the tariffs were doing? because they broke the deal. alix: president trump says china will pay as the clock ticks towards higher tariffs. investors move into safe havens. equities sink. the market tries to define a trade deal that may never happen. shunning the 10 year, the worst demand for a 10 year auction in a decade. have investors reached a breaking point? david: welcome to "bloomberg daybreak." part of the news this morning, "the new york times" as an article from the cofounder of facebook that says it is time for the market to start regulating. alix: it was a really wonderful read. facebook at harvard, so he knew -- so he's known mark zuckerberg for a while. david: he says break it up, get

rid of instagram, get rid of whatsapp, and even as you break it up, you still have to regulate it. we need a new agency to regulate social media. alix: this really brings up what is at stake for tech in the 2020 elections. in the markets, it is a risk i feel, but we are off the lows of the session. s&p futures down 6/10 of 1%. the yen climbing higher. dollar-yen breaking through some key support levels. that could also be per dissipating in some kind of upside. same thing for the treasury market, yields down by three basis points. buy todayu want to after that terrible auction? david: at 8:30 we will get u.s. economic data. also, fed chair jerome powell

speaks in washington, followed fedr in the day by president and governor. the treasury is going to be auctioning $19 billion in bonds after a disappointing auction yesterday. finally, we will get the pricing for uber's initial public offering, going on sale tomorrow. in the meantime, it is time for bloomberg first take. we are joined by pelley collins -- by peggy collins and michael mckee. we have to play it again. it was just too good to miss. here's what the president had to say last night about breaking the deal. pres. trump: by the way, you see the tariffs we are doing? because they broke the deal. they broke the deal. [cheers and applause] pres. trump: so the vice premier is flying here tomorrow, good man. but they broke the deal! david: i think he think they broke the deal. what is he talking about?

michael: apparently they thought what they were very close to a chinese usee language they thought walked back on what they'd agreed upon. how can you be sure they follow through? we talked about it as the made in china 2025 issue. we are asking them to significantly change the way they operate their economy, and that seems to be a bridge too far for xi jinping. david: and they have until tomorrow. alix: trump's lighting was not good at that rally. [laughter] alix: come inside the market here. the s&p sitting on its 50 day moving average. it feels like we had a lot of weak hands in the market, and a

little bit of what to be strength at the end of the day. peggy: the trade deal had faded into the shadows somewhat in but aof investors' minds, lot of the sophisticated traders hadn't really gone back into this rally. they pulled a lot of money out of the market in december and haven't really, so could it create somewhat of a floor? michael: we've got an interesting market put, though. all it would take would be one tweet to turn it all around. if he says they are going to meet and they close higher. david: we have to turn to that 10 year auction yesterday and what happened. it is the lowest in 10 years in the bid to call ratio. what happened here?

michael: it looked like people were not wanting to take on as much duration risk given the fact that yields have been hovering sort of lower. not necessarily at their lows, but lower. there's some concern about what is going on in the u.s. with the china trade talks. the yield premium over the two-year is that great, which means maybe the 30 year goes a little better because you have a bigger spread. there are concerns about who is buying. primary dealers had to absorb a lot of this supply. suggests there is some concern about low yields. alix: and the whole conversation about it costs a lot to hedge now, too. that story is now percolating back into the market as well. peggy: that is a great point. if you are a pension or institutional investors, chances are you already bulked up on your fixed income part of the portfolio, so how much more do

you want to go in for something that is not really yielding that much? instead we are seeing investors reach into riskier or more liquid assets. david: how much is this reflecting the diminishment of the use of the dollar in terms of reserves? since president trump took office, it has gone down around the world. michael: definitely there is a move away from u.s. treasuries. it will be interesting to see what happens if the tariffs go on. chinese participation through indirect bidders was lower for a couple of options. if they pull out of the market altogether, they are not going to selling treasuries -- going to start selling treasuries, but do they start buying? the u.s. average household has been big buyers. how much more can they absorb? with all of this debt we have to finance, maybe yields do start turning around if things don't start looking better. alix: it doesn't matter until it matters. david: jamie dimon called it. alix: yes.

peggy collins and mike mckee, thank you very much. you can find all of the charts that were used just now and throughout the next two hours. -- go to gt vigo on your terminal. this is bloomberg. ♪

kailey: this is "bloomberg daybreak." hughesk cofounder chris says it is time to break up the company. he writes he is angry that ceo mark zuckerberg's focus on growth has led him to sacrifice security and stability for

cliques, saying zuckerberg's power is unprecedented and un-american and is not enough enough- and it is not for the government to impose a fine on facebook. chevron has until tomorrow to come up with a new bid for anadarko. their last offer was for $33 million. artists ---- of novartis will pay as much as $1.9 billion if it reaches certain milestones to acquire to keita. to acquire to the chinese government promptly announced that if tariffs are raised, it will take what it calls countermeasures. we welcome now principal with

-- it is good to have you. with us what went wrong -- good to have you with us. what went wrong? this is a big change from where we were just last saturday. guest: it sure is. two weeks ago we thought we saw on end game to these trade talks. we weren't sure if we were going to get a comprehensive deal, but it seemed like both sides were committed to reaching agreement by the time the vice premier arrived in washington, scheduled for today and tomorrow then last weekend, president trump tweeted we are going to raise tariffs on friday, and in fact, the chinese overnight acknowledged that and said china will take countermeasures as nursery -- as necessary to protect its interests. concerns that happen in the final stage of the trade

negotiations, whether there is backpedaling, some reneging on prior commitments, and it seems like that is exactly what we have here today. both sides returning to a little bit more brinksmanship rather than focusing on coming to an agreement by friday. it looks like an agreement won't be reached that will stave off the imposition of tariffs by the u.s. side on friday then inviting chinese retaliation. we are in this thing for a little bit longer. suggest, there are other trade negotiations that have gone a little sideways at the very end. although we are the number one and number two economies in the world. is there a middle course between breaking down and getting a deal by friday? is it possible the united states might say it is going well enough, we will extend that 72 hours? amy: that is what happened last time. you are absolutely right.

president trump and december xi met in and decided the proposed tariff rate would not go up on april 1. then, at the end of february, when we were looking at that 90 day deadline coming up, the u.s. side said negotiations continue. we are going to postpone imposition of tariffs so that the negotiations can continue after april 2. it seems like the u.s. side is saying now we really need to see progress or else these tariffs are going into place. the u.s. side clearly feels the need for this additional leverage to bring the chinese back to a real set of agreements. david: thank you so much for spending time with us today. co of albrightli stonebridge. alix: over the past five days,

the dollar is weak against the yen. these are all moving averages. if i zoom in, you can see the fall that we seen in the last couple of days breaking through all key levels of support. joining us now is mike mccormick of td securities. is this a true safe haven bid, or short covering? guest: i think it is short covering. markets were not priced for this. the focus the last couple of months has really been a reallocation in global equities, particularly emerging markets and equities. no one was prepared for a tweet to say the u.s. and china trade deal wasn't moving forward or wasn't progressing, or could be delayed. alix: is that why the euro is holding up? mark: i think it is interesting because i think the euro has a little bit of breathing space. before, everyone was focusing on auto tariffs because we have a

may 14 potential deadline between the u.s., europe and japan on auto tariffs. the euro has been building and risk premium. people were thinking if trump and china agree on this trade deal, the next pivot is to europe and japan on auto tariffs. i think this is why the euro is running relatively cheap to the models we run. i think this is why the euro is a little bit insulated. yen is rallying, but euro-dollar is unchanged. i think the focus here is on the equity story. david: if we've taken some of the optimism out of the market, how much have we taken out? we don't know how this is going to play over the next 48 hours. mark: our base case is that this is kind of a release mechanism. this isn't a pure driver of what is going on in global markets. markets are focused on the central bank pivot in the global growth story. this creates some risk to the

global growth story, but the global economy is doing a little better than what people thought it would be three months ago. think this is a drawdown. this is a tactical pullback, a positioning squeeze. i think this is worthy of maybe a couple of weeks or months. both the u.s. and china have pretty strong positions to articulate their brinksmanship from. china has seen their economy stabilize, data improve, and the u.s. is coming from a strong position. q1 gdp was good. data is not too bad. the fed is giving them a cushion. both of them are coming from a source of strength, but the medium-term game is that there's an election next year, so also you've got u.s./china trade talks, the auto dispute, usmca. all of this is going to be trump'sut and what are needed victories.

one leg of the story was that yields are too low or looking at a budget deficit. therefore, that will be bad for the dollar. is that story yet playing out? mark: there's kind of a breakdown. the rate story is telling you one thing, a little bit of doom and gloom. you are pricing in cuts from around the world, from the rba and rbc, one cut from the fed. youmarketplace was telling a completely different story, that the markets are ok. no one really want to hold u.s. treasuries, and no one wants to buy them because of the cost of hedging. the correlation between rates and the u.s. dollar in broader currencies has broken down. the thing that has been driving the dollar is really equities. this is why the yen is so sensitive. this is why the swiss franc is so sensitive. you can even see institutional treasuries from

the japanese is falling. there's going to be a lot more supply of u.s. treasuries because the u.s. has to borrow a lot more money. where is the demand going to come from? it seems like international buyers are pulling back. the fed now is pulling back. who is going to buy all of those treasuries? mark: that is a good question because the marginal buyers are disappearing. if we see things change like political risk, people come back , and that world there isn't a new marginal buyer for u.s. treasuries. what you have is potentially a weaker u.s. dollar with higher rates. it is not a two-year trade. it is kind of like the 30 year, 20 year rates in the u.s. are rising because of the supply and demand mismatch, but that is not coinciding with a stronger

dollar. the other thing is global inflation moving lower. there's still a macro element that caps the term premium, but there is an element that the buyers have disappeared. no one wants to buy u.s. treasuries because they are too expensive to hedge. alix: where's the volatility? you come inside the bloomberg. obviously the white line is equities. the vix pops. you have idiosyncratic volatility. where's my vol? vol: this is an equity story. inflation is a critical macro voler of ethics -- of fx and inflation vol. it is kind of wobbling a bit. i feel very comfortable in an options space feeling the dollar and yen moving lower.

you could probably buy dollar-yen call options very cheaply and be able to say this is kind of a quick tweak to volatility, not a structural change. there's a lot of things going on. this is kind of like a positioning drawdown. it is not really driven by fundamentals of volatility, but this is kind of everyone getting washed out of this equity trade, which no one is prepared for. they thought they had the momentum. we think volatility is going to remain lower for longer until we are talking about hiking rates again. until then, we are fading these short-term moves in vol and the dollars to buy and the very short run. david: coming up, disney beats estimates and the second quarter, but the cost of its streaming business may be takes a little bit of the magic away. wealth discuss with research management director next. alix: you can check us out at

gtv online on your terminal. ask us a question or reach us on twitter. this is bloomberg. ♪

david: disney announced earnings beating estimates on earnings-per-share and overall revenue. ryvickerme marcy of wolf price management. what did you make out about existing business? i did see espn subs were down again. guest: on the old business, pretty much every segment beat. down, itn subs were was expected, and investors are realizing espn is not the driver of this stock as it once was. david: what struck me about the

"avengers" movie, it won't make as much money now because they have 70 people in the cast, right -- they have so many people in the cast, right? guest: i think they are managing expectations. david: let's talk about the news disney. first of all, the integration with fox. marci: it sounds like it is going well. what is funny as we didn't get a lot of information. i think that is a positive for the stock because we didn't get everything out once. what we did get is that disney is speaking with comcast about buying their 30% stake in hulu. we didn't get the upside in synergies in stock. we didn't get when fox is going to be attributable eps. i think there's still a lot of positive catalyst to come. david: and what about the streaming service? it is pretty expensive. marci: we've known that.

they laid out the cost structure. what we don't know is the cadence of the quarters. we don't know exactly in what year all of the costs start. the more important point of the segment is that revenue beat. we got the hulu subs higher-than-expected. this really is a segment about revenue growth and subs. it is not about oi at this point. we are just wondering when they had profitability, and they told us that that will be in 2024, and i think that was good enough. david: they've always been very proud of their balance sheet. they've got a lot of leverage right now. when are they going to get that down? marci: we have them getting down , and they also sold sky which brought in about $15 billion.

i think they will get down at about three quarters, which is a lot faster than comcast after buying sky. david: thank you very much. and they said when they would be including the new "avengers" movie in their streaming service. you probably care about that, right? alix: if you have a child, you cannot not own disney streaming. adult child.n an [laughter] alix: coming up, tensions on the rise in the middle east. the u.s. banning trade on iranian metals. iran give 30 days'notice and puts the pressure on europe. the implications, coming up next. this is bloomberg. ♪

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s&p futures off by 6/10. cyclicals really taking it on the chen. the dax off by 7/10 of 1%. safe havens come into play. dollar-yen continuing to climb higher. you are looking at the highest level for the five-day rally in the yen. the german 10 year yield negative six basis points. in lowest we hit was back march, -10 basis points. the 10 year yield lower as well, despite the fed option yesterday. 30 year auction today. good readthrough through on safe haven demand. it is risk off, but i wonder how much positioning versus real commentary of what is happening in d.c. david: exactly. oil stands up in the middle of geopolitical risk. now let's get an update on what is going on outside of the business world. kailey leinz is here with the first word news. kailey: president trump has turned up the rhetoric before

talks resume on a trade deal with china. last night he accused chinese leaders of breaking the agreement he was negotiating with them, but said things will work out. the president threatening to raise tariffs on $200 billion of chinese goods tomorrow. we are getting more details on the north korean weapons test, the second in less than a week. according to south korean military officials, the north appears to have fired two short-range missiles north of the border but south korea. the test firing -- the border with south korea. in turkey, the central bank unexpectedly raised borrowing costs in an attempt to bolster the lira. it suspended its one-week auctions that effectively raises the cost to borrowing for banks by 150 basis points. the cheapest rate had been 24%. the lira trimmed losses after the move. president trump is putting more pressure on iran to keep it from developing nuclear weapons.

he banned the purchases of iranian metals after the reports that it may be enriching uranium at discouraging companies from doing business with iran. 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 kailey leinz. this is bloomberg. alix: thank you so much. for more on iran and where the u.s. and iran are, joining us on the phone is richard nephew, senior research scholar at the center of global policy. theas also director of national security staff at the white house in 2011. there's no other person we want to talk to when it comes to iranian sanctions. what did you make of the news yesterday that we now have sanctions on things like iron ore, aluminum and copper?

really: i think it reflects the fact that we have already been posed sweeping sanctions on the rest of the iranian economy, so i think the administration was looking for new sectors that hadn't been targeted as extensively, and basically went down the list of all of iran's exports and from that metals were part of the mix. >> -- part of the mix. alix: is it going to be a game changer for iran? richard: i don't think it will be. it is significant to iran, probably about a $6 billion a year export industry, which is important in the context of an economy that is losing its ability to export oil, at least in theory. most of those exports are to their neighbors within the region, which means it is much easier to keep those transactions moving. you don't necessarily have to use the international banking system. i think the trade may continue notwithstanding the imposition sanctions. david: if the ultimate goal of

the administration in the united states is to do away with this agreement altogether, have the irradiance stepped into a trap that has been set by president trump? they are now escalating, putting europeans in the crosshairs. does this agreement go away? to some extent, and the iranians are very aware of that. the u.s.hy when withdrew, the iranians decided to hold still. i think that domestically, the political situation has been deteriorating for rouhani. he didn't feel like he could just stand fast and not do anything in the nuclear space, so they chose some measures that don't materially breach the jcpoa right now in order to buy some time and avoid that trap. tox: so that 60 day deadline

europe to back them up, what do you think the result of that is going to be? unfortunately for the jcpoa, the europeans don't really have the ability at this point to change the u.s. minds. they are not going to get the united states to back away from sanctions. it is highly unlikely they will get their companies to reinvest in iran. i think the 60 days will come and go without a whole lot of value for the iranians, putting them again in the box of having to decide whether or not they are going to retaliate by expending their nuclear program again. i think at this point, they see very little value in continuing to comply with the jcpoa since they are not getting the economic benefits, and are much more likely to escalate the pressure by restarting nuclear activities in 60 days. alix: can you walk us through what it means for the actual region? there's lots of reporting that

presidents took place between president trump and saudi arabia, how they team up in order to put the screws to iran. how does this change that story? ofhard: i think that part the story hasn't changed, other than the fact we haven't seen the saudis step up production all that much. i think they are still waiting to see what china, india and turkey do, and whether or not they continue to purchase oil or get subject to sanctions. the regional security situation is getting much more fraught. once iran restarts other activities in 60 days, i think we are going to see similar things out of israel, saudi arabia, and uae. that means maybe stepped up , stepped upemen attacks inside of syria, and there's always the persistent cyber threat coming from iran. david: we have a lot of

sanctions on a lot of countries around the world. you suggest that perhaps they are starting to bite on mr. romney in iran -- mr. rouhani in iran. is there something similar with kim jong-un in north korea? they've fired what may have been a ballistic missile. are they starting to have an effect on some of these regimes? richard: in the case of iran, they are definitely having material economic effect. i don't know as much in north korea because we haven't stepped stepped up those sanctions because of the summit process. we haven't seen real political change either in iran or north korea. the north koreans have yet to refuse to give up their nuclear weapons. that has been their position, notwithstanding u.s. pressure. to isk with that points that sanctions pressure can mount, but it doesn't necessarily change the strategic calculus or strategic interests

of the countries being subject to that pressure. we are finding that in both cases right now. david: take one big step back for a moment. when you are taking a look at sanctions, does the u.s. government take into account the possibility that i imposing too many sanctions, it may lose some power? particularly when it comes to europe, ultimately the power is for the u.s. dollar and the clearing process. willere a danger that they figure out another way to take care of business? richard: absolutely. i think this is a concern a number of former u.s. officials, including myself, but also folks like secondary jack lew, adam zip and, we've all been talking a lot over the last couple of years about how perhaps this is a tool we need to use a little bit more discreetly, and certainly with a lot more strategy behind it. it is because of all of those things you just listed. the u.s. economy gets tremendous

advantage from being at the center of the web, but we are also using that web a little bit too much for political and security interests, and that runs the real risk of having that web cutaway. alix: thank you so much. i will have more on the iranian sanctions at what it means for the oil markets today at 1:00 p.m. eastern time. we've been talking about the spot price lower in the physical market really tight, and why those two are not syncing up. david: we will get an answer, finally, because we have been talking about it. alix: i think i have an answer. we will discuss. david: coming up here, the man behind "the big short" warns we could see massive losses. this is bloomberg. ♪

kailey: this is "bloomberg daybreak." coming up in the next hour, lance fritz, union pacific ceo. ♪ kailey: this is "bloomberg daybreak." i'm kailey leinz with your bloomberg business flash. bitcoin has risen above $6,000 for the first time since november. the digital currency has been on a wild ride that side go above $15,000 before plunging to $300. long-term technical profiles continued to point to a new up cycle. the volume of opioids prescribed in the u.s. fell in the biggest decline in more than a quarter-century. doctors have become more cautious about giving out large amounts of the drugs in the midst of an opioid abuse

epidemic. another sign that growth maybe slover business is trying to build around self-driving vehicles. waymo has been testing their service in suburban phoenix. alix: thank you so much. we turn now to wall street beat. bett up, softbank's uber paying off. eiseman on massive bond losses. steve eisman of "the big short" fame says there could be massive losses. and former countrywide financial ceo has some new warnings on the housing market. david: joining us is peggy collins. so softbank is getting a big payday out of uber's sale tomorrow. peggy: one of the things to note is we have seen lyft go public earlier this year, and that has

been a bumpy ride. it will be interesting to see. certainly softbank earning gains from their uber holding. they are the largest shareholder . the pricing tomorrow will be a big day. alix: also a super juicy gain on ,arden health and india's oyo but a loss when it comes to nvidia, so not everything was perfect for them. peggy: it is a giant fund in terms of where their growth is coming from, their vision fund, about $100 billion. they are going out to market for a second vision fund about the same size. these earnings could help in terms of investor traction for that. to be known asd a cell phone company. not anymore. short"isman of "the big

warned of big losses if things go sideways in the was economy. >> i think the financial system of the united states is safe. that doesn't mean we won't have a recession. i think there will be massive selloffs in the bond markets because there's a lack of liquidity, but that will be a problem for people who invest in the bond market. david: that's a little bit of a warning from mr. eiseman. peggy: we have seen a number of investors .2 december in terms of a lot of the outflows from leverage loan funds, and that there's been an exclusion in corporate credit. interesting i thought he was saying that the corporate debt market was not necessarily going to cause the next recession, but that is where the most pain would be. alix: i think there's a lawsuit in the leverage loan market that says that basically they should be treated as securities and with more transparency because there is so much money in it, and they won't have the kind of information you need to make better decisions. peggy: right.

investors are starting to ask for more transparency around it because there are starting to become some more warning signs where people are saying i hope these bonds are going to hold up if we have some issues in the broader economy. alix: totally right. peggy collins, thank you very much indeed. the former countrywide ceo critics there would be changes state and nation deductions. >> you are going to see more of these houses for sale. the question is what happens to this over time as these houses cannot be sold, become either price down dramatically, reduced price dissection -- price

deduction, or focus down. >> even though these are big-ticket properties, many of them still have substantial mortgages. who's going to be left holding the bag on those mortgages? >> the people who made those mortgages. >> thanks? -- banks? private investors? >> all of them. anyone who owns that paper. they are on the balance sheet. those who possess the balance sheet are going to have issues. >> a lot of those jumbo loans are on bank balance sheets. >> that's right, because they thought they were safe. you are dealing with high-quality properties. you've got all of the pieces together. it should work. >> so the banks could be blindsided by the trump tax cut. >> could be. we will just see what happens. there's a point at which people will throw in the towel.

we see that they did. they threw in the towel because the value of the home was below the mortgage amount. because it is now an investment and not a home, i'm out of here. what complicated it is people didn't leave the homes. they start making payments, then leave, and the government protected them. i know of one loan at countrywide that is now 11 years that has not made a payment, still living in the home. and it's repeated all over the country like that because people were protected. they didn't have to get out because of bankruptcy. >> and the moral of the story is? >> i just think that the moral of the story is when you see

and things look so good, it is time to pull back and worry. we talk more up, real estate with the ceo of rx rxr, which is just made a deal for premium rockefeller space. this is bloomberg. ♪

david: a new deal announced just a few minutes ago between rxr realty and we work. we welcome now the chairman and ceo of rxr. how does it work? we put together rxr, rockefeller, and wework. tenantshey are offering >> ability so they don't have to

sign -- offering tenants flexibility so they don't have to sign long-term leases. the companies need that >> ability and put a premier monitor, so we structured a deal -- need that flexibility and put a premium on it, so we structured a deal. right now it is vacant space wew ork is going to take the initiative of building. we are repositioning this whole building to be able to deal with how customers are changing. ofid: but i think of wework being sort of industrial space, loft space, not rockefeller center. scott: the entire ecosystem of how people work is changing. people used to work 9:00 to 5:00. now they work five cut to 9:00 -- five a clock to 9:00 -- 5:00 to 9:00.

we are being a leader of creating buildings and urban centers that are for the 21st century and create that sense of community. alix: they may have a community come about they can also come in and out. ,f i am renting space at wework how does that translate for you putting the capital upfront for the building? scott: there's a flexible office space and an enterprise product. the enterprise product if they work with fortune 500 companies and become that one-stop procurement. if you are a major company and you don't know how much space you will need for how long, and you don't want to go through hiring a broker or an architect, they can call wework to be in this marketplace, be active really quick, but only needed for three years because i don't know where my business is going. the product you are referring to is more of the co-working product, which as you can get a desk for a day or two.

this is going to be an enterprise product, the longer-term. david: you have a long-term deal with wework. scott: we have a 15 year lease with we work. we continue based on their ability to rent the product. they are providing more customer flexibility and we are sharing in that premium. david: is there some discount there because he read getting an upside? scott: we end up getting a premium to market rates because wework is able to get a premium .or market rates alix: this is obviously a new kind of paradigm for the real estate industry in some ways. what is the risk when you are betting this? what is the thing you want to do clear out? scott: whole real estate industry is going for a paradigm. people are working differently, so companies are changing the

way they want to have space available to them. our business used to be about building four walls and signing long-term leases. today it is about activating and curating what is happening within those walls to really create a sense of community and energize that space. the most important ingredient for a company in this 21st century economy is talent. they are willing to pay more to be sure they can attract that talent. david: so you also have an airbnb deal. scott: right. we announced a deal was airbnb. 75 rock is a model of how you can reimagine a building that isn't just active five days a week for 10 hours a day come what 24 hours, seven days a week , and how you can provide the amenities, services and programming. with airbnb, we are taking 10 floors of this building and creating apartment style

hospitality so that you can actually travel like you live in new york. you come home and it feels like an apartment, versus a hotel, but it has the standards and services of a five-star hotel. alix: interesting. thank you for bringing more tourists to rockefeller center. [laughter] alix: thank you so much, scott rechler, of rxr realty. day,g up on this risk off his position unwinding, or is it a fundamental shift as the u.s. and china prepared to meet in d.c. for the latest round of trade talks? this is bloomberg. ♪

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every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. ♪ pres. trump: by the way, you see the tariffs we are doing? because they broke the deal.

they broke the deal. alix: president trump saying china will pay as they prepped to meet with the chinese delegation. shunning the 10 year. the worst demand for tenure auctions in decades. have investors reached the breaking point for low yields? the 30 year auction is on deck. we speak to lance fritz, ceo of union pacific, on trade, u.s. growth, and running a business in the middle of political uncertainty. david: welcome to "bloomberg daybreak" on this thursday, may 9. i guess everyone is still talking about this chris hughes piece in the sunday "new york times." we took a look at it this morning. alix: as you were pointing out, he really believes it. basically, this is chris hughes, the cofounder of facebook, who has known mark zuckerberg for 15 years, basically calling for the breakup of facebook, saying it is mark's humanity to makes him such a big liability, and there

needs to be some oversight. david: he's very concerned about the concentration of power. we talked about that with a lot of democrats, elizabeth warren, for example. he really goes through this in some detail, the legal and social consequent is. alix: but not even just democrats. republicans, too. that the nexts phase will be what you do about big tech, how do you regulate it , and do you need to break it up? how do you do that? david: they made a huge mistake when they let them buy instagram and whatsapp. first thing to do, make them sell them again. alix: but this would basically have to violate antitrust laws. you are an antitrust lawyer. correct me if i'm wrong, but if it lowers costs for me, it's fine. david: the way the courts have interpreted it since the 1970's, that's right. you are going to have to change the law, which is what elizabeth warren is advocating, but chris hughes has a very well thought

through, well reasoned piece. alix: it was really brilliant. definitely want to read that in "the new york times." the power of the market is to the downside. s&p futures down by 7/10 of 1%. it is a safe haven story, full stop. u.s.. lower here in the here's the bid. where was it yesterday? who knows. was there something to be said for not wanting to buy u.s. debt, or was that a day where you didn't want to buy u.s. debt? , withalso participating geopolitical tensions bubbling up for north korea and iran. tune in at 1:30 and you will know everything about oil. david: we are going to get u.s. economic data today, including ppi for april and jobless claims for last week. fed at 8:30 this morning,

chairman jay powell speaks in washington, followed by fed presidents and a fed governor. auction 30y will year bonds after the disappointing tenure auction yesterday. finally, after the bell today, we get pricing for uber's initial public offering, which goes on sale tomorrow. let's return to the u.s./china trade dispute. until sunday, we thought that trade deal was on track, but then president trump tweeted he would be upping tariffs as of tomorrow, and last night said they "broke the deal." pres. trump: by the way, you see the tariffs we are doing? because they broke the deal. they broke the deal. [cheers and applause] pres. trump: so the vice premier is flying in, good man. but they broke the deal! you spent three decades

in the trade representative's office negotiating with the chinese and others. welcome. really great to have you here. guest: good morning. david: i think he thinks they broke video. what is he talking about -- broke the deal. what is he talking about? guest: what he is talking about is apparently china took things off the table that the united states thought they had agreed to. this late stage in negotiations, that is bad faith. david: is that unusual in a trade negotiation? you've done a lot of these. is this not heard of, or is it just that this is such a big, complicated, important one? wendy: this does happen in late stage of negotiations. countries get cold feet about what they've agreed to and see if they can walk some things back. but the magnitude and the gravity of this application is -- of this implication if this thing breaks down is so much

greater than any of the negotiation. we may see tariffs increase on over 200 billion dollars worth of imports from china. the stakes are high now. tomorrow, theight u.s. has officially issued the notice that they will impose these increased tariffs. can humpty dumpty be put back together again in that short time? wendy: nothing is over until it's over. we have the vice premier coming here to meet with lighthizer and mnuchin later today. let's see what he brings. he may be able to convince the they canation that head towards some kind of successful conclusion. but it is difficult. this is going to be difficult, and particularly given the latest development of taking things off the table. david: the way i've heard it, what's happened is they think they have an agreement, and then they go back and draft it, and the u.s. says that is not what it says.

if that is the problem, how can they get that resolved in the next day and a half? the u.s. will say you've done that same thing again. wendy: my understanding, this time around it was china sending back a draft and crossing back stuff they'd agreed to, so it is a little different than what you said, but still, he can say now we can accept that language, maybe say that i can't accept it that way, but here is alternative to achieve the same objective, or maybe come forward with a package of how to resolve all of the outstanding issues, and in the u.s. is faced with a decision. is this something they can work with, or something that is just unacceptable and they are willing to go ahead down the tariff route? let's be clear, china said last night they will respond with counter retaliations. high-stakes. david: can president xi do that without appearing to his country

that he has basically caved into the president of the united states? wendy: exactly. china is going to have to look very carefully at this deal and whether it looks like china did this deal because it is in its own interest, or in response to u.s. pressure. again, the pressure is enormous on both sides now. they are both facing a serious escalation of tariffs and other measures that are not only going to affect china and the united states, but affect the markets, global growth, the asia-pacific region, u.s. consumers, workers and businesses. important day in trade talks. david: you've persuaded me, certainly. cutler, asiawendy society policy institute's vice president. alix: come inside the bloomberg. the s&p sitting on a key level. joining us now is jim paul

sen from indianapolis. this is a severe disagreement with a lot at stake. how much more downside can we see in equity markets? jim: there can certainly be more. this president sure like to introduce volatility. there certainly could be more downside, but i think what is important as a couple of things here. odds are thatthe eventually, in the not-too-distant future, some resolution will be reached. just too high for and china, andes for the world. this thing could drag on for a while without much immediate immediatee but -- impact come about with tariffs on post sides -- immediate impact, but with tariffs on both

damagings could have effects. i think the pressure is going to be such that the odds of some resolution soon are going to be high. remember as an investor is if it drags into the next week and the like, certainly the market could go lower, but there is also upside risk. this is a two way trade. one thing that keeps this market from totally cratering on this news is that if there is a quick tweet in the morning that we got a deal, it could go the other way just as hard. i would look at this more on days as an weak opportunity to get your portfolio where you what to be after resolution is reached. that is the way i look at this right now. david: a trader can make or lose money day-to-day with all of this uncertainty, but what about some of the longer-term

consequences? with this much uncertainty in the marketplace, are we seeing ceos refrain from making investments that could affect growth into next year and beyond? jim: i think if this drags on, that certainly becomes a bigger and bigger risk. i don't think, if it is a matter of a few weeks, that that is going to be a major risk. if it drags out for months, that could be a different story, no doubt. it will affect expectations for the future, but i don't think in just a few weeks that is going to happen. and don't discount the good things out there, too, on the flipside of this. ceos are somewhat competent at the moment because we've got full policy support for the economy and for earnings to manon in the united states and around the globe. we've got increased money supply, lower yields, fiscal stimulus, and that is a lot of

offset to trade disputes. alix: and part of that you can see in the, in certain markets. you don't have volatility in treasury markets. it is really just an equity volatility story. so where is the biggest missed misprice?he biggest jim: i think the bond and stock market are, to me, the potential to move the most on an agreement. i think yields could come up a lot. i would not be surprised if we get beyond this and the economy re-accelerates, that bond yields could move quite a bit higher. i would focus my portfolio mostly on those areas. i continue to be closer to minimum on my bond exposure, and i would be tilted bullish lee on stocks and take advantage of the -- tilted bullishly on stocks

and take advantage of the sectors that are hit hard. a lot of that is going to be the industrials and materials and energies. take advantage of those sectors right now and add a little bit in those areas to lift out of the defensive areas that are holding up better. that's how i would look at this overall. alix: jim paulson will be sticking with us. coming up, we will talk about the bond market with conflicting signals. investors showing no appetite for treasuries yesterday, while corporate debt issuance hits in 48 hours. this is bloomberg. ♪

alix: conflicting signals from the bond market. it was the biggest demand in a decade for the 10 year auction yesterday. then the corporate debt market is has them -- is having its busiest week in a month. still with us is jim paul sen of the lose hold group -- of the leuthold group. what is your take away? jim: from the corporate side, they are looking at extremely low yields here and a chance to raise some capital. if you look at where they could do it now versus last year, just 12 months ago, it is radically lower for the financial side. i think i can see the motivation coming from the corporate sector to do that. on the demand side, you got fromtors also reeling relatively low yields now on their high-quality portfolios, and trying to add a little more incremental return by some

spread from offering taking on some credit or structural risk. you can see where the demand is going away from the highest partty a little bit, in because it just doesn't give you as much. i think that is what we are seeing on both sides of the equation. david: with respect to u.s. treasuries, it particularly does not give you as much when it comes to hedging costs. this chart shows the nominal yield on the 10 year at the top, and then if you subtract the hedging costs, that is the glue on the white lines, which are way short of what the nominal yield is. how much of this is an fx problem? jim: i think it is a good point. i think we get a lot of dislocations with such a low rate structure throughout the world. negative yields in parts of the world creates some very bizarre outcomes, if you will, compared to what we're used to in the past. it is certainly the dollar

laying a huge role, with dollar , in the ability to hedge your portfolio risk across currencies. that is certainly affecting demand for treasuries here, as well as abroad. alix: no doubt if you're going to be buying risk in the equity market, you're probably not buying treasuries. what you do in the corporate bond market? bonds within your bond portfolio still play a role. they looked a lot better just a couple of months ago when spreads were a lot wider on both junk and investment-grade aadits, but you seen the spreads come in. they are still elevated from where they were last year, and from earlier in this recovery. i think within your bond portfolio, it still makes sense to have an underweight in the

highest quality areas and overweight in credit, as well as structure, to add incremental yield and give you a bigger yield bump if rates start to rise again. what it really comes down to is how close do you think we are to a recession. if you think we are close, of course you don't want to be stretching yourself out into credit. but if the recession is a few years off yet, then i think corporate bonds are probably going to significantly outperform higher quality governments. alix: so if you take that view to the currency market, for example, do you see the move we've seen in dollar-yen? the lack of move in euro-dollar? is that just position squaring since there are so many shorts out on the yen versus something more fundamental? jim: i think that is a difficult call. there's a lot of positioning going on there. we are not just having big movements.

volatility is low at the moment. it is probably more positioning on both sides. my own view is that i would suspect if we get beyond this trade dispute and the global economy picks up a little bit, i think we are going to see the dollar weaken again over the next 12 months, and that will become a bigger issue if it breaks some significant barriers. in the meantime, if it stays in this low vol range, you get more and more traders trying to add adds.mental david: thanks so much. you are going to stay with us. softbank's operating income triples, helped by its big bet in tech. more on that next in today's bottom line. this is bloomberg. ♪

david: it's time now for the bottom line, where we take a look at three companies worth watching. first of all, i'm watching alibaba. there is a report in "the financial times" they are going --o global, which made which may be a little message to someone called amazon. it will be very interesting to watch if they could go after this. alix: the u.s. is one thing, but i am particularly interested in india. david: exactly. alix: where amazon has had some difficulties. i'm taking a look at intel. you have a lower gross margin outlook percolating throughout the stock. even some of the bulls see any sign of upsides capped. even morgan stanley says shares are going to be under pressure in the short term because margins are so important. they are the best evaluation in

that group, but watch that today as we had to the open. david: let's talk softbank. for more, we turn to brooke sullivan, bloomberg opinion columnist. softbank had nice reported earnings. brooke: exactly what you want to see when you are reporting earnings, more than triple their operating income, largely on the basis of the gain in uber. they reported a $3.8 billion gain on their stake in uber. i do want to make the point these are paper gains. this does seem to suggest that they've made some really great bets, especially through softbank's $100 billion vision fund, but we will see how these play out. obviously the lyft offering has been rather a cautionary tale, but it does seem like they are trending in the right direction. david: are they going to have to start writing a letter like warren buffett does? this is kind of a berkshire hathaway kind of problem. they are worth more than it looks like on paper.

brooke: i'm sure he would love the opportunity to continue to expound on why he thinks softbank's valuation should be significantly higher. he thinks it should be roughly double what it is right now, and thinks investments are not being valued properly. that has led to these conversations of should you do an ipo of the vision fund. with that better capture the value if you had some of the berkshire hathaway type of structure? -- alix: how many more ubers can there be, or are there? they have so much money they need to put to work. brooke: and they are talking about raising even more money and launching a second vision fund. how many of these perfect unicorns are there out there? could you have more on the disappointment front that don't measure out to what they believe this company could be? i think nvidia is a really great example.

semiconductors were so hot for so long. m&a, so mucho much consolidation. but we have seen that downtrend, so these markets can change very quickly. david: you only need a few big hits to cover a lot of losses. you can put a lot of chips on the table and bet on a lot of things, and if you have a few ubers like softbank has, that will cover a lot of investments. alix: but like brooke says, it is paper gains. if they cashed out at the right time it would be a huge win, but maybe when they cash out it will not be that great for them. brooke: and it is difficult to time that as you just don't know. i think people were expecting a stronger ipo out of lyft, and that is not what we have seen as analysts say, is there ever going to be any profit? what is the cash flow? ipo, andch makes ubers

some ways, a lot more important tomorrow. david: it is going to be huge, but the one person following this closely, i expect, is the crown prince of saudi arabia. a lot of money in the vision fund. brooke: which raises the question, who do they go to when they try to raise for the second vision fund? do they go back to saudi arabia, or go outside of that? alix: brooke sutherland of bloomberg opinion, thank you so much. coming up, trade tensions and how they are weighing on industrial shipping companies. this is bloomberg. ♪

alix: chevron is walking away. they are taking the money and running during their not going to raise their bid for anadarko. there are putting the money in buyback.

buyback increased by 25%. is takingvron occidental money and buyback your shares. if your shareholder, that is not bad news. alix: not bad news. not great for anadarko and occidental in terms of share price. longer term, this is a free cash flow back. that is a good thing for the m&a market and a good thing for occidental. david: i'm sure what occidental would say is that is fine, we are investing in future production. alix: there also getting much more exposed to the oil price versus being disciplined and able to ring out efficiencies. they will be much more exposed oil pricing because they will have more leverage. that is longer-term worry versus the free cash flow production. david: apparently shell --

alix: we do not know. a point.ffett had david: i thought they would have taken that note. eco-data.o have ppi, if you backout foods and energy year on year coming in a touch lighter but essentially the same. 2.4%, month on month basis. up .1%. trade balance widened a little bit, back in line with estimates. initial jobless claims around 228,000 filing for additional jobless claims. david: no big surprises. alix: if we get a trade war with china, what does that do to commodities and input prices and the price index? it had been rising faster than ppi. does that conversation change or does it get worse as we see

higher inflation? david: i do not know whether we have talked enough about what it might do to an nation. -- due to inflation. people say it is a tax on the u.s. consumer. alix: or you could have market compression for companies. in the market it will be a risk off kind of day. dow jones futures off triple digits. european stocks also getting hit hard. cyclicals taking it on the chin. you can see the dax down 1%. in other asset classes know it is a safe haven story. yield down the bund to basis points. it is the longest losing streak since december 2018. the lowest yield since march. dollar-yen also lower. are we seeing unwind or is it fundamental? yields moving lower on the ppi number. maybe that is a commentary on

longer-term growth even though the 30 year option is right around the corner. oil moving lower. still with us is jim polson. a slight miss, but what do you make of the weaker producer prices when they have been holding up? what does that mean when he rapid into a trade deal or non-trade deal? jim: the biggest part is what it means for the fed. it allows them to continue to pause and be patient and that allows fields across the curve to contributed trips lower on the idea that inflation is a awol and it is not showing up everywhere. producer price is another advocate of that. this could change if we start to war, butrm -- a tariff

right now we're going in with low inflation. alix: thank you very much for joining us. david: time to find out what is going on outside the business world. we turn to renita young. renita: getting more details on that north korean weapons test. according to south korean military officials, the north appears to have fired two short-range missiles launched from a base 130 miles north of the border with south korea. the testfiring came after kim jong-un supervised the launch of several projectiles. one of those is believed to have been a short range ballistic missile. upsident trump has turned the rhetoric before talks resume on a trade deal with china. last night he accused chinese leaders of breaking the agreement he was negotiating. he says things will work out. the president is spending to raise tariffs on $200 billion in chinese goods tomorrow.

putting moremp is pressure on iran to keep it from developing nuclear weapons. he has banned the purchase of iranian steel and other metals a day after iran declared it may soon begin enriching uranium again. the latest order discourages foreign companies and countries from doing business with iran. 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. renita young. this is bloomberg. alix: thank you so much. i will be talking about iranian sanctions today on "commodities edge" at 1:00. david: an embarrassment of riches. alix: i need an hour. i cannot do half an hour. david: i want to turn to the industrial sector. cnh industrial is a global reader in industrial products. cnh reported its quarterly earnings earlier this week and

had earnings per share of $.18. sales fell short of analyst expectations. we welcome cnh industrial ceo. welcome. it is good to have you here. hubertus: thanks for the invitation. david: give us a sense of your company in the industrial sector. where he are you seeing growth and challenges? hubertus: we are modestly optimistic. we are the second largest agricultural equipment .anufacturing we are seeing a lot of growth in the area. the north american sentiment, with all the trade discussion, it is somehow muted. we did grow our sales in north america, it could have been more of we had a resolution on the trade issues. south america is significantly up more because the south american farmers are taking

advantage of the trade tension between the u.s. and china. a resolution to the trade deal is important. alix: continue. hubertus: we are also seeing growth on the construction side. we are guiding to 5% to 10%. with that growth we are also going to grow. if you look at our earnings, you can say we've been slightly short. up 2% on constant currency. we bet earnings significantly. of 30% on earnings and we continue to improve our profit margins. we did have a record first quarter. in this uncertain market environment, our share prices overreacted. alix: what happens if the trade deal does not get done? if there is more tension? if the european economy cannot pick up? elections in south

america as well. what is your pessimistic outlook? hubertus: i think the guidance we have given continues to see the trait rhetoric. we have not given any upbeat guidance this year. we believe we are cautiously optimistic that a trade deal could be found. if a trade deal is not found, it will not be good for u.s. farmers. we have a natural hedge with south america, because as the north american farmer suffers the south american farmer takes the benefit. in europe, we do have european elections and there is some uncertainty. sector hasven the ag been hammered, we see the worst is the sideways move in the first quarter in europe was really good. tractors were up, combines were down. we remain cautiously optimistic despite the uncertainty we are surrounded with. to emphasize, it is important we

get a trade deal with china done and we get a deal done around nafta 2.0, the usmca. the contract is there and it needs to be signed. that is of paramount importance for all u.s. businesses. alix: fair. in terms of the upside, you did not raise your guidance that you did not lower it. after you have your net sales it, 5% toreaffirmed 10% earnings growth. you must see some catalyst for recovery in the back half. hubertus: we are investing it innovation and precision agriculture. we are the leader in precision agriculture. we are seeing replacement demand continuing does write the rhetoric on the trade side -- despite the rhetoric on the trade side. farmers need to invest into better machines in order to get better yields and to compensate for a weakness in their soft commodity prices.

our industry is innovation driven and we are one of the innovation leaders and we have stepped up our innovation investment, and this is purely the growth we see at the top line. we modestly guide up on the top line growth and we will see another good growth on our earnings side despite the trade issues. alix: beyond -- david: let's talk about brexit. you have the largest truck factory in europe in england. do you have contingency plans for a hard brexit? that is not the most likely possibility but one cannot rule it out. hubertus: we are one of the largest truck manufacturers in europe. the facility we have in england is a facility for tractors. we have taken precautionary measures in light of a potential brexit, which is the reason we stepped up safety inventories in the first quarter, as many of our competitors have done. to be honest, if you follow the

brexit discussions right now, i'm not sure we will see a brexit. i think there is also going to be a scenario where we have britain stay in the european brexitand if there was a , it is probably going to be a soft brexit. we are not concerned with that. david: cnh industrials ceo. thank you for coming to us from chicago. ,oming up, from roads to rails we take a look at the competition in the railroad industry. ceo joins usific on the hundred 50th anniversary of the completion of the transcontinental railroad. alix: lyft is slipping below its last private market value. i have to wonder how much of that is because you have uber coming up and is it hard to bet on lyft and uber or how much is

fundamental to lyft's business? there were no big surprises. they settle these things. we will keep losing money but we will keep growing. alix: it is a tough day today. one stock bucking that trend is chevron, that stock up on the news it is dropping its bid for anadarko. chevron.l has to pay it will increase its buyback to $5 million a year. occidental stock lower on that news. they will definitely be getting anadarko now. much more coming up for bloomberg. this is bloomberg. ♪

renita: this is bloomberg daybreak. coming up on "balance of power," democratic representative tulsi gabbard of hawaii. david: time for follow the lead. a deep dive into the stories making headlines and moving markets with insights from industry veterans and insiders. today we are looking at the railroad industry on the 100 50th anniversary of the completion of the transcontinental railroad. railroads transport everything from smartphones to call. we just heard from the ceo of cnh about competition with railroads and truckers vying for share. we welcome the chairman and ceo union pacific, lance fritz. union pacific operate 64,000 railcars and nearly 8000

locomotives. it is great to have you here. lance: great to be with you this morning. david: give us a sense of your business right now. the size and scale but also its direction. where is largest growth coming from? lance: in size and scope, if you look to last year, we were at $20 billion a year revenue company. just south of 9 million rail callers a year. we employ about 40,000 people. the business is driven in part by our industrial products portion of the marketplace. to a lesser extent, our agricultural products is doing well. construction material is doing well, steel is doing well. industrial chemicals, plastics, ethanol. in the energy segment, petroleum , refined products are doing well.

there are a couple of soft spots going into the shell markets. coal is a soft spot. , ther premium product side automotive marketplace is softening just a touch but we are seeing some good strength in our intermodal products. david: we are awfully concerned with u.s. china trade relations. do you see any sensitivity to what goes on in trade with china? lance: most definitely. we see sensitivity in the agricultural product space. if you look back a year ago, china was buying about 40% of soybean exports from the united states and about half of all beans were being exported. it was a big percentage of total production. today china is out of the soybean market. those means are having to find another home in the export markets. pricing is down about 40%

, and that has a plea on impact to those agricultural impactties -- a bleed on to the agricultural communities. alix: that brings us to the efficiencies you can still wring out of your business. how much more low hanging fruit is there and what are the far-reaching things you have to do to keep your business strong. question.nks for the i want to say first, there is no such thing as a low hanging fruit. we started a 63 operating ratio. what we are doing is implementing precision schedules railroading, and that plan is called the unified plan 2020. at the same time, we've been implementing other initiatives. target isly, the safe, consistent, reliable service for our customers coupled with highly efficient operations.

we are getting those efficiencies by being much more productive with locomotives and freight cars, touching cars fewer times, moving them deeper into the network and having them dwell less in our yards. that means there is less work so we are getting labor productivity, but we are also getting productivity out of the fuel we consume. because we have fewer locomotives, we are spending less on material, on rent, on fees. , as we virtuous cycle run a more reliably consistent and efficient network. we are able to drop costs out of the network and improve our productivity. david: that helps your company make more money, which is the goal. what about market share against trucking? is that your biggest competitor and how is the battle over market share? lance: truck is definitely one of our biggest competitors. there are other modes we compete

against, that when it comes to take trucks off the highway, it starts with that safe, consistent, reliable service. we have been effective. we have grown our domestic product, which is literally taking trucks off the highway by 4% to 5% a year for the last decade. that is been a real growth engine for us. with all the concern about global warming and the environmental impact businesses and communities can have, railroad is one of the solutions. we are four or five times more efficient than truck. we are proud of that and we help communities leverage that. alix: going forward, what is the biggest risk using foresee -- you foresee in your business? lance: it is us as a society doing something that would break this wonderful expansion we have.

the most likely risk right now is trade and trade disputes. all of us know tariffs are a tax on the economy, but we get less of what we tax so i think we have to be careful and thoughtful about how we use tariffs to do the right thing, which is to get china to snap to and behave within the spirit of the wto rules. years took back 150 what the transcontinental railroad went to this country, going back to 1862 when abraham lincoln signed it. how has that transformed the country? lance: it is unbelievable and i'm so glad you asked about that. we will celebrate the driving the golden spike at the end of this week in utah. that is when we connected in 1869, the union pacific and the central pacific. , thath the last 150 years has fundamentally changed america.

it changed things immediately. a trip from san francisco to new york that took six months, or you risk your life started taking more like 10 days and relative luxury. it changed how people eight. foods were available that weren't available previously. it changed how we thought about connection and communication. it changed how we connected the glow. one of the things people do not -- connected the globe. the intent of the railroad was to connect atlantic to pacific, connect your to asia, and we became a critical trade route. it fundamentally gave the nation something to focus on to ties together after the civil war. it did that in tremendous fashion. pacifics later, union is right in the heart of building america. behind us you see #done. int means the job was done

1869 but the job of building america was never done. david: that is lance fritz, union pacific chairman and ceo. alix: coming up, overpricing is ipo later today. what i'm watching his next -- uber is pricing is ipo later today. what i'm watching, next. this is bloomberg. ♪

alix: here is what i am watching. lyft slipping below its last private market valuation and uber pricing after the bell. joining us is a bloomberg senior technology analyst. what does it mean for uber? >> i think they will price around six to seven times sales, which is a fair valuation when you look at some of the parts for uber. uber is a much more diversified company. one thing uber has done well is to scale their efforts for delivery. that will help them on the top line.

the core ridesharing businesses slowing down, but that is what will help them gain the 20% plus growth. alix: to investors go out of lyft into uber? how is that fly? -- how does that fly? >> uber is a much more diversified that and it has the scale and network effect lyft does not have. alix: thank you very much. looking forward to that. that wraps it up for us. coming up, the open with jonathan ferro. as risk on permeates in the market after that weaker than expected price index. as an be futures off 1%. -- s&p futures off 1%. ♪

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

jonathan: coming up, china's trade team headed to washington. equity losses, the threat of tariffs hanging over the markets ahead of the most anticipated ipo in years. uber prepared to go public. 30 minutes until the start of trading. futures at their lows. down more than 1%. in the fx market, euro-dollar around 1.12 as always. treasury yields coming down five basis points. yield is 2.44%. we begin with heightened uncertainty ahead of trade talks weighing on markets worldwide. this is the view from goldman sachs. economists now saying new terms are more likely than not. writing "the odds are higher that new tariffs will take effect