two more, but then it is time for a pause and really absorb this. the problem with cutting is it is one of the few tools you've got. alix: keep some powder dry. morgan stanley's ceo's advice to the fed. and a $36 billion surprise bid. announces achange deal for the london stock exchange, buying $36.6 billion. and market whipsaw. jp morgan sees value rotation could last as investors reposition. david: welcome to "bloomberg daybreak" on this wednesday, september 11. today is the anniversary of the day 18 years ago when terrorist attacks took the lives of some 3000 people. a series of events commemorating the lives lost against at sunrise, with the unrolling of the american flag at depend on. there will be moments of

silence. bloomberg will be covering those events through the morning. alix: 18 years. in the markets, you have seen the s&p hold steady, but the churn beneath it has been quite staggering. a huge, unbelievable shift, added momentum into value since value weeen -- into have seen since 2009. you're seeing some buying in the bond market. yields down by about two basis points. over in europe, couldn't decide on a bond bear or bull day. time now for the global exchange, where we bring you the market moving news from around the world. joining us are bloomberg's enda curran in hong kong, in london, emma chandra, and michael mckee joins us in new york. the hong kong exchange made an unprecedented $36.6 billion offer for the london talk exchange.

bloomberg -- london stock exchange. bloomberg's enda curran has more. enda: obviously this is a very ambitious corporate transaction. , itably more importantly would be a real test of investor perception towards hong kong. remember, this raises all kinds of questions about potential security implications and conflict of interest. hong kong being edited mistreated region of china. we had six downgrades of hong of conflict within his broader system of government. quite a proposed corporate transaction here. it will be interesting to see what this does for investor sentiment and perception towards hong kong after the protests in recent months. david: and that offer is upon jealousy -- upon

-- let's go to these tariff exemptions. what have we learned from what china has done? enda: what they've done is, in 16 categories, they've taken tariffs they imposed last year and will remove those. they include fish food, fern of sue calls, and a -- fish food, pharmaceuticals, and others. but they are not removing tariffs on some of the politically sensitive products like pork and soybeans. it could be seen that they are perhaps feeling some pain in their own economy and sectors were tariffs are imposed, but on the other end, they haven't ones thatthe big remain part of the mix. perhaps it would suggest going forward that if talks progress

and if there is some success in the meeting of minds, that china makes a -- that china might take some more of the tarasoff. -- more of the tarasoff. -- more of the tariffs off. hisd: president trump fired national security advisor john bolton yesterday, saying he disagreed with many of his positions, and brent fell on the news. lee is in-- julian london with the market reaction. wasan: i think there obviously an immediate reaction to that, but i think that is time has gone on, people are realizing perhaps that it is actually donald trump who is making oil policy. it was never his national security advisor. there are feelings, perhaps, that things might change in the relationship with iran or the trade dispute with china.

any hopes for change there may have been a bit premature. big monthlyad two reports coming out in the last two days. the u.s. department of energy with its outlook on the oil market yesterday, and opec with its report today. they both make fairly gloomy reading on the demand side. both of those agencies have cut their 2019 oil demand growth forecasts. the u.s. the apartment of energy yesterday was the first of the three big agencies to see demand this year growing by less than one million barrels a day. that is going to be a worry for what opec produces. they are meeting in abba dalby to -- in abu dhabi tomorrow to discuss their output so far. alix: u.s. antitrust regulators are discussing whether amazon is using its market power to hurt competition. emma chandra has more. emma: bloomberg learning that

the ftc is interviewing small businesses that sell on amazon's marketplace, and some of those questions have included the extent or what percentage of revenue those small businesses derive from amazon's marketplace versus other online marketplaces what the one operated by the likes of walmart and ebay. what this suggests is the ftc is perhaps skeptical about them is on's claims that its suppliers have other alternatives. if a small is this derives a high portion of its revenue from amazon's marketplace, it makes it more vulnerable to changes in demand or changes in policy from the e-commerce giant. the ftc really confirms or denies if it is investigating a particular company, but the chairman did tell bloomberg last month it was interested in hearing from third-party sellers on the marketplace that amazon runs. amazon not commenting at the moment. david: we also have the states,

like, 48 of them going after google. we did hear what they were asking for. it is pretty extensive. emma: that is absolutely right. state attorneys general in the u.s. launching in and have pressed -- launching an antitrust probe into google. it seems they are really trying to get under the hood of the ad business, looking at acquisitions of ad tech companies and how they collect data. remember, google dominates the digital ad market in the u.s. it accounts for about 40% of that market. here in europe, we heard that big tech's big nemesis, the european union's competition commissioner, this week was given another five-year term. she has already hit the likes of google and apple with multibillion-dollar fines. david: thanks so much. back in the united states, president trump has tweeted this

morning, saying in part, "the federal reserve should get our interest rates down to zero or less, and we should then start to refinance our debt. interest costs could be brought way down, while at the same time substantially lengthening in ."rm we're going down by michael mckee. michael: it's clear that his massive tax cuts have created a debt, and that adds to interest costs. with interest costs where they are right now, when president trump came to office, five point 6% of the budget each year went to interest. ,y the time he leaves office the office of management and budget says it will be over 11%. so interest rates do play a big role in the budget deficit. the deficit was created by the occupant in the white house. alix: also later on today, we get the latest read on inflation

. it sort of dovetails with president trump's tweet as well. what can we expect? michael: the fed would disagree with the president's tweets here that inflation is not a problem. rather, they argue that the lack of inflation is the real problem. if inflation expectations slips too much, the balance in growth falls, and that means that has less room to cut rates, a particular problem when they are already cutting rates. today doesn't necessarily correlate well with the other inflation indicators, but it does give us an idea of where we are on the production side, and where er hasn't been very good. the number is expected to go up just a little bit today as oil prices will weigh on the index because they sell 5% during august, and we are seeing the strong dollar weigh on prices as well. so don't expect a lot of relief from the markets today on ppi. alix: thank you very much. coming up, more of your morning

trade analysis on the markets in today's first take. this is bloomberg. ♪

david: now for the bloomberg first take, where you get the trade analysis of the markets. today we focus on value and momentum trades, a steeper yield curve, and the big news of the morning that the hong kong exchange is offering to buy the london stock exchange. here to discuss it is gina and vince cignarella. i will start -- is gina martin adams and vincent cignarella. i will start with you, vince.

the chart makes this look like a lot. alix: if it is not real, what is it? vincent: i think we've seen one of the more volatile months in august that we've seen since i've been trading in 2003. value have one of its worst months in 20 years. so now we seen a little pushback to the other side, just a smidge. i have absolutely no idea where all this excitement is coming from or where things are going to turn. [laughter] alix: gina? gina: i think a lot of this is about the lowest moment i'm stocks gathering a little the high and some of momentum stocks starting to turn over. it's very much, to vince's point, reflecting what we went through in august. what happened in august was an extraordinary rally in bond yields, to the point where bonds were now overbought to a major extent, multi-year extent. the result of that was stocks

continue to migrate to dividend yield. dividend yielding stocks became momentum stocks. they were the leaders in the market. as a result, when you see the market reverse course, that created a shift in the equity of the suddenall we have massive value rotation and massive moment them selloff. 3 -- massive momentum selloff. nobody noticed because momentum was continuing to lead, but the overall takeaway is the market is really struggling for what factors should drive performance at this point in time. is it about yields? is it about growth? is it about policy? there's no real consistency. vincent: that is the real perfect point. august was a tumultuous month, and everyone is looking for something to hold onto. the 10 year yield, 60 basis nowts below ioer, and

reversing the course with bond yields. alix: there can still be more of a move, right? you have jp morgan's analysts "you're going to have the fundamental investors, the value rotation can continue, regardless of what winds up happening with trade." that begs the question for me, how much more rotation do we need to see to bring back the pension funds? gina: on that point, you have to see more than just yields reversing a little bit of their rally. what really drives value trades and factor rotation? in our opinion, a lot of it is revision momentum and earnings. to support a shift into value, you have to have value companies, value stocks experience a positive revision momentum, which has been the bigger driver of performance over this entire cycle. energy companies are the perfect

example. they cannot find any positive earnings revisions. financials very much stuck in a negative earnings revision sort of cycle. you've got to have some sort of fundamental support to support the trade longer-term. otherwise it is a shorter-term rotation out of extreme positioning. so far, that's what it is. you need to have a fun a metal driver. alix: hang on one sec. breaking that tony raymo -- breaking that saudi aramco is said to have picked bank of america for its overall. not morgan stanley, not goldman sachs, not jp morgan. huge news for bank of america. as we bank of america, know, has been struggling. remember brian moynihan said we would take a little more risk? where did they come from? alix: and all the calls we've

heard from big banks this week, bank of america seemed the most solid. david: mid single-digit growth, when everyone else said we were trailing off. alix: that is interesting. this is total speculation, open for the table, but i wonder how fiasco, thatuber was goldman sachs, right? how that tainted them looking better for the lead. i don't know. just throwing that out there. vincent: honestly, this is a huge surprise for me. bank of america has never been seen as a leader in the investment banking space, so a major leap forward for them. alix: i'm taking a look at the lead table to see where your rankings are. it will take me a second. david: among the major banks, i think it was number five or so. for core actually took over citi and bank of america last year, i believe.

they've been making a real push on this. get used to be that investment banks had an advantage because they could lend money on the deal, and that has gotten separated increasingly, where people can get the financing. goodness knows these days you can get financing separate from it. that is something banks have been struggling with. vincent: they must have made the fee incredibly attractive. it had to be the pricing. this is a huge ipo. there's huge fees attached to this. my guess would be they just undercut the competition in terms of fees and put themselves in a winning position. gina: a lot of this is about relationships, too. too. there's a lot going on behind the scenes. oftentimes, it is relationships. there's relationship banking for a reason. investment banking is absolutely about relationships. david: deana powell was going over to riyadh an awful lot. alix: and morgan stanley having saudis on the board. americaovertook bank of

, so you had bank of america below citi, morgan stanley, and goldman sachs, and now this? but there will be enough of the pie to go around to most investment banks, but still, this is a huge headliner for them. david: huge ipo. really big news. in the meantime, we should spend a minute on the hong kong exchange issue, the hong kong exchange buying lse. there's a lot of questions about geopolitics, whether we want hong kong running the biggest stock exchange in the world. vincent: it is unusual timing when using about what has been happening in hong kong, and also that they made the deal that has to be canceled out of this trade, and the lse has said it is not happening. it almost seems like a moot point that it is not going to happen. you mentioned the geopolitics of it. i don't know how this is going to play throughout investors.

i don't like it is going to play well. david: much less in london and in washington. a bigt: if huawei is deal, you can imagine this. david: thank you so much for being with us today. , newg up, new iphones prices. we will break it all down with dan morgan of synovus trust. this is bloomberg. ♪

david: apple held its annual keynote event yesterday, unveiling new phones with a competitive pricing strategy, updates to the apple watch, a streaming service for radio games, and a $4.99 tv streaming service. we welcome now from atlanta dan morgan, synovus trust senior portfolio manager. he holds apple in his portfolio. were you impressed? do you like apple today better

than you did yesterday? dan: it looks like the market likes it better. i think the key here is just kind of a change in strategy. strategy in the past was always to increase average selling prices even though unit volume was slowing down to drive-revenues that way. now we have a flip where they are lowering prices on the iphone8 and introductory 11 to increase their overall service revenue, which has a higher profit margin than iphone units. very interesting changeup in strategy, something completely different than the last couple of years. alix: do you feel like the lower price is enough to make up for the fact that this next generation of iphones won't be 5g, and that chinese phones will be unveiled with 5g before apple can get there? dan: you are right, coming into this introduction it was kind of like, ok, some new colors, new

cameras that sound really cool, but i think the next move is going to be towards 5g, and towards a foldable. we know samsung is going to reintroduce their second foldable this fall. apple doesn't have one. i think there's going to be a race on there, and also going towards 5g. we know about them acquiring intel's modem business, so down the road they will be leaning on qualcomm for the 5g, but that is going to be the next big upgrade. at that time they may be able to command a little more pricing in terms of the phone. david: two underscore what you are saying, they also listed the listed the they also pricing for their streaming service at four dollars nine nine cents -- at four dollars $4.99.ne cents -- at dan: i don't know if this is

going to have the big push that we are looking for, just because, think of apple. we had a million conversations in regards to netflix. they spend about $1 billion in regards to content. netflix spends about $7 billion to $8 billion. it is all about those new series. it is all about hooking people to keep coming back and watching, not necessarily just pulling old content. it does start a dangerous war in terms of how much you are going to pay for this, but i still think these premium services may have an edge because of content. alix: we did see netflix selloff on the news. so do you want to buy those kind of dips? dan: netflix is a different stock on its own, in terms of the p/e ratio. in terms of buying netflix, it might be interesting just because we are getting more news about competition. we have the disney-hulu, 20 century news coming i we have the apple news. it will be interesting going

forward to see how netflix trades off this. i know roku is down on it also. alix: dan morgan of synovus trust, thank you very much. i don't yet know if it means i'm going to buy an iphone. i have to be totally honest. [laughter] david: you are waiting for us to buy you an iphone. let's be totally honest. let's go back to bank of america now. the word is they are the lead dog in the ipo for aramco. the word is they will work alongside goldman sachs, j.p. morgan, and others. alix: huge win for bank of america. coming up, the ecb's anticipated rate cut. why markets are watching what the central bank will say about tiering. bank -- matt.s. brill, invesco head of investment grade credit, is next. this is bloomberg. ♪

♪ alix: this is "bloomberg daybreak." happy busy wednesday morning. s&p futures up by just about one point, but the turn beneath the surface is what -- but the churn

beneath the surface is whatever one will be paying attention to. we see the move out of momentum and into value, as small caps also rally. i did want to point out european banks, able to squeak out a rally before the ecb will probably announce a rate cut. what it means for banks and how tiering will play into that. it is a mixed dollar story and a mixed bond story. in the u.s., yields higher by about two basis points. the curve is flattening, but stays steeper. yieldsman ten-year bund moving lower by about one basis point. .ields here lower by about two oil higher, despite the fact that opec had to cut its global demand forecast by about one million barrels a day. those issues still percoti in the market. speaking of the oil, the news of

the morning. david: the ipo for aramco, there was a headline that bank of america had been picked for the top ipo role. , it hascarefully now picked bank of america as one of the top underwriters. so it is not clear it is the top underwriter. alix: this is including bank of america, goldman sachs, and jp morgan, but we can be sure it has been a furious lobbying by all of the banks to get a piece of this ipo that should sell about a 1% stake on the saudi exchange and another 1% at a source at another point. this is a big shocker. goldman sachs and jp morgan, we wouldn't have blinked, but this is a surprise. david: in the meantime, we go to europe. the european central bank announces its rate decision tomorrow, and is widely expected to move further into easing territory. to set things up for us, we turn now to michael mckee. michael: one of the important

concepts we are going to watch tomorrow is called tiering. because of qe in europe, banks there have a lot of excess reserves, and currently park those almost $1.8 trillion overnight at the european central bank, and for that they are charged 40 basis points, -40 basis points on the interest rate. that costs them more than 7 billion euros a year. the bankers screaming about the idea that the european central bank may take that negative rate even more negative. they say it could take europe to the reversal point, where initial stimulus actually hurts growth. their argument is this. just a little more cut in the negative rate won't cause companies to borrow more money, but it might lead banks to cut back on lending because right now, they are losing money. their margins are being compressed by the fact that they are absorbing these negative rates. they are not passing them on to consumers because everybody is afraid if you pass on negative rates to consumers, you will

lose all of your business. our recent study by the ecb suggests that the banks are right, so expect mario draghi to announce tomorrow if they go with an additional negative rate that that they do something called tiering, which exempts some of those deposits from the negative rate or gives them a slightly different higher rate, which will mitigate some of the pain. there are different ways to do it. there are a number of banks that do negative rates now, and all ofhem except the ecb have adopted some 40 of -- some sort iering, but it is even more complicated for the euro zone because banks with large deposits will benefit more than banks with smaller deposits. banks with large deposits are usually located in the northern part of europe, so the ecb is going to have to be very careful. if they don't do tiering, it is really going to hurt the euro

zone economy instead of helping it. alix: thank you so much for breaking down that complex subject. joining us for more is matt brill, invesco fixed income head of investment grade credit. if you come inside the bloomberg terminal, you can see what the expectations are for a rate cut for september and december. what is your base case? what is the ramification? matt: we think they will cut, we think they will do tiering, and we think they will start qe2.itative easing two, so if they buy a greater percentage of corporate bonds then in the past, it could be area impactful. alix: is going more negative for some of these corporate issuers actually going to make a difference? matt: that is the big debate. you have roughly $15 trillion to $16 trillion of negative yielding get around the globe. you have issuing new bonds at a negative yield, and everyone is

wondering, is this even working? our joiso figure out how to make money off of it, not to debate if it is right. we think the dominoes lead to lower rates across the globe. is there a fixed into it? -- a fixed and to it -- a fixed end to it? matt: if they say we are going to open up the checkbook and go as long as we need to do it, that is sort of the bazooka you keep hearing about. alix: do you want to buy junk bonds in europe, or is the trade still ig? matt: we think the quality is what wins out. you are making a leap from sovereign security to investment grade securities, higher quality. but the domino from there is it makes everything in europe very rich, and that means u.s. credit very cheap. we think the next leg is tighter in u.s. credit spreads due to this domino effect from europe. alix: to that point, we know you

like ig credit spreads over in the u.s. walk us through how much of that is going to be defund middle strength of the underlying companies, and where you want to be if we are going to get this move out of european debt. bbb's have gotten the memo that they need to pay down debt. everyone is wondering where we are in the cycle, but we are getting later in the cycle. the equity markets are saying to not let her up anymore. debt, anday down your don't become the poster child for an over levered credit market. david: how much of that is to refinance existing debt, as opposed to actually increasing leverage? matt: that is probably the most amazing thing that's happened in the last week plus. 3/4 has been used to refinance debt. in the past, companies would have been saying money is

basically free, let's borrow as much as we can. we will figure out to do with it later. the equity markets are saying, don't do that. be very strategic about it. that is very prudent of them. they are turning this out for longer-terms. they are issuing 10 and 30 year bonds at lower coupons. alix: what happens when you have this massive move in the treasury market, where yields are back up? matt: it becomes a little more attractive come but at the end of the day, they are still very rich. corporates are still in pretty good shape for mindhunter mental standpoint. with the backup in rates, we companies in asia saying how can we invest more in u.s. bonds. they miss the trade for most of the year, and with this tearney to 30 basis points backup, the rate will come back and. -- will come back in.

david: do we know anything broader about the market, or is it unique to ford? matt: we think the broader market is very aware of the credit fundamentals, that the market is saying bbb's are over levered. everybody has gotten the memo. you look at the at&t situation this week with elliott, elliott actually said to deal ever -- two de--- elliott actually said sheet.ver your balance we don't know where we are in the cycle. we don't want you to take additional risk. they are not trying to take advantage of it through coupons. it is very prudent. alix: what companies are using that money to buy back debt versus some thing else? matt: the number one thing credit analysts are looking for, are the companies following through on what they are talking

do?t their going to the first thing you see on an ernie's call is here's how much debt we paid off -- on an earnings call is here's how much debt we paid off last quarter. you've got to get the fixed income market happy, and that makes the equity market happy. david: we will see what it means for the economy. matt brill of invesco fixed income, thank you so much for being with us today. now let's get an update on what is mickey headlines outside the business world. viviana hurtado is here with the first word news. viviana: the hong kong's stock exchange making an unexpected offer from the london stock exchange, a move that could throw the lse's own transfer motive deal into jeopardy. it could be seen as a potential takeover from china. u.k.'s business secretary saying the government will look at anything that has security applications. weeks ago, the london exchange agreed to buy a data provider in a blockbuster deal. china keeping the pressure on american farmers. beijing announcing a range of

u.s. produs that will be exempted from 25% tariffs put in place last year, but major agricultural items such as soybeans and pork are not included. we spoke with the editor of china's most prominent state run newspaper. mandarin] >> it is different from a concession. viviana: negotiators will travel to washington for talks. in north carolina, republican candidate that president donald trump campaign for neroli won a special -- campaign for nar rowly won a special election. global news 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: coming up, bank of america gets a piece of the saudi aramco ipo pie. if you have a bloomberg terminal, check out tv . you can watch us online, click on our charts, interact with us directly. go right to tv on the terminal. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up later today on "bloomberg markets," an exclusive interview with kkr health care strategic growth head. now to your bloomberg business flash. saudi aramco picking bank of america for a top role in what is likely to be the biggest ipo ever.

bloomberg has learned be of a will look along -- has learned b banksill lurk along other that will be added to the deal. -- the san cisco bay deal --o bay broker's jp morgan has reduced the target it set for an annual interest income. citigroup and wells fargo did the same thing. longer-term rates have continued to fall. investors expect the fed to continue cuts it began in july. i'm viviana hurtado. that is your bloomberg business flash. alix: thanks so much. we turn now to wall street beat. we cover three things wall street is buzzing about this morning. first up, bank of america joins goldman sachs and jp morgan for top roles in saudi aramco's ipo.

ceo jamesan stanley gorman says unicorns looking to go public are getting more realistic about valuations. makese hong kong exchange an unexpected bid for lse. david: joining us is bloomberg's sonali basak. it surprises me that bank of america is one of the lead dogs in the ipo for saudi remco. -- for saudi aramco. annmarie: one of the big --sonali: one of the big surprises is he names that haven't come out now -- is the big names that haven't come out. are waiting for news on who else is in this, but it is a big deal for bank of america. alix: why bank of america? sonali: they do have a lot of deals in the region. they are one of the biggest global banks. and this is a top role, not the top role. i think saudi arabia is really trying to get as many banks as possible into the deal as they can. something interesting also about

bank of america, the ceo oo last year -- the coo last year the conference in the desert. david: does bank of america have relationships? where do they reside? sonali: they definitely reside high up into the bank, but i don't know who their lead saudi arabia anchor is -- lead saudi arabia banker is. these relationships do tend to go quite high in the banks. jamie dimon was bragging about the event in manhattan a while ago, so it is definitely up to the top of the bank. alix: in layman's terms, we know some of the banks are involved. when do we know the lead? could it be one of these three? how are these usually found out?

sonali: this is definitely not one of those deals that there is a listing posted on the wall, like you were chosen for the lead in the high school play. it is something coming out in drips and drops. it is something i just can't understand quite. again, where is morgan stanley? that's one of the ones i am wondering when that will be named. alix: speaking of, bloomberg spoke exclusively with morgan stanley ceo james gorman yesterday. --es: they intended to go companies intending to go public later, you've got a lot of investors that come in relatively late before you go to full public market, and i think we have seen that in some of the companies that look like they are going to go public lower than what the last couple of rounds were raising. that is unusual. we haven't seen that for a long time. it's also a function of some very frothy money floating around. reporter: has that changed, do you think? james: i think the market is pretty efficient. these people aren't stupid who

are making these investments. these. are very savvy people this is sort of the -- these are very savvy people. this is sort of the corrective mechanism. that's ok. back to the bubble question. that pinpricks the bubbles that are out there. carol: are you seeing more issues? how active is it right now? james: are they not bringing them public because of this? i think it is making people more realistic about valuations for some of these unicorns. i think there's a lot of reality check that's gone into the system, and that's ok. alix: matt levine had a great column out. basically, you can't go and ofch an ipo at a valuation 36 billion dollars less than what you just fund raised at. sonali: i asked him how he felt about uber, days after uber was already starting to tank. he likened it to facebook, where

the stock came back a while later, but you can't put a time on it. uber was a really tough one for morgan stanley. remember, they are not on wework, something they were very intentionally not on. david: when you hear about corrective actions, you have to think about we work. sonali: i had a morgan stanley banker the other day call me and say, wasn't i right? [laughter] sonali: but it was a tumultuous thing. they did want to be on the deal, but there were a lot of terms around it that people couldn't get comfortable with. alix: $64 billion? no problem. david: don't change your governance at all. alix: is this like a peak governance kind of thing? are companies going to clean up their act because of wework? sonali: we will see. that is what wework is talking about doing now. david: more likely they will say i don't like this governance structure. rk, they have awo

lot of people to make happy here. alix: let's get to the third story, the hong kong sto exchange making a $36 billion bid for the london stock exchange. what did you make of this? sonali: eye-popping deal. this is all anyone could talk about the moment they wake up. what is interesting is when hong kong goes after lse, what happens to repetitive? right now the stock is pretty muted in terms of how it is trading. i think there are a lot of doubts on whether it could get done, but no doubt it is gutsy, and it is a real story. david: hong kong knows what they want to do with ruffin at have refinitiv. sonali: it is very unclear to people whether this will get done, both for regulatory purposes and -- mostly purposes.

these exchanges are a lot like sports teams. every country wants to have one, but that doesn't mean you necessarily want hong kong owning the london stock exchange. david: there was one analyst out this morning that said there is even a problem in the united states. they might block this. sonali: everybody is wrapped up in it. didn't think about that. howhe refinitiv thing, hard was it for blackstone to get this deal done? sonali: it happened faster than people thought it would, less than two years. and it was at a much higher multiple than a lot of people initially thought, especially to be done so fast, but it is kevin ollie a deal blackstone wants to get done. you have massive five equities for the u.s., london, and hong kong. a 13 point $5 billion fringe loan on the table here, morgan stanley,

blackstone, and barclays. david: ok. we want to note bloomberg lp, the parent of bloomberg intelligence, competes to come by -- to provide financial news. coming up, china unveils a list of u.s. goods exempt from duties. alix: and if you are jumping into your car, tune into bloomberg radio, heard across the u.s. on sirius xm channel 119 andy bloomberg this mishap -- 119 and the bloomberg business app. this is bloomberg. ♪

♪ david: this is what i'm watching, china backing off of some tariffs, giving u.s. producers a break on certain things like insect repellent. they didn't back off on agriculture, which is what people were hoping for. they are holding that in reserve as a practical matter. alix: what is interesting, and the market really didn't react,

and there's two thoughts. one is that it is immaterial. the other is we are seeing such a churn within the market, you're not going to have a big move because there is so much happening under the surface. david: the question is, was it a show of good faith? the glal tim editor said exactly that. >> let's not think of it as a concession. it is a goodwill gesture that shows china is confident. it is different from a concession. david: so a goodwill gesture, he calls it. maybe it is china opening up the door a little bit to some negotiations. ,lix: what is also interesting tom friedman at "the new york times" had an interview with the huawei ceo. part of what he said is that we are open to talking. we will talk with you. we will thing about outsourcing materials to you if you reach out to us in good faith and promise a change.

"we are open to a dialogue. there are no restrictions on what we would be willing to .iscuss we are open to sharing our 5g technologies and techniques with u.s. companies so that they can rebuild their own -- so that they can build their own 5g industry." coming up, matthew luzzetti, deutsche bank chief u.s. economist, will join us on is call of 100 basis points of a cut. this is bloomberg. ♪ devices are like doorways

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and if someone trys we'll let you know. xfi advanced security. if it's connected, it's protected. call, click, or visit a store today. at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. ♪ david: bochum to "bloomberg daybreak" on this wednesday,

september 11 -- welcome to "bloomberg daybreak" on this wednesday, september 11. alix: here's everything you need to know at this hour. at dawn today, a flag was unfurled at the pentagon, marking the place where a hijacked jet slammed into the building 18 years ago. americans are marking the anniversary of the 9/11 attacks, remembering the 3000 people who died. david: the hong kong exchange has made a surprise dirty $6.6 billion offer for the -- llionise $36.6 bi offer for the london stock exchange. candidate in north carolina that president trump campaign for has narrowly won a special congressional election. david: china has announced a range of u.s. products that will be exempt from tariffs, but

major agricultural items such as soybeans and pork are not included. picked picked bank of america for a top role in what is lightly to be the largest ipo ever. they will work along goldman sachs, jp morgan, and other banks. no word yet on morgan stanley. in the markets, you are not seeing a lot of action within equity futures. however, it is the churn that has been the story over the last 48 hours. huge momentum into value. euro-dollar a little on the back foot now, down 0.4%, the lowest level we have seen since last week ahead of the ecb meeting. bondve at a huge move in yields, up by over 25 basis points in just days, bringing back into question the reflation conversation, which in part has been rapunzel for the underlying equity rotation -- has been responsible for the underlying equity rotation.

david: here with a closer look at the market rotation is bloomberg's emma chandra in london. emma: thanks very much, david. while the s&p 500 has basically been unmoved over the past two days, there has been a lot going on under the hood. we are looking at the values at the close of trading yesterday. i've got the s&p 500 at the top. you can see just a three basis point gain after swinging between gains and losses through much of the session. look at what we've seen for the growth and value indexes for the s&p 500. yesterday, much bigger moves to the downside and upside respectively, really signaling that rotation. i've also got the s&p 500 energy index, gaining 1.3% on the day as the top sector performer. a big beneficiary of this repositioning, even after we saw that big drop after the bolton resignation. perhaps the best illustration of what we are seeing at the moment is the momentum trade. we've got a chart here showing the momentum trade and its today move. you can see the big drop -- over move.o-day

it is the biggest drop since december 2008. what is the catalyst for all of this? wall street really pointing the finger at the bond market. we should be able to take a look at the u.s. ten-year over the past two days or so. the theory being that as we've seen that rise in yields, we've seen safety positions unwinding. i should note that goldman sachs out with a note today saying that this rotation really is unlikely to last if bond yields stay low and growth stays weak. you can see they have a point. yields have risen a great deal since the depths of august, but we are still a long way from where they stood 30 trading days ago. alix: thanks so much. on the flipside, you have jp morgan that says the flight from momentum is only just begun. "yesterday's move was only started by discretionary portfolio managers and will continue with equity quants and fundamental investors.

we believe the value rotation will continue." isning us from minneapolis lisa erickson, u.s. bank wealth management head of traditional investments. do you agree with goldman or jp morgan? lisa: we are actually unconvinced that this value momentum can continue, and really, the reason why is that goldman is saying if you look at the economic backdrop, we see continued global growth slowing, and interest rates are at an absolutely low level. those are the kind of conditions where it is difficult for traditional value sectors more cyclically oriented stocks and interest rate sensitive stocks tend to do well. david: how does trade figure into this? think we will make much progress soon. lisa: we see trade primarily as

a big uncertainty factor, and makesif anything, that the skew towards ongoing rotations into more of the safety trade. toin, the ability of value sustain that momentum is going to be more difficult given some of the uncertainties by the trade policy. alix: so where do you buy then? lisa: our favorite sectors are still some of the more growth oriented sectors such as technology and selected parts of consumer discretionary. the reason for that is because they really have nice top-down trends supporting them in terms of the shift to cloud computing, more interest in ai and robotics, and the shift in online consumer spending habits. with that, we see both the intermediate trends favoring those companies, as well as individual stocks where there really is an ability to disrupt and benefit from creative change. david: i think you referred to two different parts of technology.

on the one hand, ai and robotics, we think of that is more is nest is to business commerce. on the other hand -- that as more business to business commerce. on the other hand, you mission consumer. what do you see i had for consumer tech stocks? more i was really thinking about selected parts of the consumer discretionary, but i think there is some linkage in the sense that we see the parts of consumer discretionary as benefiting are those that have more of an online presence, or where they have an in-store presence or they have higher experiential ratings that are able to draw customers into stores. alix: where does this all lead you with small caps that you could argue should be doing well if the domestic economy is doing well, which goes with your growth theme, but have been part of this rotation the last three days? lisa: are feeling right now on small caps is to stay neutral

within that particular allocation. we've actually been actively looking at the sector for potential entry opportunities given that it really has led while.aps for quite a with slowing global growth, the fundamentals aren't there in terms of being able to propel them, similar to the value story. so right now, we are advising clients to stay neutral in whatever would be their typical long-term allocation to the small sector. david: does the fed inter-into it at all at this point -- does ter into it at all at this point for you? lisa: a lot of the action year to date is based on the central bank being able to continue to support the economy with its move to more of an accommodative stance. we do think that ongoing action will be influenced by their actions going forward, particularly given the economic the u.s. andn

globally, which indicates the trend for the macro data is still slowing. alix: do you want to buy treasuries, then, with the reversal of the last few days? lisa: treasuries are certainly interesting. however, if you look at the absolute rates on the treasury levels, they still are very low. we are really viewing the fixed income play right now as more of a portfolio construction exercise, and the sense that we think the primary reason to have some fixed income in the portfolio is really as a ballast to equities, given what we have been talking about in terms of the underlying economic fundamentals not looking as good. there is still the potential for ongoing choppiness in the equity markets, and fixed income provides that nice counterbalance. david: lisa erickson of u.s. bank wealth management will be staying with us. saudi aramco is said to also choose credit suisse for a top role in the ipo after tapping bank of america, j.p. morgan, and goldman sachs. the oil giant is reportedly

selecting as many as nine banks. we will have more on that next. this is bloomberg. ♪

viviana: viviana: you are watching "bloomberg daybreak." google has been hit by sweeping demands in a nationwide antitrust investigation. state attorneys general are ordering google to turn over a wide range of information about its advertising business. that's according to a 29 page document obtained by bloomberg. the document shows investigators are targeting the heart of google's business model. apple is out with an aggressive pricing strategy. the new iphone 11 starts at 609 and nine dollars, lower than the

$699, lower than lunch.one x's cost at amazon -- at launch. amazon is the target of an antitrust investigation by the federal trade commission. they started interviewing small businesses that sell products on the world's largest online retailer. investigators want to find out if amazon is using its market power to hurt competition. as question is being asked the agency is skeptical of the claim that amazon suppliers have alternatives. alix: saudi aramco is said to have picked as many as nine banks for top five-year-old. among them -- for top ipo roles. among them, bank of america and credit suisse. do you have an idea of timing for the ipo? reporter: but we understand is

they have really tried to accelerate this process, but it is important to know that this is going to be, in the first instance, a listing in riyadh only. the international part of the ipo, it is unclear when that will happen. it seems that the saudi government is determined to get the local part of this done in riyadh late this year or early next year. david: it seems like there have been quite a few changes. navy there is no connection, but we have a new oil minister, a new chairman of aramco. ishe prie feeling a little pressure to make his budget? will: you are right to point to the changes. the former chairman of aramco, who was also the oil minister, was considered to be very skeptical about the wisdom of the ipo, so removing him and replacing him with the head of the sovereign wealth fund, who will receive the proceeds of the ipo, was a real signal they determined to get this process going again. as you will remember, it was

first muted a few years ago, and then there were questions about the evaluation the crown prince put on the company and the whole process fell away and stalled. this is a sign what has happened in the last week, first with the new chairman, and now with the apartment of all this -- the appointment of all this wall street firepower, that they are serious about doing this. alix: what does it tell you about what the saudis are thinking about the oil market and the oil price? will: the oil price has got stuck around $60 a barrel. saudi arabia would like $80. they are going to keep trying to get the oil price higher. we know they want a higher oil price to balance their budget and get this ipo as successful as possible, but we are seeing, from reporting from the middle east and opec ministers and analysts, that people are skeptical about the state of the oil market asked year. expect prices to fall back to $50 next year because it is

looking like a big imbalance between supply and demand. yes, they want to get oil prices higher for the ipo, but it is going to be difficult. alix: lowering demand growth has by onewering demand million barrels a day. we have the joint meeting with opec plus tomorrow. how does this help set or not the conversation? will: what we are hearing from people who are going to attend that meeting is that they are not going to decide a change of policy at tomorrow's meeting. thehort-tm come of the market is probably going in opec's direction. we are seeing some tightness in the oil market right now. opec ministers are telling us they are concerned about the picture for next year, but i think they will kick the can down the road and save those conversations for the full opec meeting in december. alix: it's russia on board with

that? you did have the energy minister say that they will not talk about extending production cuts. where does russia fit into it? will: russia always plays its hand very late in the process. they like to see where other people are going, and they like to keep their associates in opec+ in the markets guessing. . what you see is a political decision between putin and mbs just before the opec meetings on what russia decides they want to do. it is notable he is set to visit riyadh on a state visit later this autumn. we can expect a lot from that summit about what oil policy will be in 2020, i can imagine. alix: still with us is lisa erickson of u.s. bank wealth management. how are you thinking about the oil price right now? lisa: we are generally more negative on oil. if you look at the bigger picture, you have quite a bit of supply globally, whether it is

potential new production coming out of countries outside the u.s., and you had the whole shale revolution in the u.s. on a global growth front, you have slowing demand, so that makes it a more difficult situation for oil prices to rally. david: are there parts of the energy sector that are more attractive? francine: one of our most --lisa: one of our most interesting areas within the oil related complex is midstream energy. that particular sector is of less dependence on oil prices. their primary business is transport, so as long as there -- a minimum volume of oil coming through those pipelines, they stand to benefit. the pipeline capacity right now is not sufficient to really continue to flow through all of that will from the shale revolution, so we actually think that is one of the more

interesting sectors to look at right now. alix: to tie it back to saudi , with's potential ipo that kind of market, would you like buying saudi aramco stock when it eventually winds up going public? it could have a huge valuation, but it is really tied to oil policy. how would you look at something like that? less on are focused individual stocks as opposed to the call on the total energy sector. right now, our preference is really for more of those stable, ongoing growth plays like technology and consumer discretionary, simply because you have a more difficult economic environment, and in that kind of environment, it really does make it more difficult generally for more cyclical areas like energy to do well. david: if it is not oil, what about renewables? is that a growth area? lisa: certainly renewables is something of interest. i think it is ongoing a little demand, more supply and

but we see areas like wind and solar, and that kind of thing. david: thank you so much for being with us today. that is lisa erickson of u.s. bank wealth management. she is going to be staying with us. coming up, the hong kong exchange's surprise offer for the london exchange. this is bloomberg. ♪

david: the hong kong exchange has made an unexpected offer for the london stock exchange. joining us with more is marty schenker, bloomberg' chief content officers. if this moves forward, it would be the largest exchange in the world. is, whatd the question does that really get you in an environment of shrinking margins

and less volatility in the market? trading is increasingly being driven by robots. scale is important, but profits are shrinking in that world, so this is obviously a chance for hong kong to kind of get scale in order to make that business at least have some semblance of growth. david: is a question of what this means for markets in this new world. it also raises geopolitical questions. i wonder what this would have looked like before the extradition bill and all of the protests in hong kong. marty: i think that is one of obstaclesmportant to this deal ever happening. there are questions about but hong kong will be going forward. there are treaties and rules, but it is kind of amorphous who is going to really control them. i think it is a huge issue. david: it seems like beijing has shown they are not shy about exercising their influence, shall we say, and hong kong.

would that not apply to the largest exchange in the world if this deal happened? marty: you will see a lot of regulators around the world, and with some justification, raising questions about security in the marketplace if this were to actually happen. david: i saw one analyst early on say not only might london have problems with this come about washington. it might have to clear through the treasury -- with this, but washington. it might have to clear through the treasury. marty: the ceo of the hong kong exchange is a from edible guy, born in beijing. he has a masters degree in journalism -- is a formidable guy, born in beijing. he has a masters degree in journalism. the president has instead focused on the fed and what should be done with interest rates. this is what he tweeted first thing this morning. "the federal reserve should get our interest rates down to zero or less, and we should then start to refinance our debt.

interest costs could be brought way down, while at the same time substantially lengthening the term." i guess it would take care of his deficit problem. marty: i think this is the first time he's actually suggested the fed go to negative rates. there are some real questions among experts and commentators about whether the fed could even legally do that. the notion of extending maturities for debt, a 50 year the, a 100 year bond at treasury is under serious consideration. the president supporting that notion, i wouldn't be surprised if we get there. david: that is an interesting notion. steven mnuchin, the treasury secretary, explored that a few years ago. it was sort of discouraged by the market place. people like larry summers have said with interest rates this low, why don't we go out and buy some money long-term and do something constructive with it like infrastructure?

marty: that becomes a huge policy debate in a divided congress if donald trump wants to use it for border security instead of rebuilding roads and bridges. you're going to have a real fight on your hand. david: we do have some politics going on as well. the election is coming up in 2020. how much more is poor jay powell, the chairman of the fed, going to be involved in this election is a campaign matter? marty: he would just as soon everybody not know his name. this is a way of donald trump positioning himself to put blame on a slow down on the fed rather than on his policies. david: which is one of the key questions. bloomberg has been reporting this week about a possible recession going on in some pockets of manufacturing around the country, particularly wisconsin and pennsylvania, which are key to president trump's election. marty: it is interesting. the results yesterday in virginia showed that donald trump is losing ground, or the republicans are losing ground in

the suburbs and those urban areas. that is where they can't afford to fall too far behind. they are definitely doing better in rural areas. this whole split in the electorate is in stark contrast when you look at the results last night. david: fascinating. those were remarkable. thanks so much to marty schenker. we want to make sure you understand, refinitiv, which lse, bloomberg competes with refinitiv to provide financial news, data, and information. coming up, we will talk about what is going on with the yield curve. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. just a few minutes away from the latest read on ppi in the u.s.. equity futures up .1%.

energybout value, banks, . in other asset classes, a mixed dollar story. , $24 billionarket of 10 year notes today after a fine. we are over 6% on the per, a little bit steeper. the reflation theme, the question, let's get the latest read on that. the producer price index on a year on year basis coming in higher at 2.3%. final demand also coming in a bit stronger and a month on month basis also coming in a bit stronger. that feeding into the steeper yield curve conversation in the last 48 hours and also are we seeing some kind of reflationary tingle? i guess i made that up. david: that is very good. they are modest numbers but higher than people thought. alix: it feeds the conversation

we've been having. the rotation out of momentum into value. is that repositioning or something more fundamental? if you are seeing a steeper curve, is that why you are seeing the outperformance of small caps and banks? david: joining us is deutsche bank chief u.s. economist. still with us is lisa erickson out of minneapolis. indication we are starting to get an uptick in inflation. >> as he said, there is a tingle. alix: will that catch on? >> a little bit of outperformance. we will see with the cpi tomorrow. that should two. the underlying story -- that should tick up. core pce is only at 1.6%. 40 basis points below their target. that does not change. you have a fed that is looking at growth concerns and also at

inflation below their target. both of those things are leading them in a dovish direction. if you tied together with what is happening with the market, even if it is a tingle or more modest, you are still seeing a steeper yield curve. you need to rise a little bit more? potentially seeing the potential for the yield curve to stay flat. it is actually encouraging it has moved upward. generally, when we look at the economic data, we see slowing trends. while we have had starts and stops in terms of the data stabilizing, we have not seen a firm movement in that direction. as long as we get that global growth slowing and also firmly in the u.s., it is difficult to imagine we will get a strong move in the yield curve either way. alix: that brings us to the fed. we had an interesting call

yesterday about the fed saying we now expect the fed to cut rates by a further cumulative 100 basis points through the first quarter of next year. trade developments are nearing a tipping point. and offramp remains elusive. the u.s. economy could slide into a mild recession. is that a zero or negative rate call? or is it four and done? matthew: we have four and done. 25 basis points next week. we have the fed funds rate dropping at 1%. the policy rate would be above global peers. we will probably see the ecb cut rates further tomorrow. what we are focused on is a lot of the data we are looking at, the ism fell sharply. we are seeing slowing in the labor market data. the leading indicators for manufacturing and capex are week. in that environment you need to get resolution of this trade

uncertainty to put a floor on growth and see growth begin to rebound. assuming we will not get a trade deal before the election in 2020, which is what a lot of people in washington and beijing seem to be signaling. matthew: i think we will not get a strong deal that removes resolution. i think we cannot continue on this path of escalation. if you go on the path of further escalation, recession risks become real. alix: if we stay where we are, where there is a tit-for-tat, some exemptions, some not, that is the 100 basis points call? matthew: i think you need to have a bit of a pullback. we would have to reassess where we are at if we get the tariffs in december that are hitting key consumer goods. the fed did a research piece on this last week. they show the trade uncertainty, just the uncertainty, is a 100

basis point tract on the level of gdp over the next year. that is just the uncertainty we have had so far. david: lisa, let's bring you in for your views. if you knew today we are not going to resolve or get worse in terms of the trade with china, what would that tell you about recession possibilities? lisa: we think the possibility of recession is still low, so our base case is this is a midcycle slowing adjustment. the reason why is that even though you see a downtrend, and we monitor over 700 indicators globally on our proprietary health check, if you look at the absolute levels, they would indicate we are not far enough along to go into a recession. if you think of the economy as a treadmill, we are moving from a level of 8 on the treadmill to now probably a 6. david: let's talk about that yield curve.

the 2-10 is in positive territory. stillree-month 10 year is negative. it has gotten better but it is still negative. should we be concerned about that as a recession indicator? matthew: the fed has done a lot of good research. 10 of the indicators, the year three-month spread is a better indicator. they have something called the forward spread, which is looking at forward three-month yields minus the spot three-month yields. both of those remain deeply inverted. we have looked at consumer confidence. if you look at the gap between the university of michigan and the conference board, it is highly correlated with the 2-10 spread. that is a measure for consumer confidence that is flashing a little bit in terms of consumer recession. alix: mardy talked about the fed yet again, saying we should get our interest rates down to zero or less. interest rates could be brought way down. is that in the cards?

what would we have to see to get interest rates to zero or negative territory, and would that be a good thing? matthew: it would be a response to a recessionary scenario. alix: more extreme than a growth scenario? matthew: more extreme. our baseline is a slowing growth scenario where the fed cuts 1% more. you get some resolution on trade but not a big trade deal. that is enough to put a floor on growth and eventually see growth pick up next year. further escalation, getting to zero is a recessionary scenario. in the u.s., fed officials have looked like they are not interested to move into negative rates. one of the questions is what markets would take away from any substantial move by the fed. does the fed know something we do not know, and if they did cut substantially, even down to zero, what with that say to the marketplace? lisa: it would be a mixed

message. there would be relieved from the fact that the fed is trying to do something significant. i think there would be a potential concern if we got to a zero or negative interest rate scenario. are you saying there is more going on we should be concerned about the economy than we realize? where is the biggest mismatch in the market based on where the market is versus expectations versus where the fed will go? lisa: we think the biggest gap is the gap between market expectations and where the fed potentially may go. if you continually look at market expectations and what the prices are in the futures market , they are certainly below where the fed forecast are. even though the fed continues to ease, there is a risk it could disappoint the market. david: -- alix: matthew, from your work, how does that have a vicious catch-22 cycle.

what position does that put the fed in? matthew: if they were to move much more aggressively, that is concerning. it would send a concerning signal to the market. part of that reason we do not expect them to move next week. it is part because the beta -- the data is mixed. the trends are pointing toward lower growth, and i think you will need to get those trends confirm to get the more hawkish members on board for cutting rates. david: the fed is not one entity. it is several members. we had to sense. you think there is a dispersion about what needs to be done? matthew: heading into the july meeting we had a dispersion. we learned two members were arguing for 50 basis point cut. we had two dissents. since the july meeting, there has been a dovish transition lower. fed wasf the dallas

against cutting rates in july but now seems for. jim bullard, who was against cutting by 50 in july is now for it. you have a good dispersion. the entire distribution of views has moved lower. alix: when it comes to the relationship between fiscal and mmt,ary, i will call it basically targeted fiscal stimulus helped by targeted central bank by. is that the world we are headed in and what is the ramification? matthew: i think over the next year you are in a world where it is mostly the fed cutting rates and monetary policy easing and potentially get a backing off of some of the trade tensions which helps to lift growth. alix: not some kind of tax break, infrastructure move, anything like that. matthew: the difficulty would be the politics. president trump we need to get that past the house. in an election year, unless there is clear signs the ecom is slowing, i think that may be difficult. david: some things you need to

get past the house, some things it is not clear you would, including index of capital gains tax. if they went forward with that, could that have a stimulative effect on the economy because it might free up people to sell things they are holding onto? lisa: absolutely. if you get tax reform, certainly there will be a short-term bump as you saw with the earlier tax stimulus we had. certainly that could be a propellant for the market. alix: what would be another positive catalyst? what would get us out of this that would not have to do with trade. matthew: if you would get a rebound in some of these labor market data. one of the concern for us has been the slowing and hours worked, the slowing and the job trends, if you look at the services sector -- we have seen 120 thousand jobs added per average over the last six months. that is down from 180,000

earlier this year and near the lows of the cycle. if you start to get firming there, it would be hard to know what the catalyst is, given what we are seeing. from a global perspective, china growth remains a key driver. if we get stimulus there that begins to stabilize the economy in turn things around, that could help germany, european growth, and into the u.s.. alix: the hours worked and the wage conversation -- how long do you think productivity hangs in, that we have unit labor cost lower so companies can feel ok versus when we get the pass-through to inflation. you have a sense of that? matthew: wage growth tends to lead to productivity growth over the cycle. it is the idea that you have a tight labor market, companies become forced to invest in productivity enhancing projects and that leads to productivity growth. that dynamic is in place and continues over the next year. david: matt lose eddie of

deutsche bank and lisa erickson, thank you both for being with us. this is the 18th anniversary of the attacks on the united states that took almost 3000 lives. there are commemorative events happening at the white house, the pentagon, and what is called ground zero in southern manhattan. they are beginning in southern manhattan as they are bringing in the u.s. flag. there will be ceremonies there that continue with bagpipes, drums, the national anthem, and amount of silence. both in southern manhattan and the white house. let us listen in.

o say can you see by the dawn's early light what so

proudly we hailed at the twilight's last gleaming whose broad stripes and bright stars o'ergh the perilous night the ramparts we watched were so gallantly streaming and the rockets red glare the bombs bursting in air nightroof through the that our flag was still there star spangledat banner still wave the freeland of of the brave

[applause]

♪

victims]names of

david: time for the bottom line, where we look at three companies worth watching this morning. speaking of ipos, we are looking

at wework. they a high valuation, that has come down. now they are saying they need to pull it or redo their governance structure. we will what happens with wework. alix: morgan stanley specifically was not on the wework scenario. how do you win an ipo deal without pitching it to low and be realistic about evaluation? david: they want to hear high numbers. the problem is they have waited longer and longer. more money has piled in and it jacks up the valuation. alix: the same with the ipo world. $1.16re trying to raise billion in ipo. -- this isell shares a pure bet on a subscription exercise business. david: very popular. alix: i will leave it there. on,you know anyone at pelot

they will swear by it. if you are betting on a subscription business, i'm not sure how this is pulled off. david: unlike uber, it will not deliver food. alix: it will not. david: the third company is our experts boeing is brooke sutherland. are we finally seeing a slowdown? brooke: you are. ideally the air framers want to have this at one, which means the new order for every plane you are shipping out. for boeing, this has turned negative, which is not a great sign. there are a lot of factors at boeing. the 737 max 8 been grounded since march. yup airlines overseas that have had bankruptcies. airbus interesting is ratio is very weak. that raises concern about whether we are seeing a slowdown

in demand for aircraft. david: that is a global economy issue. that is not boeing. brooke: they are both very dependent on china and china has seen its growth slow. that could read to a in passenger air traffic and demand. they do not need as many planes to fly those people around. you could see this be a real turning point. if you look at the industrial airplanes have been a bright spot, if you see that slow down these numbers could stop -- start looking uglier. alix: we will hear from the ceo today. what can we expect? this is the first time we have heard from him since earnings. brooke: i would expect him to touch on his thoughts on the commercial market update. he has been rosy about this even as the max has been grounded. passenger traffic has been down. versusth for the year projections of 6% to 7%. he said that is healthy and growing.

i would imagine to pick up on that theme and see if he is more pessimistic, and then we will get an update on the 737 max and if there is any changes to boeing's expectations. they say they expect that to be blind by the fourth quarter. david: who believes them? alix: this is like the third? david: we were told june. brooke: i am skeptical, and a big reason is we have heard from european regulators who say we want to do our own flight tests and we have questions about the sensor that cause those crashes. they may be want to have another sensor. you cannot put that plane in the sky if you have two major regulators disagreeing. if you're an american, you want to take that risk and follow the fbi -- follow the faa and that have european regulators come back and say we have another problem. i do not know how realistically

that plane can fly. david: you set airbus and boeing are both weaker. are they building their own? this is one of the issues. china does have some aeronautic capability. people have rejected that is where a lot of the growth would be in passenger flights, and china. brooke: those things are not quite ready yet and have not been certified by international regulators. that is the longer-term threat is that you shift, especially domestically, to their homegrown champion. they do want to have that eventually take market share from airbus and boeing. that is the longer-term concern. we have seen significant slowdown in china orders. that does raise the question of whether they are gearing up for supporting that national champion. alix: who are ahead of the faa. brooke sutherland of bloomberg opinions. thank you so much. looking forward to those headlines. that wraps it up for bloomberg daybreak.

i willup on "the open" be joined by pinky shada. look at the quick equity markets. it is the turn within the market momentum to value. moving to small caps, move into banks and energy. does that continue? in other asset classes, a mixed dollars story. it is the bond market you want to pay attention to. a little bit of buying as yields move lower. is that going to continue with $24 worth of 10-year note. what will demand be and have we seen a paradigm shift and a world of higher yields and inflation taking hold? this is bloomberg. ♪

alix: from new york, for our viewers worldwide, i am alix steel in for jonathan ferro. "the countdown to the open" starts right now. ♪

coming up, president trump continues his attacks on the fed , calling for the central banks to lower interest rates to zero or less. bid --lion of pride surprise bid making an unexpected offer. and from worst to first. this year's laggards are bouncing back. talk about that rotation. s&p futures may not be going y action. but whipp , movinglar down .4% lower into that ecb meeting results we will get tomorrow. a little bit of selling on the long end, yields moving higher by one basis point. the bond market taking a breather after huge move and yields to the upside over the past days. u.s. inflation may be starting to stabilize. core pci ticking up in