next. this is bloomberg. ♪

♪ alix: shares of apple rising in premarket, up by almost 6%, topping analyst estimates even after a disappointing holiday period.

joining us is shannon cross. shannon has a buy rating on apple with a $235 price target. how did you read the market response? is it that things are less bad than we thought, or is this a huge by backstory? shannon: things are better than anticipated, and during the call, tim pointed to improving business in china during the march quarter, so linearity in the quarter improved toward the end, which leads people to feel better about the trajectory. plus, revenue guidance was above expectations. alix: still, revenue expectations for particularly iphones were maybe not great. did you get a read if the iphone sales slump is temporary versus where we will find solid ground? shannon: the whole idea is they are shifting more to a services business, and have to look at the value of the install base. certainly the upgrades are below the company's expectations over

a longer period of time because you have got to the point where things are saturated. what they are shifting to is trying to monetize that install base, and they've done it very well. it is amazing. the subscriptions they do on a quarterly basis were up 30 million quarter over quarter, and that has happened the last five or six quarters. they are out there being able to sell 30 more subscriptions every quarter. it is pretty impressive, the value of that install base. david: is this going to turn into a services company? even though they are showing substantial growth, it is still a relatively modest portion of overall business. shannon: overtime, growth is going to come out of the services businesses. it is somewhat saturated from a hardware standpoint. that being said, obviously hardware is still very important. they continue to gain share in certain areas, and they are expanding their hardware. air pods, for instance, while

not a big business relative to iphone, definitely generated revenue. as the company continues to grow from a hardware perspective, the services will follow through. david: they have now gone back to guiding up forward revenue, but even that is a relatively modest up compared to what they were doing one year, two years, three years ago. if the stock price going to reflect that? shannon: keep in mind, the stock price they gave doesn't include their video services which will be coming later this fall. extent, this is a bit of a pause year in terms of growth rate. the cash flow is really strong. they are buying back almost $20 billion worth of stock a quarter , not sustainable for a long period of time given that at

some point, you run out of cash to use at that level, but it shows the company thinks the stock is undervalued, and it is the return of cash program the company put in place several years ago they continue to adhere to. david: thank you very much. that is shannon cross of cross research. ibc's privatew c wealth cio from boston. theut of a chart now of faang's. this doesn't include the apple uptick. we actually lost $100 billion of market cap. what do you make of this overall? there was a lot of focus on earnings coming into the first quarter, with generally pessimistic management guidance. companies in general have been able to leap over that low bar. i think there's probably a little less pessimism built into all of the faang stocks, and we

are seeing hypersensitivity to quarterly earnings. i don't think there is a trend here. it really is idiosyncratic company by company. alix: how long does that last? how long do we stay idiosyncratic, even as some of the metals -- some of the fundamentals aren't in place? dave: ultimately this year, the fundamentals are taking over, not just for technology, but for most sectors. compared to the beginning of the year, we've got more positive news in terms of the economic growth outlook. we are seeing revenue growth coming indecently as a whole for the first quarter. we have certainly gotten better news in terms of the interest rate outlook. markets,in the overall including the tech sector, year to date make a lot of sense. we believe there is room for similar upside over the course of the year. alix: you pegged it, interest rates.

we will talk about that. dave will be sticking with us. recent inflation readings indicate any rate cut on the rise and -- on the horizon? how will they address president trump's tweets? this is bloomberg. ♪

latesttoday we get the fomc policy decision, with the market supposed guest -- with the market focused on inflation. we welcome now michael mckee, policyrg's international correspondent. dian is still with us. what is the fed going to do, if anything? they are going to continue to monitor. i saw your charts. i'm going to raise you one.

it is the seem chart you have come a but i took it back farther. -- you have, but i took it back farther. those inflation figures aren't at all outside the bounds of where they've been for a long time. they are even in the range of the inflation figures before you go into the last recession, before the fed had to do anything. at this point it is unlikely they will do anything at all. the one question out there is what will they do about the rise of fed funds trading above the ioer level. that is something jay powell is going to have to manage. alix: oh good, ioer. when you take a look at what mike is talking about and look at market expectations for an actual cut by january of next year, what is the biggest mispricing the market? equities, bonds, or currencies?

the: of the three, i think dollar is probably a little on the high side. i don't expect a rate cut in that timeframe. i think that while certainly the inflation numbers, the fed is going to have to address that , as michael pointed out, it is really not now. they are going to have to sort of massage that language. basically, they have reason to have high confidence in the outlook for economic growth here , especially with the first quarter gdp reports. i think they are going to be content for many months to essentially do nothing. david: michael, why don't they just address the issue of inflation by changing that target? what is so sacred about the 2% target as a practical matter? we have real wage growth growing, which is reducing the disparity between the rich and the poor, some think they have wanted to do. we have gdp growth coming along. why do we need to present? michael: their mandate -- why do

they need to percent? michael: their mandate calls for it hasinflation, and been relatively stable compared to what it used to be. they want to figure out ways to generate inflation as part of their year-long lookahead in what they are going to be doing. for jay powell, it is kind of a communications issue. how do you convince people there isn't a danger of deflation right now. 2%?d: but why is it why can't stable inflation be 1%? michael: when they put the whole thing together, they decided to percent would incorporate the kind of inflation movement that you see on a regular basis, without being too high. there's a concern that if you did 4%, which some people suggested to try to build inflation expectations, that that could lead to inflation getting too high. they looked at 2% as ineffective number. but -- as an effective number.

look for people to question jay powell today if it comes up. alix: it will come up, i'm sure. going forward, is a do nothing fed good enough to keep supporting the market at this level? dave: i think it is, primarily because i think we are beginning to see an uptick in earnings of patients -- earnings expectations over the course of the year. about half of the companies reporting earnings are up. i don't think all of that is in the market. if we have relatively stable interest rates and better earnings, there is room for at least more modest upside in u.s. equity valuations. alix: if president trump has his way, he would like the fed to cut rates by one percentage point. way? at all right in any

the real rate is now above the neutral rate of interest. does that tell us monetary policy is in some areas tighter? michael: it tells you it could be a little bit tighter, yes. however, you have to choose your measurement of what the neutral rate is. it is unobservable, so the fed. only guesses. with this one month -- so the fed only guesses. to neutrallly close at this point. it is not the kind of thing reta rding the economy at all. they do not think they are slowing the economy. a 1% rate cut would be very dangerous, they feel, so we are not going to see that. jay powell's best friend today, william barr. if he can make some news, jay powell would like to make none. david: there is a chance the attorney general will make some news, given the controversy over the mueller report. as a practical matter, why

shouldn't the fed reduce rates? it is not the absolute number, but certainly the relative number we are sure about, that is a lot closer to a year ago. michael: they are afraid of goosing the economy too much. ,f to get things going too fast that could be a concern for the possibility of bubbles forming in asset markets. alix: thanks a lot. -- davee obedient donabedian will be staying with us. the fed decision is coming up at 2:00 eastern time. this is bloomberg. ♪ alright boys, time for bed.

listen to your mom, knuckleheads. hand em over. hand what over? video games, whatever you got. let's go. you can watch videos of people playing video games in the morning. is that everything? i can see who's online. i'm gonna sweep the sofa fort. well, look what i found. take control of your wifi with xfinity xfi.

let's roll! now that's simple, easy, awesome. xfinity xfi gives you the speed, coverage and control you need. manage your wifi network from anywhere when you download the xfi app today. ♪ alix: this is "bloomberg daybreak." just catching up. a lot of markets are going to be closed.

europe and most of asia are going to be closed. dow jones and s&p futures higher. what is trading is the ftse, pretty much flat. growthget disappointing in the vix, flat as well. what i am watching is going to be the dollar. it is mixed on the day, but i am very continually confused as to how it continues to be so strong in light of a dovish fed. what is leading the dollar higher? david: i think a lot of people are asking that very question. alix: is it differentials? is it going to be worse growth elsewhere? david: europe doesn't hurt. europe is not growing very fast. alix: wasn't it less bad or something? david: less bad, but overall not great.

viviana hurtado is here with first word news. viviana: wikileaks founder julian assange was sentenced to 50 weeks in jail for jumping bail. he was avoiding extradition to sweden for sexual assault allegations. last month he was arrested after ecuador revoked his political asylum. the u.s. still wants him on conspiracy charges. you are taking a live look at the bridge prime minister's cuban day -- q&a period, feuding question before our limit -- before parliament. she will discuss where things go next. bloomberg learning may once talks with the opposition labour party about a compromise to be wrapped up next week. u.s. secretary of state mike pompeo telling foxbusiness military action is possible as the u.s. doubles down on its support of venezuelan opposition

leader juan guaido. guaido continuing to call for supporters to rally in the streets in an uprising against president nicolas maduro. hours later, military leaders were still standing by maduro. 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 viviana hurtado. this is bloomberg. david: thanks so much. for more on the venezuela story, we welcome a lecturer at columbia university's school of political affairs, and founder of think tank global american. good to have you here. we started yesterday with a lot of turmoil in venezuela, but conflicting reports. at the end of the day, it doesn't feel like much has changed. what do you know? guest: it is still in flux. obviously yesterday was a very chaotic day.

with indication that the military support is crumbling. the armed forces is critical to maintain power. we know that maduro is still in control. to secretary of state -- [indiscernible] alix: it looks like we are having some connectivity issues there. just for -- christopher sabatini, we will say goodbye to you for now. we want to welcome in damian s assower. what does this mean? very fluidis a situation. a man who was on house arrest

for some time was standing with wide-out -- with quite a -- with guaido. he is a figure the maduro government has really rallied against. to see him on the pulpit adds a little bit of a twist and new element. countries that have gone through an economic contraction the likes that we have seen in once a regime change does take place, that is whatever everyone is playing for. that is what everyone is looking for today, but it is a very fluid situation. right now on the ground, things remain disparate. david: is there any trading in venezuelan bonds at this point? no, you actually cannot trade in the bonds. and there is no and if jp morgan will not clear those traits right now because you cannot

sell to a u.s. person. coming this summer, they might be a limiting -- they might be eliminating venezuela from its bond index. agentss or custodial will be on hand to clear them. david: please day with us. want to turn from venezuela now to another place that we are really focusing on if you are investing globally today, and that is china. trade talks wrapped up in beijing today, and secretary mnuchin called them productive. but chief of staff mulvaney was sounding somewhat different. some point inat any negotiation, you realize we are close to getting something done. on the other hand, you throw your hands up and say this is never going to get anywhere. i think you will weigh one -- you will know one way or another the next few weeks. still with us is dave donabedian. are the markets overpricing this? dave: a little bit.

my best guess is we do get an agreement in principle, followed by a formal agreement sometime in the third. i would probably put a 60% likelihood on that. markets are probably at 80% or 90%, a little too much complacency. even if that scenario does play out, we are not done with the drama. i could see a scenario where, between the agreement in principle and the formal agreement, there are some last-minute changes and saber rattling back and forth. i think the idea that the trade issue will be behind us by midyear is a little too optimistic. we have to remember that there are other trade issues to follow. there is the gratification. of newhe ratification nafta, which doesn't have nearly the votes to pass in congress. alix: not to mention what is

happening between europe and the u.s. there are indications that president trump, more desperate to sign on a deal, will back off on things like ip theft. what would be the applications? gauge: it is hard to what has been priced into the market with regard to trade talks and what hasn't come up at there is no question there is a sense of complacency within foreign-exchange writ large, not just in dollar you on -- dollar-yuan, but with any em currency. thisu mentioned earlier, persistent dollar strength is something a lot of very smart people are struggling to wrap their brains around, myself included. the dollar has really held well. is a huge disparity. the gap has widened to just about all-time wide. demands maybe hedging up. david: to become on alix's

questions that the u.s. may be backing off of demands, in part because president just once a deal, should we be distinction between the trade and the investment? the trader might say just as long as you've got a deal, i'm happy we don't have a war. the investor might really care what that deal says. dave: i think that is a great distinction. i think you are right in the short term. the trader should never be taken for a policy wonk. the issue is can we de-escalate the situation, and the details don't matter. the problem is when you look at the perceived fundamental inequities in the trade relationship, it will matter for companies and their ability to do business in china, depending on whether you get some fundamental reform in the areas of intellectual property, for instance, or not. it is important long-term. alix: the backdrop is potential

china stimulus. the more disappointing that is, the more that is going to be talked about in the market. as that feeds through to the rest of the world, if trade gets somehow resolved, is that going to bring dollar week this -- dollar weakness? damian: in a sense they are trying to target small and medium enterprises of the dimmest economy that are really -- the domestic economy that are really lagging. unfortunately, the spill over into emerging markets and global economy is going to be constrained. that is something we are looking very closely at. i don't believe china stimulus has the same impact it once held. i think you will see that even after these trade talks. david: that takes us to the next step. let's put aside the trade a part of china. what about the real economy and what is really going on over there? how does that express itself to

a u.s. investor? investingthink about in china or the emerging markets generally, you've got to start with the chinese economy. it is the second largest in the world. i'm a little more optimistic that the things they are doing are likely to lift economic activity in the second half of the year. you seen some pretty meaningful cuts in both personal and business tax rates. bank has the central done some targeted accelerated credit extension, infrastructure spending since they have gone back to the old playbook, which has shown its ability to work on a cyclical basis. i think the somewhat improving outlook for the chinese economy the second half of the year leaves the emerging markets in pretty good space. in our asset location work, we are very much overweight the emerging markets versus the developed international markets, where you just continue to see a lack of growth, particularly in europe and japan.

alix: is that also contingent on a weaker dollar finally coming into play? dave: i don't know that the emerging markets need a weaker dollar to perform well, but i would agree with the earlier comments that where the dollar is now is sort of surprisingly strong. the dollar reason keeps appreciating, that would be the biggest rick to the -- biggest risk to the outlook. alix: guys, thank you very much. coming up, steve cohen once some more. the billionaire seeks more money billion last $5 year. this is bloomberg. ♪

♪ viviana: this is "bloomberg daybreak." , anng up in the next hour exclusive interview with tim ceo.e, norfolk southern's viviana: the bank at the center of the estonian dirty money case built up enough capital to make up stock dividends. the scandal over money laundering led the bank last year to lose roughly 50% in market value. in the u.k., lloyd banking group has been given more breathing room on its capital requirements. that tears the way for a higher shareholder payout. the change stems from a revision from the bank of england that could free up about $1.3 billion in excess capital. society jenna rao -- society

ete generale soci plans to slash its staff in paris. there will be about 200 job cuts in the markets unit. that is your bloomberg business flash. alix: thank you so much. ouch. david: i give them credit. it may be the right or wrong decision, but so many companies, as well as banks, say there is a problem and nobody does anything about it. they said we are going to pull back. alix: fair, but maybe there's also going to be a dispersion now. we talked a few months ago that certain banks are starting to hire again, so you really see where you're going to be bleeding workers in certain banks. david: but it sort of makes sense. if you are not big enough to be a jp morgan, specialize. pick your niche. pick the high ground you can defend and go for that. alix: totally fair.

we are just still unsure what do jamaica's trying to figure out, right -- what deutsche bank is trying to figure out, right? david: we turn now to wall street beat for what wall street is buzzing about this morning. plus, after deploying $5 billion last year, steve cohen's hedge fund makes for more. greenlight capital suffers its worst year on record. finally, ken griffin blasts socialism, calling its track record one of "complete failure," saying taxing the rich isn't the solution to income inequality. not a huge shock that mr. griffin does not like socialism. [laughter] alix: joining us now, peggy collins with u.s. investment coverage. let's start with steve cohen. i thought he was just running his own money? david: did you really think

that? [laughter] alix: i really did. peggy: it's fair because last year he was. alix: thank you. stuart: he certainly did come back last year --peggy: he certainly did come past lack -- come back last year. last honest, in returns year, it was mediocre, about 1%. but it looks like he is up about 5% this year. he opened up last year after being out of the game for about two years, gathered about $5 billion. now he is saying i am looking to raise another $1 billion. david: i thought when you said --was charging a fair amount he's proud of what he does. peggy: that's right. when he was running s.e.c. capital advisors, they were

running about 30% in annual returns. where he is at now is different from the expectations that many had come about certainly looks like he's confident enough to go back out to the market and say i'm ready for you. david: let's go to david einhorn now. he had a bad year, really got beat up last year, and really doing better this year. why? peggy: some of those long positions are helping him out. he had a terrible year in terms of the loss of about 34%, happening in his longs and shorts. he is coming back with some of his longs. he had a letter out to investors earlier in april that he is , basicallyla thinking the wheels are coming off. david: they are down quite a bit from the top. peggy: that's right. it seems like some of the longs and shorts are coming back for him.

to that point, it seems like we are seeing things move was not as much correlation worldwide. that should be good for guys like this, and that is kind of the point. peggy: that's right. when things are all moving in the same direction, they can't really stand out. now they have a chance to show they have their best in the right places. is he my favorite thing said i'm going to take money again because there's no danger of being too big after he shrank drastically. [laughter] david: ok, we will take some now. alix: well, let's talk about what everyone is talking about, and that is what is going on at milken. the headline that caught me is ken griffin talking about taxing the rich yesterday. >> if we look at the alternative socialism, we know the track record of that.

the failed history across cuba, across the ussr, now real-time in venezuela. alix: but also, please don't tax us. don't take our money. it won't help you. david: we need the money. alix: didn't he buy a million different homes? david: most extensive home in the history of the united states of america. peggy: he basically said poking the bricks doesn't -- poking the rich doesn't help, but he stands out against ray dalio earlier, who said that capitalism is flawed. david: but this is a strong man, to summit -- a strawman, to some extent. ray dalio is not seeing let's be socialists. he just says we can do a better job on capitalism by restraining it some. peggy: people are going to get more frustrated. he's calling for some redistribution of taxes on the wealthy, but not a radical socialism change to that effect.

what griffin did really .2 in the interview yesterday was he things what is broken in the u.s. is the education system. 22 student loans, but some people say those have helped -- pointing to student loans, but some people say those helped. alix: which no one is doubting, it is just a matter of how you pay for it. then you have the parties. talk about income disparity. apparently at milken this year, there is a puppy area where you can go and hug a puppy. peggy: why don't we have that here? david: i'm worried about the puppies. how much fun is it to be a puppy with all of these people running around? alix: it depends on the puppy. gong thing, a sound fast. yoga at dawn, apparently.

theses normal to have things? peggy: they do at a lot of these kind of conferences. they try to make it a holistic experience. david: and part of that, i happen to know there were some pretty fancy parties in fancy mansions. alix: but did they have puppies? david: i don't believe so. a lot of expense of art. alix: it has been shown to focus and elevate your mood. apparently there was an oil conference a couple of weeks ago that had a yoga thing where you could get up in the morning before you talk about fracking, no one was going. david: is that right? [laughter] alix: we are good. we don't need yoga. david: many thanks to bloomberg's peggy collins. coming up, trump's latest pix

for the fed are looking grim. stephen moore's chances for the fed are but i'm looking at. this is bloomberg. ♪

david: here is whom i'm watching today, it is stephen moore. we had him on the set with us. president trump said he would like to nominate him for the federal reserve, but it turns out he's having some trouble. remember, herman cain was the last one up. he's had to withdraw. nothen moore said he's withdrawing, but we now have three republican senators who have expressed doubt over things he said in the past. for example, women shouldn't be serving beer at professional sporting events, and that maybe child labor laws are not such a great idea. we've got now three republican senators saying they have questions. alix: but none of it has to do with his actual economic theory and policy.

just his personal believes in other stuff. is that a good reason for not approving a fed? david: for advise and consent, they can do it for any reason they want. senator shelby, who never really speaks out, saying there are problems. joni ernst saying it would be a no. alix: this is more in the politicization of the fed. david: and why does the president want him? because he wants to cut rates. he said he wanted cut a full percentage point. alix: coming up in the next , and mark stovall principal global investors' glob al investment strategist. this is bloomberg. ♪ this is bloomberg. ♪

♪ alix: powell's patience.

cut --nce a 1% rate wants a 1% rate cut. plus, we have an exclusive interview with norfolk the potential on to $.3 trillion infrastructure plan. potential 2.3 million -- potential $2.3 trillion infrastructure plan. 1 is international labor day. not here, but over in europe. markets are closed, a lot of things happening. alix: we don't usually see protests and marching on our labor day. david: international labor day ,s much more of a workers organize labor, and even marxist and leninist, thing.

this goes to the heart of the workers and their protests. we also saw in athens, street demonstrations. it is a tradition that goes way back. alix: we could really rake in some cash for lunch. the majority of europe is closed, as well as asian markets, china and japan closed for the rest of the week. apple optimism helping support s&p futures. he also had a deep selloff in the faang stocks yesterday. it is a mixed dollar story. euro-dollar up by 2/10 of 1%. what kind of fed news is priced in? yields go nowhere. crude down by's extensive 1%. maybe the venezuela -- down by 6/10 of 1%.

maybe the venezuela situation is contribute in. david: at 8:30 this morning eastern time, the fed announcing -- announcing refinancing plans for the quarter. general, attorney william barr begins his testimony on his handling of the miller report. at 2:00, the fed releases its latest rate decision. we are going to have a very special program here, but as mike mckee said, probably jay powell is hoping william barr takes all of the oxygen out of the room. alix: what should investors really care about with this? david: there's a big fight, as you know, about whether mr. mueller wrote to mr. barr and said you are misleading the emerging public. the question is, is this -- the american public. the question is, is this really going to distract?

we had infrastructure yesterday, chuck schumer a nancy pelosi saying we are going to work on $2.3 trillion with the president. can the democrats go after central impeachment at the same time they are working on -- after potential impeachment at the same time they are working on infrastructure? alix: in the markets, shares of apple are rising, up by about 3% over the last four days. forecasts topping analyst estimates. we have our analysts joining us. what happened in china with iphones was better than feared.

the optimism and stimulus that was going on in china certainly helped. services continues to do what we think services should be doing. you and i spoke a couple of weeks ago about services specifically, notwithstanding the fact that with 16%, we need to remember it is 20% of revenue and one third of gross profit. the chinese sales, they are talking about revenues going up. they are not saying how many units they are selling. how much could affect the overall apple strategy if they are having discounted prices? mark: certainly discounting prices for demand something they thought they need to do. i will say, having the elimination of giving us exact units is a bit troublesome. that is a bit of a knock on apple, that they have taken it away. in many respects, i think you could view the iphone as an annuity. therating cash, but

services over the long term really should carry the day. alix: market sounding optimistic. how much do you buy that because of a buyback? >> i think there's two sides to the story. a lot of these earnings could go higher and make markets happy. think the china story is very important. i am out the milken conference this week. there's a lot of optimism about china, and i would tend to agree. we have had some concerns over recent weeks that the year is a pullback. i would consider as you are taking your foot off of the accelerator instead of putting on the break, we should -- the brake, we should continue going forward. thet of this guidance, forecasts have been downgraded so significantly that beats were very likely.

it is the companies that have actually disappointed on forecasts that are getting beaten up. the ones that are beating the forecasts are doing really well. maybe that is similar because people got a little bit too negative about q1 numbers. david: mark, what about it? are we being spun a little bit? we had bloomberg talk with a close follower of apple, and this is what he had to say. >> overall, it is definitely not pretty. i think we've got some tough times ahead, to be honest. we are looking at 2020 as the beginning of the real recovery for the overall markets. they've got challenges ahead, but that is not to say anyone should rule them out by any means. david: really being bullish on them. are we being spun up by apple a little bit here? did they guide down enough that they would look better? mark: i think there is certainly something to be said about that. your prior guest said that companies have done a good job.

i think in the market right now, the companies have done a good job bringing expectations down, and i think that is important. but again, i love this is sentiment. let's step back and thing about a complete netflix. netflix gets a lot of room because it has a big user base. apple has 900 million users. it is a big number, a big base. i believe that management, number one, was very good in actually telling you that they believe the stock is undervalued. the dividend increase was relatively small, but the buyback was big. they think it is an undervalued stock. again, as i said a couple of weeks ago, the services business, it is a long game. as long as they continue to make progress on that, and they do need to, we think it could be a stock that could be rewarding for shareholders. seema, broadened it out

for us for a second. about $100s lust billion -- lost about $100 million in market cap. does this help in that regard? of its impact on the overall market, i think it is a little bit faded for fangs 's overall.for faang ab that is a trained we should expect going forward. this stock is consumer facing, and consumers can sometimes be fickle. tech is more enterprise based. mark: when you ask any individual investor what do companies do, they are unlike you talk about -- they are

unlikely to talk about things that they don't use. i think what is also important tended to faang, it has to trade together somewhat, but i really think over the last couple of years, it's decoupled a bit. the issues at facebook, the or apple orogle amazon, really are pretty separate. i think there is an expert patient they will go together, but i think each of them have their own issues, and really should be looked at separately. and seemak stoeckle shah will both be staying with us. we turn now to viviana hurtado was first word news. viviana: u.s. secretary of state says that military options are continue theiry

backing of venezuelan opposition leader juan guaido. yesterday he called for the people to join him in an uprising against president nicolas maduro. the u.s. wrapping up the latest round of trade talks with china. u.s. treasury secretary steven mnuchin calling the discussions "productive." talks resume next week in washington. earlier, the white house warned it is willing to walk away from negotiations. still, by the middle of may, the ministry she wants to reach a deal. facing prime minister questions about her brexit strategy in public and private sessions before members of parliament. she will also meet selected numbers of her cabinet to discuss where things go next. bloomberg learning may once wlks with the opposition may -- may wants talks with the

opposition labour party. 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 viviana hurtado. this is bloomberg. david: coming up, treasury secretary steven mnuchin called the latest round of trade talks productive. we will discuss where things stand with republican senator and former u.s. trade representative rob portman. this is bloomberg. ♪

♪ david: the latest round of u.s./china trade negotiations have concluded in beijing today, with the next one scheduled in washington for next week. we welcome now republican senator rob portman of ohio. great to have you here. sen. portman: thank you for

having me. david: we heard the trade secondary say it was productive, and the acting chief of staff say they may have to walk away. what are you hearing right now? sen. portman: we are hearing about a schedule of reducing tariffs, which is a good thing. we still have big issues with china in the deficit, subsidies, and inlets will property. my hopes -- and intellectual property. my hopes are that these are resolved. i am hopeful. being willing to walk away is important, especially in negotiations like this one, but my hope is we will be able to make progress. david: you talk about structural issues such as intellectual property. we have reports out today saying the president may be backing off some requirements about intellectual property, about data handling. if you were to evaluate it right now, is the bigger risks that we don't get a deal or that we do a

deal that is too easy for china? sen. portman: i don't think bob lighthizer or steven mnuchin, particularly lighthizer, who is pretty tough on these issues, are going to agree to a deal that doesn't have some structural changes. one is the requirement that when american companies go to china, they are required to have a 51% chinese partner. that is a pretty supple fix. what happens is the ip tends to get transferred to the chinese company. inlets will property problems -- intellectual property problems exist in other ways, too. it is not just the hacking, which we know about, for the chinese government to stop come up and some of it is private. it is these regulatory issues that are in place. i think that can be handled, and should be. i think china is not just creating issues for u.s. companies, but other

companies around the globe. i was just in southeast asia talking about similar concerns. david: you were the trade were presented to for the united states of america. if you were in ambassador lighthizer's shoes, would you keep all or some of the tariffs in place? portman: it sen. will be this is harry to keep some in place, including those we have put on more recently, but you should have an agreement this has those can be reimposed immediately. that is the consequence. i think to get the right agreement, you reduce the tariffs immediately, even illuminate them over a -- even illuminate them over a p -- eliminate them over a period of time. david: another subject on the

agenda is infrastructure. we had the democratic leaders of the house and the senate meet with the president and tell us they've agreed to a $2 trillion price tag for this. they are going to take three weeks to figure out how to pay for it. you were director of omb, managing the budget. how do we pay for a bill that is that high? sen. portman: it depends how that money is supposed to be found. we've been trying for a couple of years now to find on $.5 trillion, unsuccessfully, so this would seem to be harder -- find $1.5 trillion, unsuccessfully, so this would seem to be harder. if you speed up the implementation of infrastructure projects, which is a huge problem right now -- as you for, it can take years these to come to fruition -- that is the problem. there are other ways, by using tactics into halves, using

state and local options with the u.s. government as a partner. it can be coupled together to come up with a $2.3 trillion number, but it is not going to be a $2.3 million corporation. frankly, i don't think most republicans or to impress will be willing to add that to the deficit. david: we are very mindful of venezuela right now. it is a little hard to know what went on yesterday. a lot of chaos, a lot of demonstrating. what do know about what is happening? more important, what should the united states be doing or not doing? sen. portman: i commend the people of venezuela for being strong, for staying out on the street and aspiring toward freedom and democracy. in the last 24 hours, if i understand it, there has not been a successful transition of power. maduro is staying in power because of his cuban and russian

supporters there with him. some embers of the military have not been willing to come over to the side of the people. however, i think it is heading in the right direction. the united states government will continue to support guaido and the legitimate aspirations of the people. under the constitution, the parliament is able, if there is a sham election as there was, to appoint an interim president. this is keeping with their government, and therefore is not a coup. it is the rightful transition of power that ought to occur. the other thing we need to do is continue to use our allies in the region who are supporting. there are a few who could do some more, but there are people now around the world who are looking at this and realizing that this is not a coup. it is not the united states imposing on the venezuelan people. it is the venezuelan people themselves who are standing up. by the way, some of them are also leaving the country by the

millions, so that is certainly a sign that the current government is not serving the people. david: a lot of suffering going on down there in venezuela. senator, thank you. that is republican senator rob portman of ohio. alix: we have some breaking news from adp, overall beating estimates. you had 275 thousand jobs added in april, crushing the estimates. you do have some movement in the market, the dollar bouncing off of lows of the session. buffett adding his power to occidental's bid for anadarko. more on how this changes the bottom line. this is bloomberg. ♪

david: time now to look at three companies worth watching this morning. first of all, tesla borrowing money. elon musk said he didn't want to borrow any more money, then at

the last meeting saying maybe they should. the real question, how much is it going to cost? like last bonds were 5.25%. this time they may be about 9%. alix: there were credit sales missing in the earnings call. somehow is missing. david: a chunk of their revenue came from selling credits, and they were not clear about that. that is not being straight with us. alix: i am watching uber. the company selling 180 million shares, anywhere between $44 and $50 a share. how do you draw good comps for this? unlike any other business we've ever seen, we just have lyft. how do you do that? david: what do you learn from lyft? alix: apparently nothing good, according to this ipo. david: it is at the bottom end of the range.

alix: for a third company story, we are watching anadarko. berkshire hathaway the occidental bid. us is one analyst who owns all three stocks. do you think that this bid makes chevron's bid obsolete? mark: i don't to get mix it obsolete. to begin with, it is important to know this is expensive financing for occi. it is a great deal for berkshire, but i do think it is expensive. we would expect chevron to come back with a higher bid. let's also remember the original $76 is probably more like $74 because the share price has gone down. we don't believe that chevron needs to get there to get up to that number, but we believe it is a superior combination of chevron and anadarko.

we think that shareholders may also believe that. david: warren buffett an advantage. does chevron have an advantage? i think the market might be overestimating that this is a great thing for occidental. as i said, it is a wonderful thing for berkshire. , it is a wonderful deal. even today, we think that you have reduced or significantly reduced your margin of safety. it is a very levered company. they have to do a lot of things right in a commodity environment that still could go down. we don't know where crude is going to go. your margin of safety with an occidental bid we think is significantly lower than chevron. alix: if occi wins, are you

selling anadarko? mark: we would not want to own anadarko at that point. we would sell it. alix: great to get your perspective on this point, mark stoeckle of adams fund. you will be sticking with us. this afternoon, do inflation readings indicate rate cuts on the horizon? what is priced into the markets? how much more dovish does the fed need to be to support equity levels? an updated price target for morgan stanley. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. yesterday at a record despite the fact that fang stocks. hit hard. the longest monthly winning

streak since september. todaydelivering results to help the street feel better. in other asset classes, a mix to dollars story with the dollar off the lows of the session after adp crushed it for april. flatter, about 22 basis points. there is a lot closed over the next few days. europe is closed today. not a lot of action and you will have a lot for the fed to take it comes to what it will have to prove to the market and how dovish they will have to be to support the market. we haven't treasury refunding announcement coming out as well. andmuch they will borrow where across the curve. it looks like they will option

19 billion -- and $27 billion in 10-year note. during -- noup real step up. david: that is the big issue. it is coming up, we do not know if it is in september or october. we have debt ceiling we are bumping up against. alix: that is why they cannot increase what they will be selling. the debt limit, they are like let's raise it. david: that does not mean they will borrow less, it means they will wait longer to borrow it. it is time to find a what is going on outside the business world. we turn to viviana hurtado. viviana: in paris, police are using tear gas to control today's demonstrations. havew vests protesters been demonstrating every weekend and joined a traditional labor union march. they show their rejection of emmanuel macron's economic

policies. --ald trump a pairing appearing to designate the muslim brotherhood as a foreign terrorist organization. that would lead to economic sanctions. egypt's president el-sisi asking president trump to make the designation. the muslim brotherhood winning elections in egypt after the air uprising -- after the arab spring uprising. the rain of the new emperor of japan again quietly. he ascended the throne a day after his father abdicated. there will be a more extravagant celebration in october. his role as purely symbolic, he has no political power. his first major diplomatic task will be to host president trump at a banquet. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg.

david: the fed announced its latest rate decision with patients still the watchword. for a preview of what might be coming, we welcome michael mckee. take out your crystal ball. what will we find out? out the we will find fed's keeping an eye on inflation but not a lot else. let me throw up a chart similar to yours. i replaced the headline pce headline with core pce. the white line did turn down the last month, but it is still within the range it has been for many years. they are keeping an eye on inflation but it is not a real concern yet, not a reason why they would want to cut rates especially without blue line showing growth is still strong. quarter,or the first you really need to be cutting rates. david: in the study of ethics, they showed -- they say you

should not talk about a lot to do something unless you can do something. michael: that is one of the tough questions. even if they cut rates, would it do anything to generate inflation? that is why they are doing a year-long review of their policy deceived there is another way to push inflation higher. no proof we will see any kind of inflation over the long run. that is a question for them. if they do something, will it have an impact? the real question is do they do anything about the fact that fed funds are trading through the excess reserves level. that is a concern in the markets and part of the communication problem for jay powell today. mckee,bloombergs michael thanks so much. he will be part of bloomberg special coverage of the fed decision this afternoon at 2:00 eastern time. alix: still is is is mark soquel

of adams fun. -- of adams fund. the market indicates you are looking at a cut by january of 2020. you can see markets lowering that expectation for fed on raise. based on that, how mispriced is the fed in the equity bond market? see how thereto will be a fed rate cut at this stage. if you assume chinese growth will be picking up, which is consensus forecast, there will be keeping up pressure for u.s. growth. you have a very tight labor market which at some point should be bringing inflation pressure through. growth has been good. how can they have a rate cut? the equity market is high -- if they are expecting a rate cut,

historically the first rate cut has been a red flag for equity because it indicates -- there may be a knee-jerk reaction of there was a fed rate cut, but the markets are thinking what the fed knows that we do not know, that is when market anxiety tends to kick in. i think the fed will be staying on hold. the data they will be receiving, if anything says to me there is no pressure for the fed to move right now. growth is strong, inflation pressure is subdued. alix: exactly. if there is a shift in policy from cuts to neutral, what kind of equity shakeout do you expect to see? be interesting if that happens. i think fema is absolutely right on. when you look at the facts and try to put out the noise, it would be hard to think the fed would cut. what is more interesting is what

michael said earlier, which is it the fed continues to work on how they want to position what they want to do with inflation. david's question is good. to doe not been able that, so should the fed be looking differently at that? seema is right on. it is hard for us to think the near term. david: we were talking there's going to be a cut, the market is saying there will not be much change at all. this chart that shows volatility, we are doing for a record levels of shorts. the white line is shorts. the market does not think it is moving either way. seema: absolutely. that makes sense. , youu see the data role in have the job numbers we have just showed. what is the incentive for the fed to cut rates? it is more interesting to say what would trigger those fed rate cuts coming through.

one thing i will see is if china fails it does not lift up the global economy. you continue to see negative earnings numbers for large u.s. multinationals. maybe that would be something. if the inflation pressure continues, there is no reason for the fed to move. the other thing is if growth continued as it does and you do eventually see inflation pressures pickup, i would point to earlier this week that we had christine lagarde talking. why isn't inflation picking up? she said it is a mystery. you have the head of the imf saying it is a mystery. at some point inflation pressures may come through. at that point, what does the fed do? does the fed come under pressure to raise rates? alix: it is a mystery. great to see you both. david: coming up, reading the u.s. economy through the railroads. we will be joined by norfolk

southern ceo next on today's economy -- today's installment of the real economy series. live from new york, this is bloomberg. ♪

viviana: this is "bloomberg daybreak." i am viviana hurtado in the hewlett-packard enterprise greenroom. dirkg up, dark mandolin -- vanderlit. alix: time for follow the lead. a deep dive into stories making headlines and moving markets. all this week we are taking a look at how the u.s. economy is doing by talking dizzy years of companies who need to navigate through it. railroads play a pivotal role in the u.s. economies, transporter

everything from commuters -- from computers to call to their final destination. to give us a rundown on norfolk southern's performance, cure is bloomberg's abigail doolittle. railroads have been the backbone of the u.s. economy for 200 years. norfolk southern is one of the biggest publicly traded railroads right now. sincerely price 1980's has been a towel on the economy and the stock market. take a look at the chart going back to the early 1980's. in white we have the share price of norfolk southern and the white is -- and the yellow is the s&p and the other line is the gdp. at some points there in areas where there has been a lead to andpositive, in 1994 norfolk southern when peak in

1990 as opposed to the broader markets in 2000. a tell on the downturn. in 2008, the stock market dropped first and then in 2015 norfolk southern a lead. the reason the shares are a leading tell on the stock market and the economy, take a look at this. in white we are looking at carloads coming out of the great recession in the correct direction. in blue we are looking at earnings per share and we see both are going in the right direction. more reasonably, earnings are outpacing carloads due to operating efficiencies at norfolk southern on. this is a chart going back to 2011. in blue, the isn manufacturing index. in white, shares of norfolk southern going in the right direction. right now we are looking at a divergence of shares of norfolk southern outperforming the ism manufacturing index.

david: thank you so much to abigail doolittle. we welcome jim squires, norfolk southern ceo and brooke sutherland, bloomberg opinion columnist. outperforming the volume as well as the isn manufacturing. is that what is driving that? we are working on a new plan that combines growth and efficiency. you become more efficiency but you also pursue growth. rates: how do truck impact your ability to raise prices? of truckcutting-edge rates has softened recently. the non-asset-based transporters have seen some softening truck rates. historically speaking, truck rates are high and trucking remains tight. and have afrom that big business which plays into the trucking sector. keith: you mentioned -- brooke:

you mentioned your new land that adheres to the principles of precision railroading. you've seen that adopted across different railroads. at what point does that start to swing the pendulum toward rail and take more share away from the truckers as an industry jim: ? that is our goal -- industry? jim: our goal is getting freight from the highway to the railroad. we have broadened our volume spectacularly. our new plan calls for a continuation of volume growth. that will be in the lead as far as growth is concerned. we are pursuing efficiencies and aiming for a lower operating ratio. david: how much is the government helping you by not fixing the roads? typicalit is more more difficult for truckers as a practical matter. jim: anything good for the american economy is good for the railroad. any infrastructure bill, we would benefit, perhaps directly in the form of partnerships with federal government agencies and

through the products we are. -- the products we own. alix: how is business? jim: the economy is on a solid footing. compared to last year, the growth has slowed. from the perspective of 2019, we are feeling good about the economies of our customers. brooke: to go back to your operating plan, other roads have done this, not always with success. norfolk southern's approach has been called nicer. i wonder if you could talk about that in the feedback from your customers as you push through new efficiencies. jim: as we implement the new operating plan, we are working closely with our customers. our difference will be to take a collaborative approach with our customers, letting them know the changes that are coming and bringing them into the process and making sure the new operating plan works for them. it is a collaborative approach designed to minimize the service disruption we have seen in past implementations. david: how far are you in the

process? 10%? 50%? how much upside is to come? we've been through locally and made a lot of changes to local operations. later this year we will flip the switch on a new operating plan for the network and that is when we expect to see big changes in network operations and cost reductions. brooke: analysts will be pleasantly surprised by the improvements in train times in your first quarter -- you feel you're ahead of schedule to your 60% operating target by 2021? jim: we do. we were able to create much greater network velocity. dramatic improvements over last quarter. that sets the stage for the bigger operating plan changes when we will begin running trains differently and produce further cost reductions. alix: friday is jobs friday.

just got a killer adp employment number. what is it like to find workers? jim: it is tight. we need good qualified people on the road. we are out there looking for the best possible talent for our company. jobs are plentiful and we have to work hard to recruit and retain the best people. alix: how do you work hard? jim: make sure we are paying a great wage and have a good benefits package. we are a largely unionized industry so our benefits and wages are collectively bargain. david: when he said the economy is on solid footing, where are there differences, either regionally or by certain things you ship? were easy weaknesses and strength? jim: it is pretty broad-based. we haul all kinds of industrial products, chemicals to paper products to finished automobiles. we did see a slowdown in automotive volumes in the first quarter. in our case that was because of circumstances related to our customer base, certain plant

shutdowns. overall we are feeling bullish and so are our customers. i met with customers yesterday and they were all looking for growth this year. brooke: are you worried about the automotive market? i know you said that was idiosyncratic issues but that has been a problem spot for industrials. as you plan this out for the year, do you see volumes holding steady, picking up? jim: we think the automotive production are what we call high plateau. things may be softening but relative to the past it is still at a high level and benefiting from that as do a lot of suppliers. david: how much of your business is tied to agriculture? we are seeing farmers income come down. are you seeing diminishment in agriculture shipments? jim: we do have an agricultural products business. we handle corn and wheat and ethanol. it is relatively small part of our business.

we think the opportunity to export may be somewhat more limited. in general, we think we have an opportunity as elsewhere. how much do you think the trade war with china has distorted your flows in the last year or so? jim: our international volumes were up in the first quarter. some of that may have been pulled forward based on the possibility of tariffs. when we look into the balance of the year, we still feel like there is growth ahead, particularly on the domestic side where we have terrific channel partners exposed to the consumer economy. our customers are looking for growth and so are we. brooke: you mentioned pulled forward orders and we have seen this from companies like 3m, and inventory hangover. are using those dynamics in your own business? jim: we think there has been some inventory buildup. as transporters we will help to move those goods out.

the key point is that looking ahead we think there is growth possible for the rest of the year and we will benefit from that with our channel partners. david: what about your capital cost? are you seeing input costs go up? jim: inflation has been muted. we bought a great deal of products. overall, inflation seems tame as far as our purchase. was your capital investment affected by tax cuts? jim: we were beneficiaries of the tax cuts. a lot of that went to the bottom line. for the series, we are taking a look at these companies that have a unique window into the u.s. economy. what is the biggest wrecks -- the biggest risk from your seat? jim: we are exposed to our customer support county and economies go through -- our customer's cycilicality.

economies go through cycles. our customers feel pretty bullish about the economy right now. brooke: one of the things interesting to me is the data has been pointing every which way. we had the i sm manufacturing index earlier -- how much you pay attention to those relative to your business planning or is it more about conversations with customers? jim: it is both. we do look at macro indicators. we are also talking to our customers all of the time. i a conversation with a group of customers yesterday. i can tell you that overall, they are still pretty bullish. cautious, but feeling good about their products. alix: jim, a great perspective. jim squires of norfolk southern. and brooke sutherland, great to have you as well.

coming up, venezuela's power struggle. more on what i'm watching, next. this is bloomberg. ♪

alix: here is what i am watching. venezuela. what will happen with juan guaido versus nicolas maduro and the dynamics for the u.s. as well as russia. i'm taking a look at it for the oil market in particular. if you have more oil coming up line and you have iranian sanctions and no waivers issued, how tight the market will become is something that does not feel has been priced in on a sentiment level. just saw a chart that a lot of venezuela's oil is going to india and china, countries hurt by the sanctions. alix: a lot of the oil they are sending is to pay off a debt. they are owed it because of the debt. it is not even asked recruit in the market. particularly important for the

u.s. businesses. a lot of refineries on the u.s. gulf coast are suffering because of the lack of regional oil. the heavy oil prices are shooting up. it has a real-world business application as well as geopolitical. david: what is the long-term adjusting refining capacities? alix: they will have to start using more like oil. then you get different kinds of products with like oil. definitely what i'm paying attention to on a political, geopolitical, and commodity level. that wraps it up here. coming up on the open with jonathan ferro, bob michele. this is bloomberg. ♪

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

jonathan: coming up, equities back in uncharted territory. results from apple fueling another like higher. the federal reserve decides chairman how stuck between tepid inflation and solid growth. wrapping up trade talks in beijing. secretary mnuchin calling the meeting productive. here is your wednesday price action. futures positive .25%. us news in the bond market. 2.50 on the u.s. 10 year. the reason for the lift is apple giving the equity market a lift across the board. that stock positive almost 5%. we begin with the big issue. the federal reserve stock on hold. >> we think the fed is on hold. >> on hold. >> off the table. >> no reason to raise. the fundamentals of the u.s. economy is strong. >>