germany makes bond history. yearmpany sells 30 debt at negative yields. and it is the fed versus everybody else. the san francisco fed president says the u.s. is not headed toward recession, while barclays sees three more cuts this year. and stocks set to open at a record after killer quarters from toys to groceries. david: welcome to "bloomberg daybreak" on this wednesday, august 21. we will not have a state visit from our president to denmark, and why? alix: because greenland is not for sale. david: he's offended. he's supposed to go for a state visit, but he wants to buy greenland, basically. alix: this sort of took everyone by complete surprise. one of the leaders of the ivernment parties was, like,

can't believe we didn't tell him it wasn't for sale. i can't believe this is even a conversation. david: when this first came out, every one thought it was a joke. he's just getting -- he's just kidding. and then maybe not so much of a joke. alix: do we know why he wants greenland? david: because the arctic, particularly because of climate change, has become much more important. there are really strategic interests in greenland. in fact, president truman tried to buy it in 1948 for similar reasons. you invited meis to my house, i'm not coming unless you sell me something. alix: in the market, we had retail earnings coming out. we get a nice rally underway here. euro-dollar is flat. it is a mostly weaker dollar story in the g10 space. selling in the bond market with the exception of italy.

inflation expectations continue to rollover. no one taking any big positions headed into jackson hole. the question is how you hedge this. david: time now for the morning brief. at 10:00 this morning, we get u.s. existing home sales for july. at noon, german chancellor angela merkel meets u.k. prime minister boris johnson in berlin. reserve minutes from the july meeting. alix: now we are joined by gina martin adams and luke kawa. let's get the headline of the morning, and that was that german bond sale. 30 year was -11 basis points, but what struck me is it wasn't as strong a demand as and was necessarily expected. luke: i have to shrug off any fromof low demand treasuries, or whether it is across the pond. it hasn't been reflective of the

general environment, where there seems to be a huge appetite for fixed income and any yields, including negative yields. perhaps this is the bell rung near the top, but people find a reason to buy fixed income whenever risk aversion strikes. david: what is the relationship with the equity markets this morning? gina: the story for equity markets is at least the rally in bonds appears to have stabilized. there is a lot of fear in early august as yields were just plummeting. the equity market was caught off guard, thinking, where are we going from here? but you have seen some stabilization in yields, and that is probably enough to create a little bit of confidence that maybe the world is not ending. is yields the reality have gotten so low that investors are getting forced into alternative asset classes, whether it be credit, equities.

they are desperate for anything, and not as willing as we might expect for them to pay consistently lower and lower yields over time. alix: but does lower yields mean you want to buy equities, or is it started to be like, wait, we don't want to buy equities? luke: definitely the latter. there's been this huge change in how the relationship has been. washe last quarter, there an incredibly negative correlation. yields down means stocks up. you cpes expand. since august, we've seen a very persistently strong connection between lower real yield means also lower stocks. we are a little more worried about the growth environment than anything else. david: and we wait for chairman powell's remarks at jackson hole , and we've got conflicting

views. barclays took the estimate up of how many cuts we would get this year to three. in externalkness and trade -- considerable headwinds like weaker global growth and trade uncertainties have emerged, and they are contributing to this fear we see in the markets that a downturn is around the corner. this summarizes it for me. is it really the economy getting weaker, or people getting worried about the economy getting weaker? luke: very much the letter. i think they are nearly -- the latter. i think they are nearly saying the same thing. the same as brian moynahan, who warned the only thing we have to fear is fear itself,

essentially, what it comes to recession. there was this great chart showing that soft data surprises were running so far ahead of hard data. markets to the moon. now it is the reserve, where soft data surprises are running below and negative below the hard data. that's a sign that fed officials are worried about. the forward expectations, that part of the index came in by the most since the fiscal flip, so retail sales are strong, but i think fed officials are worried about this confidence hitting consumers. alix: while me for what that means for the dividend proxies, which have been super bid up. is this still the right time to get into that, or do you need to rethink it? gina: i think there's two different dividend stories will not right now. dividend growth stocks have actually trailed the rally in

yields, which is anomalous. so you've got a really interesting dynamic that emerged over the summer where sensitive, high-yielding stocks performed well, but so did the most extensive stocks in the market. that doesn't mean that everything related to dividends is extreme nearly expensive. there's quite a big opportunity in dividend growth stocks for companies with stable earnings that are providing persistent dividend growth over time. they sort of been left out of the rally, left out of the equation. i think broadly, until you get a -- tost to approve the improve the earnings outlook, you will see defensive plays out offensive plays outperform in the market. , how muchthird story of this is going to be idiosyncratic? i feel like we ask about retail every time. gina: it is very consistent with what you saw at walmart. consumerhere are weak

retailers and stronger consumer retailers. the overall picture is the consumer is generally just plugging away, continuing to spend enough at retail. emerge a similar story in the conflict between the home depot release and lowe's release. a lot of this is about expectations coming in. expectations for specialty where the highest among all the retail segments. staples werefor not particularly robust. walmart and target can beat those particularly low expectations. for walmart, to guide higher in this environment, shows an extra ordinary amount of confidence that you should note as an investor. luke: your team has done a lot of work looking at how bad the guidance going forward has been. has consumer discretionary and consumer beenin

relatively more defensive? gina: a lot of them are the week players likely -- are the relatively weak players like the kohl's of the world. i think when you look across the spectrum of things, the consumer companies are holding up reasonably well. when it comes to guidance, less companies give0 you guidance any given quarter, but to see positive guidance in a sea of negativity does stand out. alix: or what is the indicator, that when you go to walmart the economy is actually bad, because you are going to walmart? there you go. guy's, think a lot. appreciate it. you can find all the charts we used and more at gtv under terminal. germany's 30re on year bond flop.

negatively system -- -11 basis points is where it sold. mark howard, b.n.p. paribas senior multi-asset strategist, joins us nex, this is bloomberg. -- joins us next. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." lowe's posted second-quarter earnings that beat estimates. the home improvement chain eight progress in alleviating cost -- chain made progress in alleviating cost pressures. sign of impact on the u.s. housing industry. one luxury homebuilder says from

a year ago, purchase agreements fell 3%, worse than expected from last year. fundy's $1 trillion wealth rising more than $20 billion in the second quarter, a 3% return. it took place before the turmoil of the last month. it hammered equities and drove bond yields further below zero. their biggest holdings remain microsoft and amazon. that is your bloomberg business flash. david: thanks so much. prime minister boris takes his sales pitch to berlin later today, trying to persuade angela merkel to go along with his plan for brexit. -- thisme now simon gives us the opportunity to focus on germany. what does angela merkel have to offer, if anything, boris johnson he comes to visit?

reporter: that's the big question. boris johnson entered downing street a few weeks ago and has been very bullish in warning of a willingness to come out of the eu without a deal. obviously he wants a deal. the european union wants a deal. the question is whether they are willing in any way to open up the agreement they struck was theresa may. the signs so far is that they aren't, which puts boris johnson in a bit of a pickle. the case he could make to angela merkel is her economy isn't doing so well lately. a risk of a recession there, and therefore, may be europe needs trading with the u.k. that would force the brexit debate. a lot of this is economic for the europeans, so that would lean against reopening the deal. david: you pointed exactly at .he issue

if they could arrange some sort of agreement, a peaceful transition to brexit, would it be materially helpful to the german economy? simon: perhaps in the short term. maintaining trading links with the u.k. is something europeans have spoken about continuously since that brexit referendum, that they actually want a deal, but there's requirements, including things regarding the irish backstop, that they need unionntain the european that they've known to come in love. they don't want to do is allow britain to exit on necessarily overly easy terms that might come back to bite them. britain got an easy pass, why shouldn't we get a similar deal? they want to maintain the importance of the eu to future governments. david: simon, thank you for joining us today. that is bloomberg's simon

kennedy, coming to us from london. alix: the first auction of 30 year bonds coming in a negative yields, really making history. joining us now is mark howard, bnp paribas senior multi-asset strategist. you had anemic demand. what economic scenario do you have to think in order to buy german paper for 30 years at a negative yield? mark: it is a bit of a different dynamic with negative yields that far out the curve. it probably reflect a little bit of sticker shock on the part of investors not accustomed to buying long paper with a negative yield. but also, there's a tactical piece to it, which is the market has a little bit of lift after yesterday's softer tone, and that is generally not a dynamic when you went to one -- when you want to buy long papers. the construct for that bond to perform requires much slower growth, active ecb intervention in the markets, and a flight to

safety. david: let's look at that slower growth hypothesis. pmi's, both shows manufacturing and services. german manufacturing is really not very optimistic. what are we looking at in germany? are they in a recession now? mark: clearly they are heading in that direction. whether there is going to be a fiscal response or other responses that prop up activity remains to be seen. the german economy is heavily export and manufacturing led, and china is directly related to that. we anticipate china to continue to show mixed or softer trends, which will reverberate to the german economy. over the near term, we probably will be close to or in a minor recession in germany. alix: how do you understand what we've seen in italy in relation to the rest of the euro zone? the government blowing up here. 65, 66? david: this was 65. we are about to turn to 66.

alix: 66th government since world war ii. how do you understand that? mark: number one, we are all anticipating in september and beyond the ecb becoming more active in a variety of ways in supporting the euro zone, whether it is supporting banks with tiering, supporting sovereigns with more direct qe, so it is hard to bet against that. secondly, i think the market place had priced in an expectation or probability of a snap election. with that removal, it seems to be lessened now. that helps explain the rally in italian yields, but also the nehring versus german bund's. david: so you are pretty -- the narrowing versus german bunds. you are pretty aggressive in expectations for the ecb. mark: there are a lot of moving parts, obviously. got the g7 this weekend, and a

lot of horse trading that may go into what comes out from a policy response across the zone. it is hard to predict exactly what the ecb is going to do. my point was that it is hard to bet against an activist ecb. alix: how do you invest in europe? mark: in a variety of ways. clearly there are a lot of dedicated european funds in the equity and fixed income space. they have to own that marketplace in a diversified manner. certainly, owning longer has helped. now people have started to retaliate given the growth concerns we have, offset somewhat by expectation to more stimulus. it is a very tricky environment. on top of that, you have pretty decent returns in a number of distant essex -- a number of different asset categories. i think people want to be less aggressive than they were earlier in the year, and owning

quality over dispersion, if you will. what you have now are situations we were talking about in retail between the haves and have-nots. it is not just an industry trade. you can't just own everything. you want to own the winners. we are seeing that globally, where the stronger players in a given industry are really tieri ng versus the weaker performers. david: mark howard of bnp paribas, thanks so much. coming up later today, we will hear from germany's minister of foreign affairs and energy. that is 10:00 this morning, eastern time. coming up, target hits the bull's-eye. alix: nice one. david: i didn't think that one up. they reached a record high and regular trading after reporting a strong quarter. more on target, next. this is bloomberg. ♪

alix: target crushing it. here with a breakdown is bloomberg's, chandra -- handra.rg's emma c emma: target up 13%, lowes up 12%. for target, this indicates we will open at more than $90 a share. that will be a record high for target. lowe's also rising. both of them beating when it came to key metrics. one of those is same-store sales. target same-store sales came in plus 3.4% in the second quarter, , andr than estimated against a tough comparison. they are up nine consecutive quarters of same-store sales growth. the company also saw an

improvement in margins, despite all the investment we are seeing in target and other retailers in disbande expanded delivery opti. what we are seeing is target really following more mark -- following walmart, which also beat the second quarter. here they are outperforming the likes of department stores in 2019, the likes of kohl's and macy's. they are launching a new private grocery brand to perhaps take groceryalmart's business, an area that has failed to excite at target despite the fact that many other parts of its business are doing so well. david: thanks so much. still with us is mark howard of bnp paribas. i want to ask you about consumer discretionary and the retail business overall. , you've gotou said to pick your particular stock. it is not a category. mark: that's fair.

i think there will be certain hotsegments that are periodically, but by and large, you need to be really thoughtful, especially in a sector is fraught as retail. owning those companies that have courage, that are investing, you to profitability in the long-term. one thing i will be looking at closely today with both of these companies, particularly target, is the color we got from home depot and lowe's yesterday indicated that business conditions improved in july and august. if we see that continuation, that is part of the lift you are seeing in shares. david: whoever might stumble, they would not be able to do as well as the targets and walmarts of the world if the consumer wasn't there for them. mark: clearly sears is in one

down, so there may be a certain benefit from the troubles of others. there's also a weather effect in the second quarter. david: every time. paribas,k howard, bnp is sticking with us. coming up, to cut or not to cut? that is the question. we will look at conflicting views of the u.s. and recession. you have equities a little higher, getting a lift from some of those retail names, but it will be kind of soft over the next 48 hours as we await fed chair jay powell. this is bloomberg. ♪

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there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. alix: this is "bloomberg daybreak." you've got some good retail earnings helping lift equities, but it is going to the hard to get strong positions ahead of jackson hole.

european stocks getting a nice bid, up over 1%. the cac and the dax the out performers of the day. germanyne hand, you had selling 30 year bonds at negative yields. euro-dollar goes completely nowhere, nothing over the last three sessions. then you have some actual buying in btp's over in italy. yields are down four basis points. the five-star and democratic movement maybe winding up together, but really? i don't understand it. david: you have no government, so let's go buy some bonds. alix: meanwhile, the twos tens is like four basis points. david: in jackson hole, central bank governors are gathering to see where the economy is headed and what is to be done about it. barclays says the fed will cut three times this year because

"this channel of elevated uncertainty and weakness in demand entry policy concern has increased since july. the bond market is telling us something is afoot, and we tend to agree. thanorld is a lot shakier the fed thought it would be." however, these inference go fed president sees continued expansion. "i see women to him that points to a continued economic expansion, but considerable theyinds have emerged, and are contributing to this fear we see in the markets that a downturn is right around the corner." we welcome now from washington peggy collins, who leads bloomberg's u.s. economy coverage. always great to have you with us. there's a subtle difference between is the economy really going south and we have to accommodate, or it is doing just fine and we just think it is going south. which is it? peggy: i think the signals are

mixed right now. mary daly is basically saying i'm not seeing signs in the data that we are really having a slow down, particularly when you look at the job market and unemployment numbers. the consumer spending as well. but we are seeing some flashing signals, particularly in the manufacturing sector, that things may be slowing down in the economy, particularly because of the trade war intensifying between the u.s. china. alix:alix: how do you see it, mark? you also have goldman sachs expecting a cut at the next two meetings china. , looking at the bond market for the signal. what do you think? mark:mark: we recently raised our expectation for two more hikes this year. we were looking for just one. now we are adding one in september and one in december, and even possibly a third. the marketplace really puts a premium on uncertainty, and this

uncertainty that business leaders, political leaders, institutions face because of crosscurrents, particularly trade, but also others in terms of economic and fiscal policy. markets discount expected activity. that is why we are seeing the movement in yields, in the curve, and some worrying develop its and fixed income. developments in fixed income. but there is a technical. we were talking about the german 30 year, the flattening in the u.s. curve. there's a technical which reflects the demographics of the investor base globally and their need for duration. david: who is driving the bus at this point? we have goldman sachs coming out with two cuts, and what they said was it is not really because of the fundamentals. it is because they will have to placate the bond market. i will put up a chart that shows the dual main date, employment

and inflation, for the federal reserve. employment is doing great. even on inflation, although it is below 2%, it is ticking up some. is this basically placating bond markets, or is it justified by the dual mandate? peggy: we did see some inflation data in the last several weeks come in and tick up higher, so the fed is looking at some positive signals. but you also have to think about the global backdrop the fed is looking at as well. there are certainly some global slowing down in places like germany, and the ecb is teeing up to potentially cut and even do more as soon as september. so the fed is trying to balance that. i think powell is really in a corner here. he's trying to manage looking at the data in the u.s., getting pounded by president trump repeatedly to cut rates, and also trying to weigh the economic backdrop globally that could have an effect in the u.s. point, someone

"regardless of what is warranted by economic facts, the fed is in a lose lose situation." that sort of goes to the fact that this is a hall of mirrors that david was talking about with goldman sachs. they look at the bond market and fuel pressure by president trump. therefore they expect more cuts. therefore bond yields go lower. it is a rotating effect. is the answer going to have to be fiscal policy at some point? mark: i think it is different by region. there are different parts of the world that may have to resort to fiscal policy. alix: for the u.s.? mark: not necessarily. the fed has a lot of ammunition left, and our view, and the economy is running higher and the economy is quite robust -- and the consumer is quite robust. if we had a shock that destabilized the consumer, you

may have to resort to fiscal. there are big hurdles to that given how much deficit spending is already gone. david: let's talk about the fiscal. there's just been back and forth on are they were are not they thinking about fiscal stimulus. this is what president trump had to say yesterday on the subject. pres. trump: i would love to do something on capital gains. we are doing that. it's a big deal. payroll tax is something we think about, and a lot of people would love to see that. that very much affects the workers of our country. david: you can understand if the markets and the rest of us might be a little confused here because the president says we are in no danger at all, but we are really seriously thinking about it. i don't get it. alix: after he denied it earlier in the day. david: so what is going on? peggy: the messaging is tricky. trump and his administration are saying the economy is doing better. that's why you should vote for me again.

it is terrific. but then there are signals in the markets and elsewhere that we might be going into recession, so they want to hold up the economy because that is one of the biggest things for trump going into an election. they don't want to admit there might be some signals of weakness in the economy, and that is potentially tied to their trade policies, as well as responding early enough to get ahead of something if there is some weakening in the economy. we will be continuing to report out whether or not they are looking at things, but on the have one of we did the biggest changes to the tax law in the u.s. in decades last year. a complete overhaul of both the individual and corporate tax rates last year. so there isn't a lot more potentially that they could do without congress' approval this year to potentially inject some fiscal stimulus into the economy. david: mark, it's ended like you were saying we don't need

fiscal stimulus, at least not yet. why do we need monetary stimulus if not fiscal? mark: part of it is you don't have a de-link in terms of currencies and rates. part of it is just a reaction function, as we were talking about earlier. when the markets get way ahead, the fed doesn't want to be way behind. i think that's another piece of it, but i totally agree with what peggy said. the market once a roll back in the tariffs. it doesn't want fiscal stuff on top of what is already happening. it all up for us, what is the economic indicator that you watch? is it jobless claims, inflation expectations? i'm favoring today the cash trade index, now -- the cast freight index, now down. mark: i think it september, you

have a window where corporate earnings are going to be foreshadowed in the second, .hird, fourth month numbers we had good from retailers, we think the manufacturers and service companies, even some tech companies that are really getting hammered, that is going to be the indicator we are looking at because that is a leading indicator. some of the data in inflation especially is a lagging indicator. david: mark howard of bnp paribas, thank you for being with us. peggy, thanks as always to you. viviana hurtado is here with first word news. viviana: denmark is not interested in discussing how the u.s. can buy greenland, so president trump canceled the state visit there set for next month. greenland is part of the kingdom of denmark and the site of a strategic u.s. military base. primenish

minister calling the idea "absurd." president trump says he can get a capital gains tax cut without congressional approval, a move that would largely benefit the wealthy. the tax on patient says it would do very little to spur economic growth. it may also lead to a court battle. detainedconfirming its an employee of the british consulate in hong kong. he's being held under a 15 day detention process in shenzhen. beijing calling the issue "an not aal chinese matter," diplomatic issue. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so much. coming up, no place to go. the cio of the world's largest pension fund says money managers risk losing money. more on that today in wall

street beat. if you have a bloomberg terminal, check out tv . watch online, check out our charts and graphics, and indirect directly at tv . this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour, frances donald, manulife asset management chief economist and head of microstrategy. here's your bloomberg business flash. goldman sachs reportedly is now back in the running for a role in saudi aramco's ipo. goldman carried out a months charm offensive.

alibaba ported lee may launch its mega share sale in hong kong as soon as september. they intended to list shares this months, but protests in hong kong have resulted in a delay. walmart suing tesla over fires linked to solar panel systems. the world's largest retailer installing solar panels on top of hundreds of stores. the chain says that led to hundreds of fires -- that led to several fires. there has been no comment from tesla. alix: thank you so much. i mean, i love that story. tesla, the solar panels, fire. the whole thing. david: the thing i love about it is it must be bad because you would settle that case if you could possibly settle, from tussles -- from tesla's point of

view. this is the last thing they need right now, so how could they not have settled that case? alix: i don't know the intricacies of it, but overall, it goes to the fact that battery storage is not very reliable, which is part of the reason why electric vehicles can sometimes light on fire and blow up. it is still an emerging technology, and if you don't have a coolant, you can blow up. david: it's good to know the science, but that is not good for tesla. alix: all fair. especially if walmart is coming after you. we turn now to wall street beat to cover three things wall street is buzzing about this morning. japan's pension fund has a warning for you, saying there's a risk of loss on every front. goldman cautions hedge fund crowding. the equity hedge fund sees their strongest performance, but warns of overcrowding risk, particularly in health care.

david: joining us now is bloomberg process at reporter sarah ponczek. at japanese pension fund is $1.5 trillion. it's the last quarter of 2018, but still remarkable. sarah: the cio pointing out that in the last quarter of last year, whether it is fixed income, currencies, equities, they could not manage to make money. they pointed out to calpers that this is the first time this has ever happened. you would hope it is the last time. the fact is we remove or what happened in the fourth quarter of last year. typically stocks and bonds should have a negative correlation. you lose money in one, you make money and the other. that is not what we saw. we saw stocks and bonds falling in unison. in the u.s. we have seen a change of pace, especially of late. if you look at proxies between moving the opposite

direction in the longest streak since 2012. for the pension fund, it is really difficult in japan because the majority of their assets are in japanese stocks and bonds, and we have just seen a lot of pain there. got some big pension plans here to, like calpers. -- dohave no well we know how well dated? sarah: we don't know that yet. had a $28norway billion gain, but actually went out of shorter duration and went longer-term. it wasn't necessarily a strategic overall portfolio, but the portfolio managers did that. sarah: it was just micro moves from portfolio managers. the latest action we have seen,

it pushed a quarter of their bond portfolio into negative territory. they have a real rate return target of 3% or so, but still. if you have 1/4 of your bond holdings sitting with negative yields, it makes it difficult to even reach that number. his casters -- is calpers still like 7%? let's get to our second story, which is goldman. had a note out today that "leverage picked up, and overcrowded with regards to industrials in health care." sarah: they are the most overweight in 10 years. rbc has also been looking into hedge fund crowding. they also point to many risks, especially in health care.

the thing about crowding risk is it is all fun and games on the way up, but when people want to get out, it can be dangerous when it comes to that unwind, especially if you have a lack of liquidity. it is interesting considering we keep hearing that sony people are buying in health care, but we continue to be -- that so many people are buying in health care, but we continue to see health care being beaten up. amazon has the most crowding risk from hedge funds. facebook is second to amazon. where they've been coming out of has been some semiconductor stocks and others that are pretty sensitive to everything going on with the u.s.-china trade war, but you see those crowding risks in certain sectors and stocks. david: are third story now is the cfa. as alix pointed out, i have not taken the cfa. alix: i haven't taken it. thrown. being

david: women have been growing pretty steadily as a percentage. alix: we are seeing a pickup in the amount of candidates to be cfa charter holders. if you look at the amount of women who have been taking the exam, it has doubled over the last five years. that is a pretty strong rate. a very exciting day for many cfa charter holders yesterday. it was a 56% pass rate. that matches the pass rate from last year as well. david: and our 1 -- alix: and our own taylor riggs is one of them the past few years. womenare seeing more millionaires, more women getting invested in their finances, how that plays into a cfa conversation in general. ifid: if you are --sarah: you are a woman thinking about what you can do with your career, where you can make more money, if you feel like you we

will become a certified financial analyst, you feel empowered and like you can do that now. david: the question i have, and i don't want to take anything away from this at all, is this because a lot more people are going into tech? tech has really been a laggard with women. alix: that's a good point. definitely not women friendly in silicon valley, necessarily. david: i know friends in business school who may be heading towards silicon valley and tech. sarah: may be eventually we will get to that point. david: i wonder, where are people going? alix: that's an interesting point. i also wonder how the matriculation rate winds up going. it?ou stay there and keep david: and how much do people get paid once they start running the banks and working at the banks? very good point. sarah ponczek, thank you for

being with us today. coming up, mounting pressure on china. hong kong protesters prepared to rally for the release of a detained u.s. consulate worker. more on that next in what i'm watching. alix: if you are jumping in your car, don't lose touch. tune into bloomberg radio across the u.s. on sirius xm channel 119, and on the bloomberg business app. this is bloomberg. ♪

david: this is what i'm watching. it's hong kong and that detained u.k. consulate staffer. it turns out the chinese have the u.k.an employee at consulate who works in scottish development. he went across the border on

consulate business, and they detained him, apparently on a minor infraction, but the british are none too pleased. increases tension in china-west relations as well. david: mike pence came out and said this could really affect trade relations. this is what he had to say. vp pence: we are in the midst of production to -- of productive discussions with china, and they will continue in the weeks ahead. but for the united states to make a deal with china, beijing needs to honor its commitments. david: those commitments, of course, are when hong kong was returned to china, and it is the systems that a lot of people think is eroded. alix: mr. pompeo did the same thing. how does that work?

who's going to be more mad, the u.s. or china? china is going to be none too pleased in the u.s. interfering in hong kong. we saw that video of the star-spangled banner playing during one of the protests last week. china has to be really mad about that, particularly with their 75th anniversary coming up. david: they find this existentially threatening in a not good for the united states. alix: coming up to my, manulife asset management chief economist and head of microstrategy, will be joining us. this is bloomberg. -- of macro strategy, will be joining us. this is bloomberg. ♪

♪ alix: germany makes bond

history. the company sells 30 year debt at negative yields this mixed demand. then it is the fed versus pretty much everyone else. san francisco fed president mary daly says the u.s. is not headed to a recession, while barclays sees three more rate cuts this year. and stocks set to open at a record after killer sales in toys and groceries. david: come to this -- welcome " onhis "bloomberg daybreak wednesday, august when he first -- wednesday, august 21. you made a good point, we have a g10 coming up. have the g7 meeting this weekend. trump wants to bring russia back into the g7 as well. what is that going to be like? david: maybe mr. putin will be

nicer to him. alix: who really has the leverage? you can kind of say whatever he wants because you have germany really struggling, potential stimulus coming out of the country, negative yields, the ecb working on something maybe some of the italian government falling out of bed. david: the white house is saying that president trump and president macron have been talking about the g7. alix: maybe they see i to eye on russia a little bit more. he wasn't totally opposed. david: whenever they shake hands, they can't quite break. rumor that debt-free number that? -- remember that? alix: i feel like there's a video montage of that coming up. in the market, good retail earnings from target. the currency market really going nowhere. it is a broadly weaker g10 dollar story. grow seeing selling across the bond market, with the exception of what is happening in italy.

yields here up by about three basis points, and oil, a totally separate issue. coalition isec's actually adhering to all the production cuts they said they would do in june 2017. good job. david: with russia? non-opecis th coalition partners that have delivered their cuts for the first time. so that is happening, and then you have everything else affecting the market. david: a big deal for "commodities edge." alix: good tease. david: at 10:00, we will get existing home sales data for july. at noon, u.k. prime minister boris johnson meets with german chancellor angela merkel in berlin. after the bell today, we are going to get earnings from nordstrom and l brands. alix: investors had little

appetite for the 30 year offering in germany. about less than half of the amount available was sold. joining us is richard jones, bloomberg fx and rates strategist. was this a tolerance point for negative yields, or a quirk in the sale? reporter: i don't think it is the first german oxen that has technically failed, and it won't be the last. the last one in july was technically uncovered, and yields are 40 basis points lower now than they were back then. i think you could see maybe for the auction itself, demand was not high, but on the secondary market, there's still a lot of demand for german paper. when you think about it, 30% of all german bond issuance ends up with the bundesbank anyhow because of the reinvestment they do from the previous qe program. i think going forward, we will get more qe from the ecb, so another big buyer in the market. i think domestic german investors have an appetite for

german paper because they have to invest in high-quality, very liquid bonds. there's an inbuilt domestic demand for german paper. even if the auction went badly today, i don't think we seen the low in yields. alix: to that point, when you talk to strategists and your peers, is it a sort of economic need to want to go by the paper, or is it because of monetary policy and the ecb? what do people see where yields can go lower? richard: i think it is a culmination of both. havens in general, and you that,o include bunds in have been in demand because of concerns about the global economy and trade. but there is actual central-bank involvement in this, previously by doing qe, and now reinvesting as those bonds mature, but the view that there's going to be more to come in the coming months.

economiction of realities means these have much more room to fall. david: thank you for joining us today from berlin. there have been a lot of warning signs on the global economy, and a fair number of them have come out of germany. tdp growth dipping into negative numbers last quarter. you can see on this chart, that little yellow line last quarter is actually in the red. we welcome now frances donald, manulife investment management chief economist. thank you for being with us. we're looking at the performance here of germany. is it in a recession now? frances: the issue with germany and europe as a whole is that it is the up enemy of the headwinds facing the global economy. it is at the center of the storm when it comes to trade tensions, probably the biggest casualty of the u.s.-china trade tension issue. it is the centerpiece of -- ofl-bank

ilure tobanks' fa normalize. these themes will dominate the global narrative, and they are exemplified best by is happening in the german economy. david: so what can be done about it? the ecb is likely to have more qe. is this a monetary or fiscal issue? frances: that is a key upside risk for the global economy, and as i said, germany is the microcosm for what is happening globally. the emphasis on meeting to rely on fiscal stimulus as the next big boost growth or perhaps even the savior to growth is going to become the key theme, similar to headlines out of the united states. even if we see fiscal stimulus, it is probably not going to land in time to save us from a potential 2020 dip. it might help us get out faster, cushion the blow, but it is too late for fiscal policy to save us from 2020 downturn. the lags are some plea to long.

at pimco was on the show yesterday. here's what he had to say. >> you look at germany, japan. negative rates. in general, you think you are going to see not cyclically, but over the next three to five years, i pretty big shift from monetary policy to fiscal. alix: do you agree? frances: absolutely. that has to be the next big trade. it is consistent with trying to lift inflation expectations. banks are saying we cannot fix a lot of these issues. we have to see business confidence come back to life, particularly in the united states and with china, and we have to see broader infrastructure programs that help lift those inflation expectations. thee get it, we could see flat nerves in those inversions get arrested, but we are not there yet. david: take germany, for example.

billion -- were $55 were 55 billion euros. is that big enough to make a difference in an economy the size of germany? frances: what is it important to targeted. is being in germany and europe, the issue is not in the services and consumer sectors. it is in plummeting business confidence and manufacturing. that is going to be more important in determining whether or not it lifts any forecast adjustments. the issue in the united states is certainly not the consumer. it is business confidence, manufacturing and trade. target stimulus has to go to the right sectors or it doesn't matter how big it is going to be. alix: david's terminal shows the white line of services and the manufacturing. if you look at broad asset allocation for this, do you need to be taking on more risk? do you need to get defensive? what is the appropriate way to

express what your thesis is. frances: the next two months are incredibly difficult to be making asset allocation decisions from the macro perspective. you really have to be thinking incredibly short-term. we have extremely limited visibility, particularly for all data coming out of august and into september. i am likely to buy this dip in risk assets. through jackson hole, and we have to get through what i expect to be a pretty tough august for payrolls before i consider doing that. alix: frances donald of manulife will be sticking with us. coming up, we will hear from of finance.nister that's coming up at 10:00 eastern. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." target is poised to open at a record high after boosting its earnings forecast for the year. the guidance midpoint beating the average estimate, also second-quarter comparable digital sales were up 34%. lowe's posted second-quarter earnings that beat estimates. the home improvement chain made mpsgress in alleviating co pressure. the ceo vowed to upgrade systems to track inventory and pricing. j.p. morgan chase preparing to shut down its chase pay app, the bank's third reversal on digital products. in as many months. today -- digital products in as

many months. today, they told customers they would not be able to use chase -- to pay digitally in stores. david: goldman sachs says only two fed rate cuts are warranted. san francisco fed president mary daly sees continued economic strength, saying, "when i look at the data coming in, i see solid domestic woman to him poised to continue expansion, but headwinds have emerged and are contributing to this fear we see in the markets that a downturn is right around the corner." still with us from boston is frances donald of manulife investment management. 40 you expecting out of the fed? -- what are you expecting out of the fed? frances: we recently changed our

call. it will depend in part on how inflation moves, how global trade moves, and how trade tensions developed, but this looks like a federal reserve that has to get in front of an inverted yield curve and apply that insurance it has been talking about. now is the time to inject the as we head into a time that could be particularly volatile. does that mean that your call basically relies on looking at the bond market? a hall of mirrors, where you have the bond market pricing in one thing, and the fed has to catch up with the bond market, which leaves investors pricing in something different. you truly see do fundamental underlying we sin the economy -- underlying weakness in the economy?

frances: growth is going to decelerate into 2020. if the fed is staying consistent with its mandate, which is price stability, trying to achieve more of a semester target and making sure we don't see a spike up in unemployment, they need to get in front of this and apply what powell said. an ounce of prevention is worth it pound of cure. this is about the dual mandate, not responding to financial markets specifically. one thing i will be looking for over a lot of the communication, including the fomc minutes we get today, is what is the fed thinking on that symmetric inflation target? the more worried they are about achieving the inflation target, the faster they are going to pull the trigger and buy a larger amount. that is the key story, how the fed is looking at price pressure, not whether the fed is focused specifically on what we seen in the equity market. david: why does the fed need to get ahead of it? in 2018, androwth

economists told us at the time that it was an aberration because of the tax cuts. if you look at atlanta for gdp right now, the white bars show what we've been doing in terms of growth. it's been around 2% since the second quarter. but they are projecting now it will be up to 2.1% or even higher going into the third quarter. 2% growth is sort of what economists thought we would have. frances: when we talk about a central bank getting ahead of it, we are not talking about the next quarter. we are talking about 18 months from now. that is the lag that central bank policy affects the economy. when they are thinking about easing, they are not supporting what next month's gdp will be. they are supporting what the cycle looks like, and can we extended any further. your point about the fed should be extending the cycle, that is a philosophical matter i think we will be addressing a lot more as we get into a period of

easing midcycle adjustments that many fed presidents have been talking about, inflating financial bubbles just to support some near-term growth. alix: on the flipside, to support your argument obviously is the low-inflation we have seen. bere we expect inflation to are all rolling over. seen steep decline the last few weeks. why do you think a 50 basis point cut is actually going to help versus stabilize? frances: it certainly won't hurt, and as powell has said, this would support some form of confidence, but this is a long road ahead for the fed. how do you re-anchor inflation expectations? has to happen over an extendedperiod -- it has to happen over an extended period. that's the big communication challenge for the fed, not even

what they say at jackson hole, but how are they going to behave over the next three to five years. a lot of people talk about, is this insurance cuts or an easing cycle? i would suggest we are in a new realm of cuts, which is reflation cuts geared towards a structural shift in inflation expectation. it is a very difficult task. i'm not sure they can achieve it, but they are probably going to attempt it. alix: so do you buy the ration?is that the story here buyy duration -- do you duration? is that the story here? frances: you could see rates move higher on potentially good data come about from my perspective we are talking about a structural decline that central banks are going to have to respond to, in part driven by inflation, infarct for moving part-- by inflation, and

for moving from deflation to inflation. do i think it is going to happen before the 2020 election? no. but is it the future? probably. we probably need to rethink the way we studied economics in the way these actions impact the economy taylor: this is a paradigm shift -- the economy. this is a paradigm shift happening in real-time. david: frances donald of manulife investment management will be sticking with us. coming up, slow down fears take a toll on toll brothers. more on that next in today's bottom line. this is bloomberg. ♪

david: time now to look at three

companies worth watching this morning. toll brothers were out after the bell yesterday with earnings, saying they are seeing a decline in orders. they are the largest luxury home provider. typically in california -- particularly in california, they are being hit. does that tell us anything about the consumer? alix: i wonder why california. there's a mandate that if you california, need solar panels. i'm looking at j.p. morgan. j.p. morgan is going to shut down its chase pay app. they just kind of really started it to fight for control with andal, apple pay, etc., they are shutting it down because they weren't capturing market share. david: interesting. i actually use chase pay, and

it's worked fine for me. although if you talk to bankers, they say electronic pay is fine. it is not going to be that big. alix: i wonder if it is just we can't get it as good as apple or paypal, or we want to use our tech on something else. what the long-term strategy would be. joining us now for our third story, which is walmart and tesla, is brooke sutherland, bloomberg opinion columnist. this is quite a story. brooke: it is very rare you see such big names going at each other in a lawsuit. what is happening is walmart had tesla solar panels, actually solarcity panels, but tesla acquired that a few years ago and brought it in-house come on the roofs of its stores, and they caused fires. david: i didn't even realize they had them at their -- had them up there. brooke: they had several

hundred, and they had seven fires, and they blamed this on negligence. loose wires,bout hotspots that they complained to tesla about over and over again. it sounds like a company that is very structure rated -- very frustrated that it has gone through multiple processes with tesla, and this is the last resort. it is never good when you have walmart giving all of its firepower. david: that was my reaction. if you are tesla, you take care of this no matter what because you do not need the publicity from this. it is spilling over to cars as well, and there are questions about the cars. brooke: we just had that story out of germany with the car rental company saying they canceled their order because they were getting all of these tesla's with quality issues. they were having difficult to getting them repaired and registered. is this a bigger quality control issue for tesla? do they have the capability to make sure the products are top-notch and being repaired and

maintained anyway you would expect? alix: which is very different than what we talked about earlier, which is not a fundamental battery storage issue. all the carmakers are going to have issues picking sure their batteries don't light on fire because it is hard to keep them cool. this feels like a very idiosyncratic tesla issue. brooke: right. walmart is saying some of the issues were obvious with the naked eye, even if you weren't a solar panel expert. that you would be able to go up there and say this does not appear to be right. david: it does go to a question, i don't know the answer, about elon musk from the beginning. he's brilliant, has great ideas. does he need somebody around him to get it executed? frances: like spacex -- alix: like spacex. david: where the coo has really gotten things done. something like this really makes you wonder. brooke: they were trying to get these solar panels out there to bring in revenue, and it makes

using about the cars. david: the model three. gina: trying to ramp up --brooke: trying to ramp up production and making sureing ue standard. alix: the broader issue is tesla is not a car manufacturer. they are not a manufacturer. ford is. gm is. but they are not a manufacturer. they might not be able to many factors solar panels. that's ok. you've just got to admit it. brooke: it's an idea factory. alix: totally. how do you value an idea factory? brooke sutherland, thank you very much. target shares set to open at a record after posting better-than-expected earnings. the haves and have-nots of retail, coming up. this is bloomberg. ♪ from the couldn't be prouders

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japanese largest pension fund. in italy you have yields down four basis points. unbelievable. things are not as bad. let's buy bonds. it could have been worse. david: it could always be worse.

in the u.s. one of the bright spots is retail. the company reporting better-than-expected earnings driven by toy and web sales. stacy, what has been one of the takeaways we can get from retail? stacy: contrary to popular opinion, the consumer is very much still alive. they are just stopping at target. three quarters of the comp was traffic. retailers were driving traffic, not just tickets.

target and walmart have spent investment dollars going after amazon. target talked about today three quarters of their online fulfillment came from people coming to stores to pick up. that is incredible. it is a way to leverage and meet the consumer where they want to shop. learn anything that amazon can rule everything or there is room for some players. if you own amazon, what is your lens? not just an amazon world and target and walmart have proven that. stores, adepartment coals, a gap, a victoria's secret that has lost their way. they have not kept relevant with what the consumer wants. --get is doing privately that is what is driving the business. david: it is great to chase

after amazon. what does it do for your margins? walmart and target have to invest. doesn't really compress the margins? stacy: in the short-term it does. the more online you do, the margins come down. targets gross margins were up 30 basis points. nobody in retail is talking about margins up. if you invest, you eventually get the pump coming along and are able to leverage your margins and expenses. that is the playbook target has gone by. alix: how do you understand where the consumer is? there is always a school of thought that says walmart is doing well, the economy is doing well. what is your take? is the first time when the possibility of additional tariffs on consumer goods starting september 1, now delayed to december, this was a

massive concern. the consumer is the fundamental pillar of the u.s. economy and the only bright part. it has to be preserved if we are going to avert a recession. putting together all the pieces from the bottom-up and top-down will become critical to getting the 2020 call right. david: is there reason to believe it will continue. we can put up a chart i like a lot that illustrate something. the red parts are recession. the white line is the federal reserve household debt service ratio. what is the ratio of disposable income to debt? the blue line is the household network. network is way above -- net worth is way above where it has been. there is a lot of room for the consumer to absorb. frances: i love that chart. i bring it with me to all presentations because it tells

the story consumer is in a much better structural place than 10 years ago. that does not mean they are immune to shops. shocks. the fundamental risk to the u.s. consumer is whether their ifader -- if that happens, we see everything from iphones to diapers going up in price -- the kansas city fed has work there iss when stockmarket gyrations there is consumer confidence hits. we could see consumer weakness for a short time. it launches us into one quarter of negative growth. alix: if you have the tariffs that are going to put off until september 15, you should be buying quite a lot.

stacy: in q2, everybody decided that if the tariff impact goes through, we better stockpile inventory to get ahead of price increases. we know that tariffs have been kicked down the road until 10 days down the road. a lot of retailers are stuck .ith extra inventory wasd: president trump deprived and the fact that the fake news is driving us into a recession. the lameeeted that stream media is doing everything possible to create a recession, even though the numbers went in

the totally opposite direction. who is right? the first president or the second president? are we talking ourselves into a recession. frances: this is the time when you have to get your timelines right. casemists need to make the that you for growth could be stronger but we have to separate what to the next six months look like versus the next 18 months versus the next five years. months, we six should see 2% gdp numbers. we could see acceleration towards closer to recession territory. those packages become important when we are talking about what does the u.s. economy look like over the five-year. gdpdo we lift potential

back to the area where potential was closer to three to four? that is why central banks will advocate for fiscal. alix: what will be the benefit if we have some kind of physical pump? -- fiscal bump? stacy: as we look the second half of the year, it is very difficult for retailers to managing their business. everybody is sitting back, going to we spend, do we not spend, that is very destructive to the business. we think about the consumer and the brands, retailers are paying more, the consumer is in great out., but it will help us pull back on these headlines and help retailers manage their business. david: sound sensible to me.

thank you both for being with us today. now let's find out what is going on outside the business world. we turn to viviana hurtado with first word news. viviana: we begin with denmark. the country is not interested in discussing how the u.s. can by greenland so president trump canceled a state visit. greenland is part of the kingdom of denmark and part of a strategic u.s. military base. the danish prime minister calling the idea of buying greenland absurd. the number of americans with at least a million dollars in the retirement accounts has reached a record. people have a seven-figure 401(k) account. from theis using data retirement plans it administers. a detainednfirming deploy me at the british consulate -- a detained employee from the british consulate in

hong kong. china is calling the matter -- 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. bloomberg. tweet fromso got a the times editor talking about -- what i saying as heard on various occasions is scorn. china is making arrangements on a scenario of no deal. let's put that out there. the odds of a deal with china is close to zero. underestimating the digging in of the deals in china. in china.ls linking to hong kong will

get their dander up. alix: october 1 is the 70th anniversary. david: the founding of the people's republic of china. alix: those events mean something. david: it is huge. there's a lot of focus on hong kong. regime,ident xi and the that anniversary has to come across well. alix: coming up, the impossible mission. the impossible burger slides into fast food. how does impacting the restaurant industry with white castle vice president next in today's follow the lead. bloomberg users interact with charts on gtb go. this is bloomberg. ♪

>> former republican representatives stop -- scott kingston of georgia. ♪

here is your bloomberg business flash. goldman sachs reportedly is now back in the running for a role in saudi aramco ipo. according to the financial times, goldman carried out a month-long charm offensive. john rogers of ariel started his firm when he was just 24 years old. >> what is the best single deal we can talk about. that stock has gone up close to 15 times. you can watch all of that interview with john rogers on the david rubenstein show tonight at 9:00 new york time

right here on bloomberg tv. the cinematic future of one of marvel comics most beloved characters is up in the air. the feud between disney and sony threatens to end the production of spider-man movies. disney wants a much bigger share of the profit. alix: i would be so sad if that happened. the new spider-man movies are awesome. they are so good. david: with the marvel characters, is that what the deal is? alix: yes. it was in a different studio versus what it was before when it was not very good. david: they made a deal when the spider-man movies were good. alix: it is because of good actors. there are good actors, that is the point. david: time for follow the lead. a deep dive into stories making headlines and moving markets.

we start our weeklong series of how we eat. today we look at fast food restaurants and how they are embracing the meatless craze. to take us through it all is emma chandra. emma: fast food companies have been on something of a tear in recent months after a rate -- after earnings beats. the russell 2000 outperforming the s&p 500 in 2019. that is being led by some of the biggest name like wendy's, like brands, alsoer yum the likes of chipotle. we also see mcdonald shares hit a record high. there are concerns among analysts these earnings beats are being driven by higher prices and that is putting pressure on these chains to think of new ways to get people through the door. one of those ways is the introduction of plant-based meats, from the likes of beyond

meat and impossible foods. there are 10,000 restaurants in the u.s. that carry their product. they include these national and regional chains. they have given, burger king in particular, a boost because of its impossible whopper. the market for plant-based meat is huge. bloomberg intelligence putting by 2023.billion $10 billion in the long-term. they said the amount of plant based meet versus hamburger meat being sold is still tiny. there is still a long way to go before it becomes a meaningful portion of sales. alix: thank you so much. emma chandra. for an inside read on how the move to plant bait means does impacting restaurants, white castle vice president joins us now.

fight castle is the first chain to serve the impossible slider. how did it go? amazing. has been the family-owned business has been around for almost 100 years. we are coming up on our one year in a bursary of the impossible slider. it has allowed us to be more available for more people and we are 375 of the now 17,000 restaurants. we are proud and happy to be part of it all. as you look at your sales, is it a matter of slicing the pie in a different way or actually selling more burgers because of it? jamie: in the beginning we were a hamburger business, and i think what we realized is we are a slider business today. omnivores love white castle. the omnivores deliver was a book that came back -- was a book

that came out a few weeks back -- a few years back. the next book will be called omnivores jubilation. david: take the market as being sliders. is your number up because of impossible? jamie: it absolutely is. we appealed to customers who are not thinking of the castle. we know our vegetarian customers know they can come in and get whatever they want. 24 hours a day. the other thing we have seen that is amazing, and impossible tells us this is happening is meat eaters are enjoying the sandwich. it looks like beef and tastes like beef and we are able to offer to the castle for $1.99. we typically pay $15 if you want to go to the bistro or a dining place to enjoy it. we want to make more food available for more people with great taste and that is what we have been able to do with impossible. david: you are the first to get

into that -- alix: you were the first to get into that impossible burger but so many have caught up. burger king and mcdonald's were much bigger. how do you keep your customers and how do you keep the supply of the impossible burger? jamie: that is a great question. we do what we have always done. we ask questions, we do what our customers tell us, and then we respond. leader hasgeneration led us in this direction. supply has not been an issue. there was a blip. the same people who figured out how to make a plant-based protein were going to solve the problem. impossible has a great partnership with osi. they doubled their partnership. they tell us that by the end of the year that capacity will be quadruple. we have not seen any issues with supply, but we have seen plenty demand. as others talk about it, it grows the category. it is one of those where as our , weetitors join the castle

have had a head start and that has been helpful for us. david: if you take all of the sliders you sell today, what percentage are plant-based and what you expect them to be in a year or two years? viewership isyour all over north america, i cannot give you specifics, but what i can share is initial sales exceeded our expectations by about 140%. differentiator. this tastes amazing. when people taste it, they purchase it again. there is not a trade-off. in the past, people lot i will go for the -- what impossible has been able to do is provide a great taste. alix: what i will not do is buy a beef slider and an impossible burger slider.

sales not keeping up to where they were? jamie: what is amazing is that is happening. people are buying both. we are family-owned, all of our restaurants or company-owned, we want to look at associated sales. it is not uncommon for somebody to get a double bacon cheese slider and an impossible slider. the majority of customers are ordering meat and the impossible slider. what we have seen is, and this is where there has been great for our business, we brought new people in. we have had over 150 million impressions on social media. we have connected to our millennial customers in a way that makes the 98-year-old brand relevant. alix: great to talk to you. check this out. our crafty colleagues avenue bloomberg -- at bloomberg, you can logon, find out where is or is not in stock.

stores inside. david: the southeast is up there. the northeast is the best, but that is interesting. alix: coming up, target shares open at a record. more on what i am watching is next. if you're heading in your car, sit on the bloomberg radio. channel 119 on the bloomberg business app. this is bloomberg. ♪

18%. target is up looks to open at a record. comp sales were good. they raised their earnings guidance. up inonline sales picked part because of same-day service and in-store pickup, which means it is more profitable for them because they do not have to physically deliver it and you hope people will come to those stores and buy more stuff. the david: their margins were

up. walmart or target online investing is not cutting into margins. alix: walmart also getting on that idea. watch the retailers, watch target opening in a record and see what kind of sustainability you will have for a market rally. coming, mikex: schumacher, wells fargo head of strategy joining jonathan ferro. and less than 24 hours until jay powell speaks in jackson hole. a rally in the markets and in the rate markets with the exception of italy. 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: the global blonde -- bond market producing more records. germany 30 year debt with negative yield. 30 minutes into the opening bell, good morning. here's your wednesday morning price action. s&p.es up 26 points on the positive .9%. euro-dollar doing a lot of nothing. euro-dollar 1.11 and unchanged. yields up three basis points. back towards 1.60 on the u.s. 10 year. let's begin with the big issue. the world's first 30 year bond offering. >> is a been a different dynamic. >> is