dovish traders by saying the recent fall in inflation could be transitory. ray dalio forecasts third-generation monetary policy coordination. 29% in theibas jumps first quarter, crushing competition. david: i'm david westin, here was alix steel. we have bank of england out, and surprise surprise, they didn't change. alix: signaling more than one hike would be needed to keep inflation in check. the rate decision at 75 basis points was 9-0. there wasn't conversation. toks like it was unanimous not raise any interest rates. david: it is fascinating actually, the inflation story, given what we had at the fed yesterday.

they have such a different situation over there. let's bring in jp morgan asset andgement global strategist our bloomberg intelligence senior executive editor. it's a little below the 2%, but not by much. very different in what we are seeing in the united states. >> partly because they've had import price pressures and other things, but we are getting some wage inflation, and unlike in the u.s., we are seeing a little bit of that feed into inflation. we still think that over the course of the year, they will not be able to raise interest rates further, but they definitely want to keep that ball in the court. there's plenty of reasons why that might change. if you can ignore all of the brexit shenanigans. alix: the boe cut inflation forecasts for 2020, but leaves it unchanged for 2021. that: one of the things

stephanie pointed out is brexit. compared to where we were a month or two ago, there is a sense that there's not as big a threat of crashing out of the eu as there once was thought to be. guest: brexit is one of those idiosyncratic factors that may be sets the bank apart from its cohort of central banks globally. year hasant trend this obviously been the spillover from the fed to the rest of the world in terms of monetary policy. you saw that at the ecb and the bank of japan. you saw that at the bank of canada. you seen it at a cornucopia of emerging market central banks. more hawkish bias is the exception to the rule. part of that is just political risk. alix: i also want to highlight that growth forecasts for 2019, 2020, and 2021 all cut. they do see excess demand rising more than previously forecasted.

will we get a situation where the boe can go when it's on? reporter: i think it is a s, whattion of two thing they think the underlying growth rate is in the u.k., and how far is it growing. as long as those are in line and they are not starting to see inflation take off, we end up in this position. but because we are so close to potential, and all these questions about what happens if you start moving to brexit, that's why they want to keep this on the table. david: you referred to the labor market, which is key in the u.k. i'll put a chart up illustrating the u.k. at the moment. i find it quite interesting. the blue line is unemployment, coming down right now. the yellow line is wage growth nasty white line is wage growth, going up -- the white line is wage growth, going up.

the yellow line is wage costs, going nowhere. reporter: you had a pickup in productivity. oris maybe not as good as 10 12 years ago, but it is picking up. i just want to recap what we are looking at here. it is kind of interesting what the boe said. it cut growth forecasts for the next three years, unchanged in 2021. they did see excess demand in three years rising wasn't previously forecasted. if there is some kind of brexit deal, what kind of upside hawkish potential might we see, and what sort of ramifications globally? suchit doesn't sound like a hawkish situation, but the macroeconomics would support a hike. unemployment low, wages picking up. the bank of england has not had

either the opportunity or the ability to normalize in the same way as the fed. that is the other difference. they are probably substantially that where neutral is, so normalization process is going to kick into gear just as it did in the u.s.. david: we are talking about brexit, which means we have to speculate. may be the speculation is narrowing a little bit because there's increased talk about the customs union, maybe prime minister theresa may coming to a compromise with jeremy corbyn. what would that do to the economy and the boe? stephanie: it takes a lot of the question out of the good side of the economy, the ones worried about tariff barriers and all of those things. but we are still looking at a situation which is significantly worse economically than being in the european union. 80% of the u.k. economy is services, and services are left out of any of these customs

union arrangement. he would still have the withdrawal agreement and a transition when nothing changes, but people would start looking ahead to a situation where they know for sure, not as bad as a new deal, but definitely worse than the u.k. situation now. alix: i just want to point out something. i said that they cut the growth forecasts. they didn't. they actually raised it for the next three years. at what point might do u.k. assets not be a value trap? ben: i think it pertains to the brexit outcome as well. one of the things that you would expect in the event of some form of brexit is the potential growth in the u.k. is lower. that brings down the entire tide. it brings down the growth rate in potential terms, the neutral rate in terms of policy. may be another reason why they would think about hiking in an environment like that.

and: stephanie flanders ben mandel, both of you are sticking with us. check out these charts and more -- gur terminal at gt v tv . david: we have under armour out, which i think had a significant beat. they were projecting a slight loss earnings-per-share. they were up on earnings-per-share and revenue. discovery was right on the money on earnings-per-share, and had a slight beat on revenue. you can see discovery is unchanged. under armour is up quite significantly in the premarket at least, 3.4% right now. alix: i'm taking a look at dow. in the press release, they say there are some discrete

headwinds in their intermediate products. they did say they had some operational levers they pulled to mitigate market compression they could have seen, but i don't quite understand what these discrete headwinds actually are. david: you remember, they had a preannouncement in march. they said we are having troubles with some of our specific products. the street was actually expecting they were having a tough time as they just spun out from dow dupont. we are just getting our legs under us here on exactly how to judge this company. according to this company sales for the second quarter trails a $12 billion estimate. alix: that stock not yet trading, but presumably lower when it does. want to round it out here with apollo, another private equity converting to a c corp. to form a partnership. ,heir asset under management $330 billion. that definitely beat estimates.

they get more investors. david: i think they get also bought right in certain indices and things like that when they are a c corp. alix: we are going to find out. in the markets, you had selloff in the s&p, the biggest in five weeks. now s&p futures helping a rebound, up by about five points. euro-dollar pretty much flat on the day. going to be watching sterling overall. in the treasury market, it was a crazy hour for the treasury market yesterday. now you see selling on the --kend, up i to basis points up by two basis point. crew down as well. coming up on the program, ray dalio makes the case for a new age of economics. that's next in today's first take.

mp3. david: i thought that was a player to listen to songs. alix: this is bloomberg. ♪

david: time now for three stories we are following this morning. first, the fed remains patient. coming.ys mat is still with us, stephanie flanders and been mandel -- and ben mandel. jay powell has a new word, transitory. chair powell: we expect some transitory factors may be at work. we have reason to think that some of the next but you decrease appears to be transient.

there's good reason to think these readings are particularly influenced by some transitory factors. there's reason to think those would be transient and turnaround. are baseline view remains that with a strong job market and continued growth, inflation will return to 2% over time. david: for those of us old to remember groucho marx, a new magic word. [laughter] david: now it is transitory. what he is saying is don't worry about inflation going south of 2%. it is going to come back again. hasn't he said this before? stephanie: i think this is one of those times where he was, on purpose, was an element of strategy here. the markets are firmly expecting a rate cut before the end of the year, which went quite far beyond anything the fed has talked about and what we were seeing in the data. i think you see a bit of a push back their. it did produce some volatility in the markets, but at the end of the day, if we've taken some

of that expectation out of the markets, i am not sure jay powell will be that unhappy. alix: but i feel like we learned something very valuable. we learned what happens if the market over prices some kind of rate cut. what do you make of that in terms of yields? agree, it was the center of the distribution of outcomes back into the fed doing nothing. there are high and low conviction views of what the fed will do. there is a lot of inertia and they are unlikely to do anything with policy over the next 12 months. that was the message he was trying to convey to transitory factors. there's also a side point on the fact that they've now tethered policy to inflation, and the vagaries of the month-to-month fluctuations of that process. doesn't go over well in a press conference, but it is true

to some extent. you have to anchor on longer-term drivers for inflation coming back over time. stephanie: and that is the change we were expecting. we were expecting them to bring the focus a bit more back to inflation and away from growth, where we've seen a lot of the more dovish language and he pivot at the start of the year was around we getting growth. growth --we getting around weakening growth. alix: ray dalio says, "i believe we will have to go to monetary policy three, which is fiscal monetary policy in a form we have not seen in our lifetimes. it is inevitable that this shift will happen." what you thing about this? stephanie: i give some credit to dalio. there is this theme of the fed driving prosperity, but not a

lot of talk about concrete policy to support the distribution of income or investment in education. he is saying something which i think is true, from a political and economic standpoint. thattably, we know traditional monetary policy tools are not going to be available in the same way when we have the next downturn. we normally would need five percentage point cuts in fed rates. there's also the political economy aspect. people don't feel that monetary policy has worked for them. they see quantitative easing just going into the pockets of banks and bankers, not necessarily into main street. i think he sort of captured that mood, and is perhaps channeling a little bit of donald trump, but with a bit more intellectual rigor. david: i want to stress the political part of this. didn'ting ray dalio, i

take it is a good or bad thing, but just an inevitable thing. one of the consequences is if you take away the independent fed and put it in the hands of politicians, in this case congress and the president, there are risks involved with that. benjamin: i absolutely agree. the bedrock of this whole system is the independence of monetary policy. the suggestion is we are in a secular trend towards more interdependence between fiscal and monetary. i think there's a limit to how far that can go before the wheels come out. monetary -- the wheels come off. monetary policy is not the solution in many ways, but it is not the problem. we had these massive trends over the last 30 years that have led up to the difficult political economy driven by inequality. similarly, monetary policy is probably not the solution for that.

it is hard for monetary policy to affect structural institutions of the economy. it is a bit of a dangerous experiment to tinker with the independence of the central bank. david: we want to go to bnp. they had some remarkable reports out on their fixed income trading, which really shut the lights out. they are up almost 3% right now. bnp is an interesting story in itself, but also a larger phenomenon in europe. that is the extent to which many banks are trying to specialize themselves now, saying we are not trying to be jp morgan, all things to all people. benjamin: from the perspective of a multi-asset investor, we've been thinking about where to add risk in an environment like this. it is difficult to pick the winners and the losers. part of it is that traditionally, over the past couple of years, we've disliked europe from an asset allocation expect if -- asset allocation

perspective. perhaps there is a sense in which that might be improving, which might drive better growth outside the u.s.. has notal story which worked yet in this expansion. i don't think we are taking a big bet on europe and european banks in particular, but it does tell you if you are having to risk in this environment, it is a global phenomenon. you have to believe the global drivers of equities are driving everyone higher. i think that is the exposure we prefer. alix: how did bmp beat everybody else? they've been cutting a lot of money. i think it shows how hard you ,ave to try to be trend on this the european banks. they still want to be up with the big guys. they've got a wild to go, and

perhaps even these results show how far any european bank would have to go in order to come close to the u.s. banks, particularly on the i.b. side. there's a big gap between the european and u.s. banks, the u.s. banks make money. european banks still have pretty low margins, although they would say one of the reasons is because jp morgan comes in and leaves us with very low margins in europe, but not the u.s. the u.s. banks will continue to be dominant in this space. alix: ok. thank you very much. mandel will be sticking with us. coming up, more suitors for withrzbank after talks deutsche bank fall through. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." shares of volkswagen are up the most in five months. first quarter profit rising. earnedman automaker despite a global market slowdown , boosting lucrative suvs, and benefited from a favorable exchange rates. shares of qualcomm are falling. the chipmaker giving a lackluster sales forecast because of weaker demand for smartphones in china. that outlook overshadowed the benefits of settling a prolonged legal dispute with apple. since the deal was announced april 16, qualcomm shares rising more than 50%. doingtch bank ing is nothing to dispel speculation it may be interested in germany's commerzbank. bloomberg speaking with ing's cfo. >> we really don't have any

comments on any market rumors. i think it is really a question of sticking with our organic strategy, but of course we will look at transactions that are presented to us. viviana: talks with deutsche broke down last month. that is your bloomberg business flash. alix: thank you so much. commerzbank remaining an m&a target after talks fell through with deutsche bank, and now ing credit is eyeing them for a deal. how closely do you follow what happened to deutsche bank as a proxy for the european banking sector? benjamin: not so closely, to be honest. when we think about europe and european equities, the banking sector is a very important part of it. let me take one step back to say that european fundamentals more broadly, so the banking sector as a mechanism for credit growth, is a part of it, but european growth more generally has been one of the puzzles that started last year that i don't

think is fully resolved here. we've been making the case that fundamentals are supportive of adding a little bit of risk to portfolios. you have a few more shoes to drop for things to get better. one of them is europe, and the other is the global industrial cycle, which we expect to improve come about at this point it is much more forecast than fact. david: how linked are the two? in europe, business is particularly dependent on the banks. benjamin: using that credit mechanism as the proxy for how growths doing -- for how is doing is a good thing to do. we do that. one thing to note is that credit growth has been strong in europe fairly consistently through high and mediocre headline growth. so how do you distinguish from the 2017 scenario, where europe

was growing significantly above trend, 22018, where it was just affected by a sequence of idiosyncratic shocks which made it difficult to invest, even if credit growth was ok? alix: it has been a pleasure to have you on set with us. thank you very much. coming up, we are moments away carney'sgovernor mark news conference. they said some interesting things on growth and inflation, raising the growth forecast for the next three years, cutting inflation forecasts for the next two. what that says about the inflation rate and what happens to the central bank, how many hikes should be priced in at some point, in a brexit scenario. this is bloomberg. ♪ ♪

alix: this is "bloomberg daybreak." the day after fed howell service -- fed powell sort of surprised market, seeing a little bit of

stability here. , allean banks up 4/10 thanks to bnp paribas crushing the competition. mix dollar whipped yesterday on the fed's announcement. youhad some answers sing -- had some interesting leg which coming out of the boe, less hawkish than markets had thought -- interesting language coming out of the boe, less hawkish than markets had thought. now the question is brexit and what they do with stronger growth. david: they didn't change their position. alix: exactly. mandel of jp morgan asset management is here with us. benjamin: i think there is a neutral,of what is

which has been plaguing all of the central banks, and which will define how far the bank of eglin has to go. alix: let's see if he answers -- the bank of england has to go. alix: let's see if he answers that as governor mark carney begins his own news conference. of this was happening against a backdrop of considerable trade and financial pressures in the economy. outlook wasrm subdued and the data expected to be unusually volatile and potentially less informative than usual. but provided clarity emerged about the future relationship with the eu and the worst of global risks were avoided, we expected growth would pick up to above potential rate, inflationary pressures would build gradually, and monetary stimulus would be required to keep inflationary targets. then?as changed since

from a global perspective, and recent months, global tensions have eased. there's been a marked easing in global financial conditions relative to major economies. global risk sentiment has recovered, and spilled over to lower yields and to ease financial conditions in the united kingdom. there have been signs that global trade is stabilizing, and trade tensions, for now, have abated somewhat. partly as a result, activity appears to be stabilizing in the major economies. suggestsdata now global growth drew off towards the end of last year. recent of a limits are consistent with the mcc's expectations for a moderate pickup and global growth this year to around potential rates. in contrast to the more benign global backdrop, domestic tensions remain.

to get a sense of their consequences, it is helpful to review how the u.k. economy has performed relative to the forecast from february of last year. the headline result has been our growth has been bang on expectations, but the components have been different. employment and wage growth have meant consumption was stronger than anticipated, growing by 2% versus 1.5% expected. offsetting that news, business investment fell by more than 2% rather than growing by 4%. trade subtracted 0.5% from the expansion, instead of contributing to growth. it is this pattern that looks set to continue in the near term. the latest business investment intention survey plenty to

further declines over the next few quarters. that would mark the longest run of falling investment in the postwar era. it is weighing on productivity growth, labor costs, and domestically generated inflation. unable to plan for their long-term future, you take -- future, u.k. businesses have focused on short-term exit contingency plans. potential march 29 cliff edge, companies on both sides of the channel right fourth production, pushing imports and exports to decade highs in the three months despite the doldrums in both economies. according to our agent surveys, the proportion of u.k. serves -- twoontinue to see around 3/4 at present.

2/5 of those firms boosting gdp in the fourth quarter. it remains that companies are only as ready as they can be, and expect a marked decline in the rate of growth in the event of a hard brexit. firms expected their output would fall by 3.5% in the event of a new deal, no transition brexit. faced with the high option value of waiting for news about brexit, companies in aggregate appear to have favored hiring over capital investment. as a result, the u.k. labor market is out performing expectations over the past year, with employment and wage growth both surprising on the upside. the resulting strength in real income growth has supported consumption, which in turn has driven domestic demand. upl income growth picked further in the first quarter, and displays of consumer

householdskept remaining relatively optimistic about personal financial prospects instead of being pessimistic about the overall situation. that may be one reason why the only area of hustled spending that is restrained by brexit is the housing market, where transactions are currently somewhat subdued and prices are stagnating. in aggregate, first quarter growth is projected to come in not .3%, much stronger than we had reported in the february report. about half of that upside surprise could be due to the boost from exit related stock building, consistent with reports from our agents. we expect a corresponding dragon the second quarter -- corresponding drag in the second quarter. is still a little below potential, meeting the current large and of slack in the

current margin of slack in the economy is expected to shorten. global movements appeared to have driven the curve for market rate. expectations of policy rates have fallen significantly since february, and marked expectations have fallen. the past currently implies the bank rate will rise to about 1% by the end of the forecast period, about 15 points lower than in the february report. as inflation forecasts suggest, this new market curve introduces an additional financial market tension, the one that already exists between the current level of sterling and the level that would be consistent with waiver -- with whatever brexit outcome ultimately comes to pass. at some point, the tensions between households, corporate

and financial markets will be reconciled. that resolution come through our assumption of a smooth brexit to an average outcomes, resulting in a forecast that has two phases. in the first phase that covers the balance of this year, growth remains modest, reflecting the continued drag from brexit uncertainties and below potential global growth. near term inflation is expected to pop above 2% in april, but then fall back below target, and large partly reflecting moves in household energy prices and the still modest core services the second phase -- services inflation. , businessond phase investment growth recovers, the housing market improves, consumption continues to grow broadly in line with incomes,

and aggregate demand picks up to above potential rates. excess demand rises slightly above 1%. by the end of the forecast period, notably higher than in february, with the projected rate of decline to fall by 3%. this leads to a strengthening of domestic pressures, more than fading contributions from imports and energy prices, such that inflation rises above targeting two years and continues rising through the end of the forecast period. at its meeting yesterday, the mpc agreed that the current stance of policy remains appropriate. we emphasize that the right path for monetary policy will depend on how those tensions between households, businesses and financial markets will be solved.

the mpc's latest projection curved that the latest for our forecast is unequal to the task of meeting the mpc's reasoning. based on the conditioning assumption of a smooth brexit, the committee continues to judge that an ongoing tightening to monetary policy over the forecast period and a gradual pace into a limited extent would be appropriate for the target at a conventional horizon. with that, we would be pleased to take your questions. >> ok. as always, please make sure you give us your name in the organization you represent, and please stick to one question each for the first go around. you. lead off with >> thank you. given the forecast you've with end of demand by

, enormous circumstances. that there is a full brexit, what can we do with the pace of gradual interest rate rises down the road? can you share some light on that? gov. carney: i think the way we would put it is it something broadly like this forecast comes of time whenriod there is not growing, but then that resolution is some form of with movement, it will require interest rate re-creases over that period, and

more and more interest rate increases than the market currently expects. i will finish with this. there are a lot of factors that and yields innds markets. there are many words to refer to things like brexit. >> we are talking about a faster pace. gov. carney: what we are talking about is more withdrawal of monetary stimulus. in other words, cumulatively more hikes. but still, a limited amount relative to history, and at a gradual pace. >> jamaal now at the back, then lucy. >> just to pick up on that point, in paragraph three you

there arec judges smart mold gins -- there are small margins in the economy right now. are you guiding the market towards more backloaded interest rate hikes? gov. carney: i think to the extent there is guidance, there is insufficient hikes in the current market curve to be considered with our image. our limit is 2% pci inflation, which you know. we talked about returning inflation to target over a conventional horizon, over which monetary policy has the most traction, 18 to 24 months. we have inflation above target at that point and rising further often continuing, i might add, offstage be the forecast to the horizon. -- itl be appropriate

would be appropriate because it is conditional on something like the forecast transpiring and there is big conditioning assumptions and that, but if the world unfolds broadly as consistent with this forecast, then it would require a greater withdrawal of monetary stimulus then is currently implied. it just did not require it at this meeting. >> lucy, and then adam dunn the line. >> thank you. can you explain to justification for keeping the conditioning assumptions, given that they really don't acknowledge the reality of the brexit process so far? i think a lot of people would see a disconnect with parliament and the extension. gov. carney: i'm not sure i fully agree. i think what we have seen is that parliament has voted explicitly against a no deal brexit.

so if you take note yield brexit as an example of something which is not a smooth transition , therer form it takes have been extensions to the process. everyone knows that the process is not concluded, that what remains to be agreed is both the nature of the withdrawal and the broad outlines of the in-state. , which heren-makers are parliament and the leaders of the european union, have made those decisions. they have consistently expressed a preference or have taken decisions that are inconsistent with a smooth transition. we don't know, you don't know.

the united kingdom and around the world, investors don't know what all of the forms it will take and where it is headed. when you bring that back to what the impact that is having on the u.k. economy, it is principally expressed quite starkly through business decisions, business investment decisions. be invery unusual to n expansion and have investment falling. as we cautioned in february and re: emphasizing today, and the short-term we are going to have a fair bit of volatility in the hard and soft data. based on that assumption, which is still the base case, smooth transition to some sort of deal. what would be where the economy

would go, and what the consequences are for policy. >> adam at the back, and then alex. >> the trend of u.k. businesses cutting investment, but also spending their money on employing people, seems like a familiar one. i think we've heard that after the financial crisis, which a lead toeople believe lower productivity than our european rivals. do you think we are on that path again, and could that trend blems with the pro policy we have in this country? following the financial crisis, i agree. there are some similarities here, but there are also some differences. one of the differences was a fairly substantial, positive up bysupply shop come

which we mean there were a series of factors which increased a portion of the population that remained in the labor force or came into the labor force. some of those factors were pretty difficult. savings for retirement, which had been hit by the financial crisis, they just need to stay longer. others were changed to welfare and other policies that kept people in on other factors like education. things are in the early stages of recovery and expansion. thatwe are seeing now is in our judgment, if there is evidence that the uncertainty around brexit is effectively raising the hurdle rate for business investment.

so the relative cost of investment versus hiring has shifted quite substantially in favor of hiring. the consequence of that is what has happened short-term to business investment, what's happened to hiring, and it will have some implications, as you say, for productivity. with regard to the financial crisis, arguably the cause of the high cost financing investment was different there. banks were starving firms of credit. now it is not so much to do with finance, but with this. uncertainty but it has the same effect of trying to get depress byo investing them. when things get really uncertain , even with unemployment, they refer to a room as a tech room.

clearly it can have an effect on productivity. equally, it is not going to give you a big contribution to the cycle of productivity to explain why productivity growth here and elsewhere has been so much lower than before the crisis. there's definitely a contributory factor in the right direction. that will be the effect of this for a long time. >> alex and then joel. >> alex from "the daily mail." you paint a picture of two economies, really. the first, a quite confident or more confident consumer economy where people are going out and spending, running up their credit cards and so on, and doing all of that. on the secondhand, a bunch of aning businesses investing

in people rather than science and machinery. is there some way that the banks and the business groups can encourage investment rather than just moaning about it, the lack of it? makecarney: if i may just one comment on the households hide, households are spending. they are not running up their credit card debt. this is not a debt fueled consumption boom. what is happening is that in growthate, wage has been. picking up. it has actually picked up a little more -- has been picking up. it has actually picked up a little more than expected. employment has also been stronger, so aggregate real wage income is stronger, and that is driving consumption. as you see in the most recent credit numbers coming out of the credit conditions survey out of

the banks is that actual rate of credit growth has continued to decline. still growing, but it has continued to decline. in terms of business, i wouldn't use the terms that you used. we talked to a lot of businesses. i'm sure you do. we do it systematically up and down the country. asinesses are faced with many very fundamental question as to what kind of market access they're going to have. it could be directly for export markets. it is entirely understandable when there is a very wide range of potential deals and potential transitions to that. expectage, they do

something similar to our conditioning assumption to go back to your question a moment ago. they also expect, and there is increasing evidence for this, that they don't expected to be resolved for some time. a more and more substantial portion cross referenced in the report don't expect resolution by the end of this year. in that environment, it is difficult to make those longer-term investment decisions. if i were to characterize them, i wouldn't characterize them as using the word you used. it would characterize them is very eager to get on with investing and building their businesses. >> joel at the back, and then chris. >> most of the numbers of the monetary policy committee are men. the bank of england has diversity targets. it is not clear you're going to

hit them. as of today, britain has its first female defense minister. should the governor of the bank of england, the next one, be a woman? as seniory: what we management of the bank can control is the mix in terms of gender, ethnic, diversity, cognitive diversity, socioeconomic diversity, those elements of diversity within the bank of england. we have been taking very deliberate, comprehensive steps of the course of the last five years to shift those. i don't agree with your characterization in terms of our targets. seniormanagement, women management, with 17% in 2013. 31% today. we are on track for a 35% objective. the pipeline is very strong. we are just under 50% below

senior management. atare making big progress the graduate intake and hiring intake. are,we can influence, we and we are making progress. how youmore than just act and develop. we are shifting the dialogue that, without question. the decision of who is my successor, who is on the mpc, the prc, the courts, the bank of england, those are decisions for the government. questions about who it will be and the characteristics of who it will be for any of those roles are really questions for the government. chris giles from "the

financial times." we've got a forecast here which has got a very large degree of excess demand by the end of the period, and yet inflation running at only 2.16% in your forecast, lower than the bank of england has achieved over the past 10 years at one average. there's not a high rate of inflation. does this mean we should be a little bit more relaxed about the forecast, and maybe not worry so much about the excess demand you have been predicting? gov. carney: no. it maybe won't surprise you that there's never really a time to characterize the mpc as relaxed. [laughter] gov. carney: i'll admit that is one of the job characteristics that one would look for, is the not relaxed. .reternaturally relaxed, maybe there are a few things going

on in this forecast. what is that we are steadily building inflationary pressures. or 2 andt is q1 rising, that is not target consistent inflation. as you will know, we stretch the flexibility of our referenda because we felt there was substantial slack in the economy, and the issue was trading off jobs for inflation. wherea different world you are moving on some measures to the lowest unemployment rate on measured time, 73%. but that was unemployment chair similar to this. remitnsistent with the

inflation buildings, but there's also reasons why inflation isn't higher. i'm actually going to ask ben to expand on some of those. >> sure. one point to make with reference to what the governor just said is that we don't actually move into balance in excess demand for another year or so in this forecast. given the lags between what happens to inflation in the forecastat the end that would have been a on that relationship before the forecast period. import prices are fading, and that is pulling down on inflation, independently of what is happening to domestic cost pressure.

the third point to make, and this matters, as you know, we base our forecast on the market -- in thehe for forward markets. alix: we've been listening into boe governor mark carney. you can listen to the rest of his remarks live on the bloomberg terminal. rate hikessufficient to keep inflation in check. so you still need them, inflation is still there. ♪

alix: fed chair jay powell surprising dovish traders by saying the recent fall in inflation could be transitory, cutting their inflation forecast. and the fed is firmly on hold as the impact on markets and volatility. what provides the next leg up for equities? and how uber will revolutionize transportation and logistics. david: welcome to "bloomberg -- reak on this" "bloomberg daybreak" on this thursday, may 2. under armour had a nice beat, and discovery came in right on the money. kellogg is trading up a bit, but the numbers are not out yet. alix: apparently the cfo transition will happen at the end of the second quarter. looking at higher costs,

pass-through, and all of that. david: they are investing in the brands and trying to manage their inventory. they've got a lot of work to do, but they are working on getting organic growth going again. alix: we have cigna and under armour out. if you are delivering and you are able to restructure, you can deliver a forecast that are pretty good. 5%. stock up by a good david: they are managing the inventories down and clearing things out. in the meantime, we had dow out earlier. this is the chemicals part of it that spun off. we don't have any comparables because it has just spun off, but it has a lot of headwinds they talked about. it is down a little under 1% in premarket trading. alix: just to be clear, there are three kinds of moving parts.

the first is dow, the chemical business that was spun off. they are looking at certain headwinds in the market. then you have dow dupont, which has the specialty sector. tor will be spun off in june, but is currently under the dow. midwest has been depressing some of the agricultural profits. they are hoping especially that products will offset some of the downturn. they came in reading earnings-per-share and revenue. but in the premarket, they are not getting a lot of credit for it. alix: i do want to point out again, dow, the chemical business, talking about some discrete headwinds. they say there was operational efficiency.

in the markets yesterday, the s&p seeing its biggest fall in about seven weeks. now we are flat on the s&p, euro-dollar also flat. germany continuing to be that weak spot in europe. yields continued to inch higher after a very with the session yesterday. copper seeing its worst day since august. yesterday it was all about the federal reserve. last month, the fed was talking all about patients. yesterday, chair powell explained patients still makes sense because he believed it is merely transitory. chair powell: core inflation unexpected lee fell. we expect -- unexpectedly fell. we expect some transitory factors might be at work.

some of it does appear to be transient or idiosyncratic. there's reason to believe these readings are affected by certain transitory factors. are baseline view remains that was a strong job market and continued growth, inflation will return to 2% over time. david: joining us now are morgan stanley's chief u.s. economist and btig strategist. is he right? >> i think he's right to talk about the transitory factors. financial services, apparel prices. those are some of the categories that are transitory that have dragged down the core pce measure. it is also easy for him to point all of those outliers. at the very least, if i am a

monetary policy maker and asked to make a major decision around whennflation data point all the rest are pointing to something else, i am going to make -- i am not going to make that decision. i will once more evidence. i think you made the right choice. alix: is there something to be said for the fact that you can always blame something inflation or he when it was -- something inflationary when it was stagnant? the fed can where actually produce inflationary pressures by having easy monetary policy. getting down to the heart of those categories, that is what we are not seeing.

so inflation is low. the economy is fine. these other transitory factors inflation isat low. alix: what is the relationship between the equity market and low inflation/lower inflation expectations? >> for most of the last several years, it's been a love love relationship. essentially what you saw at the end of last year was a onset oft with the this lower inflation psychology, lower for longer interest rates psychology. you first saw it in the feedthrough with china weekend, feeding through into our equity markets. i would argue that in the first quarter of this year, you salty feedthrough into bond markets by , and the german ten-year back at zero once again. there comes a certain time when

the psychology changes, and what the fed chair is trying to do is massage the psychology because there's also an expectation or element here. their expectation is that it is going to be transitory. they would like the market to adapt that expectation as well. our problem is we see it right month'shat the last worth of evidence and the market reaction yesterday points to that being in question. david: is it too simple to say ist what jay powell thought that rates would not be cut? >> i would say, based on their flexibility over the last six months, if he wasn't necessarily intending to do that, however, to the extent that that helps inflation psychology, that may have been part of the story.

but the fact of the matter is inflation breakevens fell sharply yesterday. copper fell sharply. oil is falling today. to that extent, it didn't work. alix: what is the solution? we have this hold inflation re-think over the next few months. what is going to be the result of that? ellen: ultimately they are trying to generate higher inflation late in the cycle because then that does allow them eventually to get rates higher so that when you go into you can helpturn, out of the recession. that is the overarching thing of what they are trying to achieve here, but in a very responsible way. you allow for some overheating. you allow the economy to run hot. you don't exactly push against risk assets when they are rising just because they don't look out

of control. but that doesn't mean you don't do nothing forever. right now i think they are taking the right stance. i don't think this was chair powell pushing back against the market, saying you guys are looking for a cut and we don't think we're there yet. i think that gives the impression he is this master puppeteer. i think we are giving them too much credit for that. they are just concerned with taking the stance they think is proper, and i believe the markets really got ahead of themselves thinking that a cut is warranted right now. i don't think we get there because inflation is not going to pick up for the better part of this year. that is going to be a very tough spot to be in. i think this was much too early as wee those expectations saw them, that the fed might cut today. hikeink the next move is a

. our baseline is that the economy is fine. we actually have the economy strengthening next year, well the economy is pretty too slow. it is providing a backdrop of easy financial conditions. don't fight the fed on this. alix: all right. both of you will be sticking with us. we want to recap kellogg's' numbers. retail sales missed estimates, but earnings beat. overall looking at divesting 2% to 3%,l cut about but sees no changes for its guidance on its base business. of course, currently getting a new cfo that is going to succeed. that is kind of going nowhere in the premarket. 70%ng up, we are more than

of the way through the earnings season. that is coming up next. this is bloomberg. ♪

alix: about 70% of companies on the s&p already out with earnings. market strategists have mixed marketsresults, and the interpreting a potential fed rate cut. rbc says you could see and overshoot. morgan stanley says 3000 is definitely a tell signal. accord says-- can near-term loss it's -- can

accord says losses are capped at 5%. >> last year we were on the way down to 2350. we see 3000 as our. the price target, with the potential to shoot is highest as highfor -- to shoot as 3400. brexit needs to be resolved favorably. in our view, the fed has to its dovish pivot. we think there's the potential for rate cuts later in the year. put all those together, that's , which a1995 scenario lot of people have been talking about. but particularly, the market reaction to the fed yesterday, we are much more selective about our buying, and there could be a pullback in the near term. alix: how big? >> call at 5%. alix: ok. if the fed pares back a little

bit, maybe a little bit of pullback? ellen: we are pretty constructive on the economy. growth in the u.s. is fine. if you look at the domestic economy, that growth rate dropped in the first quarter on .3% for private final domestic demand. we are rebounding from here. we think globally, we've also moved through the trough and we start to grow better in q2 out of that. julian said a lot of that includes factors that have to go right. trade has to progress favorably, we have to avoid auto tariffs on europe, brexit have to do what brexit is doing. [laughter] ellen: i don't even know what to say about brexit. alix: no one does. ellen: but we believe we are seeing the early evidence we have gotten past the trough in global growth. that will be a better backdrop for the fed. julian expects the next move to be a cut. i expect a hike.

but importantly, but we both expect is that that is not because we are seeing doom and gloom coming, right? julian talking about the insurance cut finally being delivered as it was in the 1990's. this is something where risk assets can be supported. it would be a bold case for our 3000,strategist to get to but it is within the realm he believes is possible. 2014, we released a note called 2020 vision, just a tongue-in-cheek saying the expansion could last. i did not think in 2014 we would be right, but here we are coming up on the midpoint of 2019, so you will have to have me on new year's day 2020. alix: we won't be here, but you can totally do a show. [laughter] we can disagree on a hike

or cut, but it still doesn't matter because there will be a stronger dollar. at what point does that start to hurt? julian: companies will tell you it already has started to hurt. factually, it shouldn't be that bad based on year-over-year because it is strength in the dollar that has been incremental. but if you get a lot stronger through 1.10, which we do not expect. we think it will be more of a nonissue. our research has shown that it would support about 30 points each. -- ellen: the more the dollar strengthens, the more that shows the price inflation. part of this is the better

global growth story. dollar-based investments are going to be taken away from the u.s. and put elsewhere. david: coming up, uber hasn't even gone public yet, but it already has its first buy rating in today's bottom line. this is bloomberg. ♪

♪ david: time now to look at three companies worth watching this morning. first of all, 3m came out early this morning with announcements they are going to cut back on their share buybacks, spending money to buy a brand-new company. it is a wound care company. we talked with the ceo, mike roman, of 3m just a couple of days ago. this is what he said. >> the flexible capital, we are going to deploy. we like the opportunity to

couple meant but we do organically and leverage those synergies, and we will continue to use share repurchases as part of that allocation. david: when i asked him the question, i was saying, aren't you buying too many shares given your struggles. basically he was saying we either by our shares or somebody else's company. this time they are going to buy somebody else. alix: tesla would probably also like that money. [laughter] alix: tesla is basically readying a $2 billion capital boost. it will issue about 650 million shares, and the stock is up 4%. because now you have more capital, and stock is up. david: but now they are worried about bonds. these are company we are watching today as it uber. the ridesharing company has found its first official bull on wall street who compares it to the likes of amazon. se welcome wedbush security'

analyst who has a $65 price target. give us the argument that this is like amazon. guest: good morning. thanks for having me. the reason we view this like amazon is basically amazon came out years ago with a transformational idea on how to change retail and commerce across the globe. over time, they achieve that mission. we see uber on the same track on a global basis, trying to do the same thing with consumer transportation. alix: on the flipside, it is a very different kind of model as amazon taylor: it could potential -- as amazon. it could potential he have regulatory issues and state issues as well. how do you factor those in? guest: some of those come at specific city levels. it is a challenge that it is going to have to work through. it is not guaranteed that in

every city it is going to have a clean ride. but on this scale, it helps it get through those challenges, and new leadership has done a good job of transforming the image of the company, and we think ultimately those things do a good job to help them maneuver over time taylor: -- over time. david: what is the motor on this business? can't anybody come in and do this? guest: people can come in and do it come about uber has already got this huge leap. they are the only player doing it on this scale, the only player transforming two really big industries at the same time, and rideshare and food delivery. the power of those two networks combined, you are already seeing, is really tremendous. one thing that really stood out to us when you think about those whenlatforms together is

they've got a customer that uses both uber eats and rideshare, they are taking an average of 12 trips per month, whereas a user that just uses one is taking about four per month. it is that much greater when they overlap, and nobody else is doing it that way right now. david: what is the risk that your uber might run up against your analogy to amazon? amazon has other people moving into the delivery business. guest: amazon has been talked about as a threat to food delivery for a long time. they are in grocery, and uber is not yet. i would expect them to go in that direction as well over time. when you think about grocery delivery, amazon is still not really a player there, and i am

not expecting them to be a major force. there are pockets where amazon doesn't get into the same way as some of the leaders in various spaces. certainly rideshare and restaurant delivery are both going to be spaces amazon is not going to be going after as much as some of the other areas, like possibly trucking. alix: all right, thank you so much with that bull rating for uber. julian, what do you make of the lyfts and ubers of the world? not seeingt we are is the aftermarket reaction to listings we saw in the late 1990's and early 2000's that really set off the froth alarms. the average reaction has been much more muted, and that is good. obviously there is a perception

that they are all coming together at the same time. the activity in the last 45 days has been tremendous, and we expect that to continue. that is largely a function of the paperwork jim surrounding the government shutdown -- the surrounding the government shutdown. the question is is the tone changing to fund buying these new shares? we have never seen that yet. that is something to look for in the next month or so. alix: that is a good point. wasn't there a pet ipo? coming up, the latest read on the u.s. economy ahead of tomorrow's jobs report. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. a couple of things going on in the market. yesterday the s&p taking its biggest fall in five weeks.

now giving up a couple of gains, negative territory but just. european banks holding on to its rally. classes, a very painful session for the treasury market and now you're seeing the spreads jumping from 25 basis points to 18 basis points in less than 24 hours. initial jobless claims coming out now ahead of the jobs report on friday. 230,000. a little bit higher than we had expected but staying in line. david: the same as last month. we will see what that means for friday. on productivity it was a nice beat. 3.6% as opposed to 2.2%. let's find out what is going on outside the business world with viviana hurtado who is here with first word news. viviana: one day on capitol hill

and not for attorney general william barr. he told the house judiciary committee he will not show up for today's scheduled hearing on robert mueller's russian investigation. that follows yesterday's contentious hearing before a senate panel. the justice department adjusting -- william barr was to face questions from democratic and republican lawyers. shinzo abe will meet with kim jong-un without preconditions. a japanesetelling newspaper he once a candid discussion. he hopes kim jong-un is willing to be flexible. mediator serve as a for kim jong-un in talks with president trump. hedge fund billionaire ray dalio says something like modern monetary theory is coming whether we like it or not. debate over mmt has exploded recently. it says governments should manage their economies through spending and taxes rather than central banks. ray dalio saying policymakers

will have to embrace mmt when monetary policy does not work. 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. alix: thank you so much. , "i believe we will have to go to monetary policy three, fiscal and monetary policy coordination, that is a form we have never seen in our lifetime. it is inevitable that the shift will happen. " still with us is ellen from morgan stanley. monetary policy and fiscal policy should be working together, but as complements. unfortunately the fiscal policy side has not been there. monetary policy has had to step up and do the heavy lifting in order to prop up the economy.

is a muchicy, there greater role for fiscal policy, particularly in downturns, which is where it works in tandem with monetary policy, except we already deployed our physical muscle by cutting taxes late in the cycle. very ill-timed if i borrow janet yellen's words. having deployed that physical muscle,- that fiscal you will have to do policy that will balloon the deficit further. it will happen in the next downturn or the next administration. , youf these large policies want to talk infrastructure, what about the $2 trillion plan? if you cannot pay for it through tax increases or spending cuts, you're going to have to increase the deficit and it is not going

to be paid for. whatever name you want to give it, this is coming. david: let me ask a basic question. has monetary policy work, and more pointedly, the people who voted for donald trump, with a say monetary policy is working? huge divide in a weather monetary policy has worked or not. the fed has done everything in its power with the tools that have in order to provide as much accommodation as it can. we can argue whether they should've gone negative or what the guided sheet should have been. david: they did everything they could. ellen: they did everything they could and it shows after financial crisis that may not be enough. we could have done more stimulus in the wake of the financial crisis and we may not have gotten to these tax cuts we had last year if that were the case. that is history. what happens going forward?

forward, fiscal policy has no choice but to step up and do the heavy lifting, especially in downturns, and that means the ballooning deficit in the u.s., there is no end to that. alix: as ken griffin said, just do not tax me. milkensaying stop -- at saying do not take all my money. david: tomorrow is jobs day and we have with us dan black, you why global -- ey global recruitment and hiring leader. let's take a look at what is expected. i think it is 196,000 expected. you are out there employing people. what are you finding? dan: i'm seeing this. if there's any softness or concern, it is not playing out in terms of hiring numbers.

it is playing out in terms of projections for companies. in the u.s. alone we will higher over 15,000 people. that is up from last year. that number globally is over 80,000 hires for us. a consortium of folks that do what i do, large corporate recruiting, and that number is consistent in industries throughout the u.s.. alix: what is your call? ellen: the labor market is healthy. we are looking for 194,000, higher than the three-month average, more in line with the six-month average. a robust labor market. on headlines tomorrow, one heads-up. we could get some sense is hiring out of the government, so you could see a pop in government payrolls, but let's look at private to strip out the government component. it is undeniable it is a robust labor market. we are producing wage gains.

we are not at the point of wage gains spilling over the broader price increases. that is what the fed is watching. i will put a chart up. it compares number of people who say jobs are hard to get -- that and aswhite line -- there is more more people in unemployed, it is harder to find jobs. how does that translate what you are doing? dan: it is a dogfight to find talent. it is easy to apply for jobs. think back to when we were in school. ,f you're on college campuses you would go out of post a resume or drop it in a box on campus and you would hear back from a recruiter. now there is a plethora of ways to get noticed by an organization. their online tools you can use. the fact that it is hard to get a job is because now your

applications are through the roof. i mentioned 80,000 hires. that is from 2 million applicants. everyone is saying i can get an expert if i get my resume in front of someone and that is increasing applicants. alix: speaking of how hot the labor market is, we spoke to norfolk southern ceo. here's what he has to say about when he hires. jim: it is tight. we need qualified people working on the railroad so we are out there all the time looking for the best possible people. jobs are plentiful and we have to work hard to recruit and retain the best people. what form does that wind up taking and how you want up hiring, who you wind up hiring, etc.? flows we are seeing great into the labor market of people looking for a job. there are still skills mismatch so we can see that from these comments, i do not know how many

millennials are jumping up and down saying i want to work on the railroads were built houses. -- or build houses. we have done a study of generation z, they want to work in health care and tech. that is great news because over the next 10 years that is where jobs will be produced. start the line for that group. there are tight pockets and that is where we are seeing the biggest wage increases. let me say one last thing about women. women are coming back in the labor force. their participation rate is rising. you and i know we have not close the gap. there is still a gap, but we are getting there. the competition, specifically for women in the workforce is fierce. apparently they had a table that had candy and

men had to pay a dollar and women had to pay $.80. david: i love it. alix: when you are hiring and you have that competition, how do you entice? dan: there are does go big forces. -- there are two big forces. you need to have your brand out in front so there is an attraction before they even meet you. ourt of people know ey for accounting and taxes. in this past year we will be hiring over 12,000 people in the stem field. blockchain, ai. maybe that is not the natural thought for someone to think of ey as someone having those jobs, so you have to get your brand out. the second is tweaking your overall value proposition. salary is a piece of that, but what kind of benefits. no student comes to me asking what is your pension plan, was

your for a one k? , theyt is your 401(k) asked me what benefits, what is , if you change and change with the times you have a better chance of attracting them. david: thank you both very much for being with us. alix: take a look at pg&e. their operating costs higher-than-expected. they are not provided earnings guidance at this time. they are citing uncertainty on the chapter 11 and regulatory reforms. they're like, what is the point of reporting earnings? david: taking a chapter out of boeing's book. they said we do not know, we will not provide any forward guidance. we have to sort it out. coming up, consumer spending power as seen in the tech industry. today's installment of the real

economy series. live from new york, this is bloomberg. ♪

viviana: i'm viviana hurtado in the hewlett-packard enterprise greenroom. coming up, an exclusive interview with roger crandall, massmutual ceo. david: time for all of the league. a deep dive into stories making headlines and moving market with insight from industry veterans and insiders. all this week we are taking a look at how the u.s. economy is doing by talking to ceos of companies who need to navigate through it. we have speaking to ceos of three. today we are looking at the real economy with logitech.

abigail doolittle takes a look at how the performance stacks up with the economy. abigial: logitech's business is an interesting tell. their personal computer and mobile device company. up top, we have a high-growth segments, gaming and video conferencing. those are high-growth segments. if they are growing, that suggests confidence is high. in the middle, mice and keyboards. orientedis very m&a and inquisitive. that is another area of growth. where the growth is coming from, the biggest portion is from the americas and that we have europe , the middle east, and africa. both of those areas are affected by the economy. asia-pacific, bloomberg intelligence was telling me that the china economy does not matter. gaming in china is such a big

area, especially since they are releasing this ban on new games. let's bring it back to the u.s.. yellow we are looking at the s&p 500 since 2016, white logitech, and in blue consumer confidence. the s&p up 45% and logitech up 40%. look at how logitech and consumer confidence track each other. the s&p 500 looks like you might be ahead of itself given that logitech and consumer confidence are down. alix: great stuff. we welcome bracken darrell, logitech ceo, and brooke sutherland joining us as well. help us answer the question. do you think the s&p 500 is ahead of itself, how is your business? thaten: i find it exciting our business tracks consumer confidence. we continue to see a strong market in the u.s.. we just reported earnings for the year. we were up double digits again three years in a row. gaminggest segments,

were up 33% and videoconferencing is up 44%. david: what is the biggest growth territory going forward? probably videoconferencing but gaming should continue to be good. brooke: i want to ask about videoconferencing. we are not seeing the capex in -- one area investors have called out is technology. are using that trend from tax reform? bracken: i do not know that his tax reform related, but if you're under 30, you make two calls. you make calls on air pods, and call sitting down on video. have a limitedes number of videoconferencing room. the enabling of those rooms is low-cost and critical going forward. that is what is driving our business. brooke: we talked earlier about

china. i want to drill deeper. we had qualcomm talking about weakness in china. what are using their? -- what are you seeing there? bracken: we have had a great trend in china where we have been growing 20% plus. wehink it will cool down but expect good double-digit growth in china. david: are you facing more competition in china and asia? bracken: we have always had strong competition in china. china is our second largest market. we have great market shares, great growth rates. we always have tough competition but it has made us better. we compete very well in china. almost completely internet-based . 70% of our business is online in china. alix: where you feel the growth will be this year? bracken: i can only speak for us. i think we will continue to see broad-based growth. for us, so much of what we do,

we tend to be the big fish in the small pond. it depends on our ability to innovate and bring the story to the rye fire, whether a business -- to the right buyer. i believe gaming will continue to be good. videoconferencing will be good. even good old-fashioned pc peripherals will be good. brooke: you got a lot of questions on their earnings call about your fiscal 2020 guidance. where you stand on that? do you think there are upside? are you comfortable with the range you gave? bracken: we just gave it the first week of march. it is so recent. we have 11 months to go. we do not touch our guidance. i think it was right guidance to give and we will stick with it. david: will we have peripherals? what happens where you have language recognition and do not need to go through brings -- go through things like mice. bracken: this has been a

discussion since i joined the company seven years ago. a lot of people said logitech is done because you do not need peripherals anymore. the truth is nothing happened that way. the convenience of being able to manipulate something on the screen from sitting back is always there. using your voice is not always great. i think the good old-fashioned keyboard and mice will be around for a long time. alix: if you want me forward ahead, you feel like you will stay levered to the consumer or more levered to businesses because of videoconferencing? bracken: we will be a good solid mix. it is hard for me to calculate how much is in each segment. the obvious is video butaboration, which is 10%, if you look at our mouse and keyboard and webcam, they are also there. i would expect that would grow at the same rate. we are broadly exposed to the consumer and narrowly exposed to business. we will probably brought in that on the business side. you talked about

investing in your sales force in the past, are you having trouble finding people? are you getting people in those jobs to do what you need them to do? bracken: i would not say we are having trouble finding people. it is mainly on the enterprise sales force. we are learning how to build the enterprise sales force. it is kind of a new thing for us. we have had a lot of great people in the company and we will keep doing that. david: what is the biggest gate you have to get through? what is the risk? i say the quiet strength we have is risk management in our portfolio. the companies exposed to one category are at risk. a single category inevitably does slow down. because we are in 26 different categories, we are a portfolio of risks, just like investors have a portfolio. within each one of those, there are different risks. is youl thing about us

saw the consumer confidence seet, if that confidence go other way, we have the upside in videoconferencing. if you want to save travel, all .ou cfos, call me for $900 you can have videoconferencing anywhere. one flight will pay that off. it is a no-brainer for us. i will come back when the consumer confidence goes down and we will see. you talked about gaming a little bit. it was a strong quarter in the fourth quarter. a little bit off the pace of your target with 13% constant currency growth. you see that building over the year? we gave ourn guidance in march we lowered our gaming expectations because of the fortnight affect. fortnight was such an engine of growth, so we are not thinking something else will explode the gay market. the long-term secular trend -- the gaming market.

the long-term secular trend continues. we have already assumed that in our business. here is a wild fact. more people are watching people play video games online that are watching espn, netflix, hbo, and probably bloomberg combined. this is a trend -- almost all of them are under 30. alix: david knows. he feels the pain with his 16-year-old son. bracken darrell and brooke sutherland, thank you both. a hardup, the chance of brexit is low according to david solomon. we discussed next. this is bloomberg. ♪

alix: david solomon is speaking to shareholders. a little brexit chat. he says the chance of a hard brexit is low but they have moved a number of people to the continent. this echoes what we heard

earlier in the day. david: we had mark carney sailor best case is a smooth brexit, which makes his job easier than planning for a huge recession. alix: yes, but then he has the code midst -- convince the market they are underpricing a rate hike. if it is smooth, the economy will pick up. things he saidhe is they are not investing because they're not sure. alix: hiring, not investing. that wraps it up for us. coming up on bloomberg -- the open, chris harvey joining jonathan ferro. this is bloomberg. ♪

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

jonathan: coming up, the fed taking down rate cut back. chairman powell says soft inflation is transitory. china and the u.s. inching toward an agreement. one report suggests a deal could be done by next week. the smallest of improvements in european manufacturing data. enough to lift gloom from the euro. 30 minutes away from the opening bell. futures unchanged. slightly negative by not even a point on the s&p 500. euro-dollar down to 1.12. u.s. 10 year. we begin with jay powell upsetting rate cut bets. >> core inflation unexpectedly fell, and as of march stood at 1.6%. we suspect transitory factors may be at work. >>