cease-fire in the trade war with china, and china responds by saying they will import u.s. soybeans and pork. outgoing ecb president draghi points,all of his and markets wonder whether more baby beaded -- whether more may be needed. up onatic candidates gang biden, and health is front and center. welcome to "bloomberg daybreak" on this friday, september 13. it still is pretty lucky, at least in the equity markets. s&p futures are up. the euro is up against the dollar. the 10 year yield, the bonds generally tend to be selling off. the 10 year is no exception. crude is up just a tad. it's time now for the global exchange, where we bring you today's market moving news from around the world. joining us from hong kong is in the current, maria tadeo in

helsinki, michael mckee in new york, and kevin cirilli down in houston. there was a bloomberg report trumpday that president might have a cease-fire, and the president basically confirmed it. pm johnson: i see a lot of -- pres. trump: i see a lot of analysts seeing we will do a piecemeal. easy or hard. there's a deal or there's not a deal, but it is something we are considering. david: there you heard it. it looks a little like the chinese may have responded this morning. right.xactly some economists are talking about a mini deal. there's the prospect of china buying some u.s. agricultural products and exempting pork and soybeans from additional

tariffs. expectedtowards these talks in october at a high level between both sides, there is a word of caution as well in all of this. china has always been in the market for more agricultural goods. dating more pork in particular because of swine flu. there's certainly evidence of some good gestures, but no signs of a major, sustainable breakthrough just yet. in fairness, the reporting yesterday was not necessarily for an overall deal, but maybe they are considering holding things, even may be a few tariffs. maybe we will have some protracted period where we don't make things worse. enda: exactly right. that's what the chinese side are saying in terms of some of the

state media outlets. they are talking about goodwill gestures. perhaps it does seem as though we are headed towards something else that may put things on hold, at least for near-term. bigs not forget we have a release of chinese data on monday, including retail sales. that will give us the latest data play in china's economy. if we see further weakness, it will only encourage views that china wants to come to the table to have some kind of cease-fire in this trade war. david: thank you so much. eu ministers are gathering for the summit in helsinki. one of the top questions there is brexit. >> i am feeling increasingly optimistic. there's still a lot of work to do. people know we do need to end this. we plan to leave on october 31,

and we will leave with a deal, but it is also understood that whether it is a deal now, if it is a no deal outcome, eventually will be some kind of deal, so i think it is in everyone's deal -- in everyone's interest that we strike some kind of deal now. david: maria tadeo is in helsinki. is there any basis for that optimism? maria: it really does depend who you ask. u.k. perspective is they feel they are making progress towards that deal. time,on't ask for more and this is do or die. they need to leave, preferably with a deal, when it comes to that halloween deadline when you speak to officials -- halloween deadline. when you speak to officials here in helsinki, they believe the u.k. has made no work to defend new ideas. nothing has been put on the table for weeks, and they are at

quite a loss because of the political commotion in the u.k. someone else could come into play, and there is the perennial question about the second referendum or whether anything could actually change. asked oneans to be whether they feel closer to a deal, they will say no because nothing is actually changed. very quickly, we just heard that boris johnson will actually be in luxembourg monday to beat with juncker. perhaps we will get some kind of clarity on where brexit stands. david: i minute on the ecb. ,ou caught up with mr. holtzman who confirmed they were not quite unanimous behind mario draghi. that's right, and that is a fallout from a huge decision by mario draghi. andut rates, launched qe,

you are actually seeing almost an unprecedented pushback against those decisions. the french, the dutch, the germans were against that huge stimulus package. when i spoke to the austrian central bank governor, he told me many left the room, thinking a policy mistake had been made. he also told me he's hopeful that christine lagarde can maybe take a different tone and approached monetary policy differently. the hawks on the governing council were not happy about the decision taken yesterday. david: thank you so much. we get u.s. retail sales numbers just over an hour from now, at 8:30 eastern. michael mckee is here with a preview. michael: consumer spending is 70% of the u.s. economy, and becomes even more percent went -- even more important when the all but gone away. the consumer is carrying much of the weight for growth going forward.

through july, we were doing a put a good job of it. you can see the blue line, the retail control group, the part that goes directly into gdp, growing strongly. this morning we will find out if we continue doing our patriotic duty in august. the bad news is even with back-to-school, the numbers aren't supposed to be quite a strong. it would still be good, and the even better news is in the months going into july, each of those was revived higher -- in the four months going into july, each of those months was revised higher. to me.sounds patriotic thanks so much to mike mckee. last night was the big debate down in houston among democrats running for president. bloomberg's kevin cirilli was there for all of it. it was clear they all went after vice president biden, as predicted. how did he do? kevin: i think he came away

our julie unchanging -- came away largely unchanging. former vice president joe biden taking it to senators elizabeth warren and bernie sanders, and asking, how are you going to pay for this plan? the warren campaign is going to have to answer that question in particular of whether or not taxes would be increased for the middle class. at one point during a fire exchange -- during a fire exchange, he directly called senator sanders a "socialist," but sanders and warren were also able to not get into too much of a heated political exchange, and not largely change the trajectory of the race. in london or beijing or even in america trying to price what last night's debate means for u.s. policy abroad, tariffs potentially could be here to stay. all of the top-tier candidates

saying tariffs might be part of how they would negotiate with other countries should they become president of the united states. that means that potentially, some of this volatility could be here to stay in the long term from a u.s. foreign-policy standpoint. david: really good point. that's one thing they all agree with the president on, apparently. coming up here, we will have more on your morning trait and analysis on the markets in today's first take. live from new york, this is bloomberg. ♪

♪ david: now for the bloomberg first take, where we give you the news and you get the trade analysis of the markets. today, it is all of the new hopes for trade talks, mario

draghi's performance yesterday, and getting ready for u.s. retail sales numbers an hour from now. here to discuss our vince cignarella and rachel evans. a lot has happened in the past 24 hours when it comes to trade. president says we might think about a cease-fire, and the chinese says maybe we will buy some of these soybeans and pork. this white line shows where the shipments of soybeans have been to china. vincent: baby steps, i'm told. this is just baby steps. nothing granular. they are a long way away from an agreement. let's put this in perspective. nafta, 30 years. friendly neighbors. we worked out a new usmca. still can't get it ratified through congress. whatever we do with china probably isn't going to be a done deal until the first half of 2021. we are just going to take baby steps along the way, try to get some agreements, but to look for a grand deal, calm down. david: at the same time, in the

market, is there a pent-up demand for even baby steps? rachel: absolutely. i thought you saw that watching the s&p yesterday. we had the newsbreak that there was a potential for an interim deal. stocks jumped 0.5 percent. then we had a story later in the day, where cnbc had a piece directly contradicting it. sells cell 0.5% -- stocks 0.5%. they gradually started to climb back up because i think that is exactly the concern from markets. they want that deal. david: --vincent: the markets do want be hope. they want a positives. they want the market higher. everybody wants that gain. but when the deal came out, when we announced the deal, when cnbc we lit up with traders saying, what is going on? david: at the same time, you

said don't get your hopes up for a megadeal. but at this point, if we just don't make it worse, is that a help in end of it hel -- in and of itself? vincent: it will help markets. when you have peter navarro saying that china has committed the seven deadly sins, that is not helpful. when you have i.t. theft as one of the major components of what the u.s. wants, think about what that would mean for china to put that in a deal, to put that in writing. that would be to admit to wto and the rest of the world that i've been stealing from you all these years. they can't admit to that. what they told lighthizer very specifically was we will take care of it, but you have to trust us. we can't put that in a deal. work, that is going to saying just trust us. [laughter] vincent: that is why a megadeal will not happen. at the end of the day, you have to get this through congress. if it is the only thing

democrats and republicans can agree on, somehow we have china as the enemy. we can't put something like that before them, especially for a present to election. they will not give trump that win. it is just not going to happen. david: what about baby steps for the ecb? where they baby steps or big steps yesterday? they hit all of the elements, but there also was a fair amount of dissent. maria tadeo. to talk to mr. holtzman of austria. this is what he had to say. that as things change, this forward guidance and deposit may change. not tomorrow, not after tomorrow, but i would think it is now there for the next case. david: how did the markets sort all this out? it was less than some hoped for, and now it feels a little halfhearted. rachel: it is very interesting when you do have an ecb

announcement like this. we had rate cuts, quantitative easing. not quite the kitchen sink, but getting towards half the kitchen at least. when it came to the markets, there was other news people were trading on, so this didn't have the impact of the draghi bazooka of old. it is starting to show the limits in the ecb and central-bank playbooks generally. we see deposit rates now at negative rates since 2014. it's all very well to say this isn't going to go on for decades, but we are already at half a decade. david: all wonder what this does for poor -- i wonder what this does for poor christine lagarde, who is coming in. is mario draghi saying you've got to go deal with those financial people because we can't? vincent: the sources i talked to in europe basically said what draghi did was clear the board for her. ,his is what i'm going to do and essentially the limits of what we can do. quite depressing, was what people said his speech afterward

was. the take was a bit depressing, like this is all i can do. this is all that's left. see you. what he did for lagarde was basically go to the extent of the limits the ecb could possibly go to allow her to deal with the fiscal policy issue and browbeat europeans to stimulate. david: in the meantime, you've got president trump mario draghi debating about foreign-exchange. president trump immediately says, look at what they are doing. draghi says we don't even think about foreign-exchange. vincent: the whole idea about currency wars, this isn't a currency war. they are not trying to devalue the currency. this is a policy issue that mario draghi needs to put forward. the fact that he basically has reiterated in the last three meetings that it is time for fiscal stimulus, i'm still waiting for the market to get that hint that things are a lot worse than what we are seeing. david: let's get to the really big story, which is this grand

reversal or river between value and momentum. put a chart up here. is this happening are not? this iseople saying just reversing the mean a little bit. rachel: this is top-of-the-line for anyone covering markets this week. we did see a bit of a shakeout earlier in the week. a lot of those momentum trades got really squeezed, and we did see value coming to the fore. the big debate really is about whether this is a broader shift moving from buying growth, buying tech, that kind of strategy, into picking up value stocks. value really hasn't worked as a strategy for years. point? now the turning there are some investors out hard ono have gone very the value line. unsurprisingly, this is the time for value to shine. jp morgan also sees potential for momentum stocks that have had their day, but goldman sachs

says no, actually. now is a great time to buy u.s. equities. this is a good time to be in the market. flow wise, we are not seeing etf investors react yet. this is still playing out, but certainly it will be very interesting to see some of these value strategies take in more money over the next few weeks. david: let's talk about the economy. we've got retail sales numbers coming out. they could be quite important as a gauge of where we are going. 8:30 eastern time this morning is when we get those numbers. vincent: the consumer is obviously the key. gasoline prices are lower. crude prices have come down. that is going to weigh on retail sales. we had a big bump in prior numbers. we've already forecast a bit of a decline. any positive is going to come of the markets are going to react very well to a beat today because we really wait in on the inn -- we've really weighed

on the downside to this. as long as the credit keeps flowing, you would expect the consumer to keep dying. that is the number i look at. when that stops and the consume hits the level where they can't take on any more debt, that is when things may get a little rough. david: that will be troublesome, no question about it. many thanks to vince cignarella and rachel evans. you can find all the charts we just used and more by running gtv on your terminal. coming up, we work says it will reshape the board. more on that next. this is bloomberg. ♪

viviana: you are watching "bloomberg daybreak." wework's pick for its embattled listing. the startup is also making changes in its corporate governance to address at best her concerns up -- to address

investor concerns. at one point, we work was valued at $47 billion, now expected to be worth about $15 billion in the ipo. --ud player raising 500 software maker cloudflare pricing shares in its ipo. the sale values the company at $4.4 billion. the company did note one of its risks includes negative publicity from white supremacists using its network. its dubious distinction for smile direct club, the maker of alternatives for dental braces. in their debut, shares sinking 28%, the first u.s. company since at least 2008 to raise more than $1 billion, priced its ipo above range, and on its opening day, still fall. smile direct club is unprofitable, but has been surrounded by a whole lot of buzz. that is your bloomberg business

flash. david: thanks so much. for more on that unicorn and what went wrong, we welcome bloomberg's sonali basak. pricing above the range didn't work out so well. sonali: usually you expect a good debut, but smile direct club completely tanked yesterday in trading come on a day the nasdaq was up. perhapsfor cloudflare, it is not the same for everybody. david: what about wework? they've announced they will change their board and governance structure. sort of crying uncle? sonali: this is the wail of the season. they are changing corporate governance. it is something investors wanted. we don't have valuation, so bankers think it could be $15 billion, a steep cut to the $45 billion they were valued at earlier this year. what does that mean for softbank? sonali: they may lose some significant money, but there are talks about softbank taking a

, newman's potentially preference was to go public, so this is their option to make that happen. news right now. i've not seen it yet. this is about hong kong. is a't say for real this huge surprise. sonali: not a shocker at all. we expected lse to deny this deal. what happens next will be more interesting. now it is like, hong kong, your move. david: might they go hostile? sonali: let's see. theyl indications, wanted to keep it as friendly as possible. they are embedded in this big, messy, cross-border deal, but they may make it ugly. david: they didn't warn them in advance. sonali: 30 hours.

david:david: that's not normally the way you go friendly. andli: hong kong showed up, about 30 hours later they had the bid in front of them. sonalibloomberg's bassett, thank you for being with us -- sonali vasek, -- sonali basak, thank you for being with us. and morgena persaud peck of fidelity. this is bloomberg. ♪

david: this is "bloomberg daybreak." you can see in equity markets, futures are up on the s&p on the dow. we also have the stocks up over in europe in a risk on day.

we will take a look at the cross assets. the euro is up against the dollar. the pound has really been moving, up against the dollar, maybe on some speculation about brexit. the 10 continues to selloff, now at 1.80 percent. crude has come back up after being down earlier in the day. want to turn out to the ecb. it was meant to be the big news yesterday, but then word came that the trump administration is considering a cease-fire in the china trade war. markets reacted with some enthusiasm. here to take us through it all is michael mckee, bloomberg international economics and foreign policy correspondent. michael: there are many deals to includehat don't everything and take some of the political pressure off of xi jinping and donald trump. it appears the administration is considering that. you look at what is happened so far with trade, u.s. trade with china has dropped significantly, both imports and exports.

the trade deficit continues to widen because of the nature of our relationship with china. we buy so much stuff from them, but it is much smaller than it otherwise would be. this morning, we had another gesture of goodwill from the chinese to suggest that maybe they are making progress on this. the chinese have a problem. pork sales have dropped from an sleeve because of the african swine flu virus. they have a -- have dropped tremendously because of the african swine flu virus. they have a pork deficit. you can see what has happened with soybeans in the united states and china. the white line is the chinese demand. that is how much they are buying from around the world. the blue line is how much they are buying from the united states. you can see what major difference that has become. the other issue is what do we do about the other side of the trade war negotiations, the idea

that the chinese have to do something about the intellectual and force technology transfer? we have seen the united states in china drop off tremendously. that is this graph that shows the big declines. that is not going to be solved they may putl, but this aside and do this deal with agriculture and may be something on the chinese enforcing intellectual privacy laws that they passed in july, and set this aside until later, but we this mini-deal. david: thank you so much. send downs every day, but sometimes it pays to take a step back and look at the longer investment horizon. here to help us do that are

ramona persaud, fidelity quality portfolio manager, and morgen peck, fidelity quality portfolio manager. let's get your perspective on news we are having right now on trade. how does that affect your views ?bout investments with someade, along other variables, have driven outside volatility in the markets. but my goal for the investors in our fund is to provide total return with downside protection. takeay i get there is to advantage of that outside volatility. what usually accompanies it is indiscriminate selling and buying. in indiscriminate selling, you get big disconnect between price and value. value doesn't change that much, but price does. if i get a really big disconnect between price and value, i can

really update quality portfolios to own the names i want to own long-term at great valuations. david: at a time of perhaps heightened volatility, does that cause you to look at stocks through that lens and say maybe i am better off in some lower volatility stocks? ramona: it depends on the valuation. at times, if my goal is total return and downside protection, i will typically be more , but only when valuation makes sense because valuation drives the total return. there is this balance between the two. david: what about small caps? there's a common view that the trade war/tariff situation has much more impact on the small caps base. certainly, more companies in the s&p have a large exposure to foreign markets in terms of revenues. it is a smaller number for the

russell 2000 come of the small-cap universe i spend my time working on. the point is, that misses the fact that a number of companies within the consumer and technology sectors have global footprints, and they've had to create those footprints in order to compete. if you talk to those companies over the past three to six months, they are spending a great deal of time trying to reevaluate their supply chain. lead him to's large caps, which have global supply chains that are more diverse, small-cap companies tend to have supply chains in more concentrated regions. it is harder for them to shift production or assets from one geography to another. what i am trying to spend my time doing is figuring out where the opportunities lie. some are what ramona alluded to. we have a phenomenal small-cap research team, and those analysts are doing the work to figure out what the impact is on a company by company basis so that i can make a more informed

decision throughout this volatility on behalf of my shareholders. david: what role, if any, do sectors play on your analysis? we had a big discussion this week about value versus momentum. for the longest time, they have said value will come back. now maybe it has, or maybe it is temporary. so two questions. leave it or not, value is actually momentum. it just had been negative mind from -- negative momentum for a long time. we had a violent rotation into what we would call negative because it got very extended or distorted in august. in august, we were massively discounting recession risk. we've gotten some better data, a lot of stimulus. yields have backed up, so all of a sudden we are back to a value trade. whether or not it persists i think is the kind of market you

have to watch the data a little more carefully than average to see. the biggest question certainly has been, are we going to get a recession? all of a sudden, the yield curve is a little more neutral than inverted. it's been inverted for a few weeks, and the long and has backed up. ropee sorted in this tight of trying to figure out if we are going to get a recession, so value stocks are extremely sensitive to macroeconomic data and activity being good. so i think we are just watching the data religiously. david: when we sit around this desk and talk about valuation, we tend to be talking about large-cap stocks. do you look at the same way? is it the same thing, or a different way of looking at it? morgen: it is all related. as you know, over the past couple of weeks, starting in late august, we saw a very

violent rebound in small-cap stocks relative to large, and i think that is related to what ramona just alluded to come the shift from growth to value, and also from defense to offense. just to set context, the small-cap universe is a lower quality universe from large-cap. margins are lower, returns are lower. about 1/3 of the russell 2000 is unprofitable. to the extent you are seeing this overall shift from quality and defense into risk, that is certainly helping the small-cap space. the last point as it relates to the movement into value, the small caps universe has underperformed large caps for the last decade, and that has really been exaggerated the last one to two years as the small-cap space has seen multiple compressions. that was at its widest in about whatars in august, that is you are seeing with small caps

finally starting to outperform large caps. i spend 100% of my time trying to figure out the winners within that space, so i am aware of all the dynamics, but it doesn't change my investment process. ramona persaud and morgen peck, both of fidelity, thank you. viviana hurtado is here with first word news. viviana: democrats squaring off last night in their third residential debate. front-runner joe biden battling his rivals in the party over the most contentious issue, health care. at candidates taking shots president donald trump, especially on trade with china. sen. harris: donald trump in office on trade policy, and he reminds me of that guy from "the wizard of oz," when you pull back the curtain, it's the really small dude. anticipateduch clash between biden and senator

elizabeth warren didn't happen. economists expt two more fed interest rate cuts, next week and in december. after that, they expect the fed to lead the range for they -- range ato leave the the benchmark point. carl icahn is moving both his home and business. florida is one of several states without a federal income taxed -- without an income tax. 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 the vienna or tonto. this is blue -- i'm viviana hurtado. this is bloomberg. david: coming up, a poet versus the estate of notorious b. -- .i.g.

to check the charts and interact with us directly, go to gtv on your terminal. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." hour, up in the next rufus yerxa, national foreign trade council president. now to your bloomberg business flash. the board of the london stock exchange group unanimously rejected the $36.6 billion offer from the hong kong exchange. lse saying the bid had fundamental flaws. they are working on a $27 billion acquisition of data provider with -- with data

provider refinitiv. forever 21 is wog on a deal to get $27 million for restructuring. forever 21 operates more than 800 stores in the u.s., europe, asia, and latin america. discusseds have easing rent for forever 21 in exchange for interest in the company. its first debt sale since one public, pricing the bond at a yield of 7.5% after receiving orders of a around $200ers of billion. david: we turn now to our weekly "business week" feature. first up, carcinogens in the u.s. drug supply. then, banks begin to account for climate change risk. hidden carbon footprints on the

books could be the next dodgy mortgage. and the poet whose lawsuit couldn't stop the party. the story behind the fabled lawsuit against rita ora and the estate of notorious b.i.g. joining us are the bloomberg businessweek editor and bloomberg's sonali basak. let's start with carcinogens in drugs. i was deeply disturbed by this. reporter: about 90% of the drugs prescribed to americans are generics, and 80% of those generics are manufactured abroad in factories in india and china, where the fda does not have nearly as much oversight as they do at home. this is a look at how something like this happens. david: you were talking about something called mdma. i'm not even going to try to pronounce what it is, but it is a really toxic thing that makes its way into these generics. reporter: it is a byproduct of processes are the main effect. instead of creating the drug here at home, the active

pharmaceutical agreement is done abroad in china. that is the part that is contaminated. sonali: how did this not ever get better? reporter: exactly. there's been pressure to create more generics, so there's been a ramping up of a lot of that. we have just less fda oversight. the number of inspections has then declining the past couple of years. sonali: our large drug companies doing anything about it? reporter: yes, there have been massive recalls. david: let's turn to something else toxic, and that is the climate, potentially. it is in the news every day, but now it seems that the banks are trying to figure out what they have on their books that might be vulnerable. reporter: it is this idea of taking a look at what is on your books and how much through the bank you are having of a carbon footprint. sonali: it seems like a pretty thorough effort to have to do

this. it looks like a lot of work. how many banks are doing this? reporter: not that many at this point. it is maybe a couple dozen in europe, a few in the united states. butis the one we focus on, societe generale and others are focusing on a climate agreement. david: it seems kind of amorphous. toorter: it seems impossible tiedown a direct number, so that is where things get really fuzzy. sonali: you really wonder how much you can actually find out. next week here on "daybreak," we will have special coverage on climate. now to the third story, about a poet, beat poet, with like the bongos and things like that.

heard ahe sued once he song by rita ora that samples from a song by notorious b.i.g., that takes a phrase from the 1968.e wrote in we won't say it on air, but it basically says party and bs. he basically said i need some credit on this, and the motion was dismissed. sonali: do you think rita ora even knew she got him from him also. silvia: she knew she got it from the tory us b.i.d. because that was a very popular song -- from notorious b.i.g. because it was a very popular song. used: they said it is fair because it transformed it because the original beat poet was using it in a negative sense, and notorious b.i.g. thought it was a good thing. silvia: he said, actually, they were using this in contravention

to how i intended it. i meant party and bs were a bad thing. sonali: times have change since the 1960's. [laughter] david: exactly. it's a different world. great story. it's a really great issue. thank you, silvia killingsworth of "bloomberg businessweek" and basak.erg's sonali you can read these stories in digital and on newsstands now. coming up, differences on health care dominate last night's democratic debate. more on what i'm watching next. if you are jumping into your car, please tune into bloomberg radio, heard across the united states on sirius xm channel 119 and on the bloomberg is this app -- bloomberg business app. live from new york, this is bloomberg. ♪

>> you just said that two minutes ago. you said two minutes ago they would have to buy in. >> they do not have to buy in. >> are you forgetting what you said two minutes ago? david: what we just heard was one of the many instances where vice president biden's rivals were trying to take him down. for the takeaways, we welcome kevin cirilli. listening to that, it turns out if you go back to the tape, pouille and castro was wrong, but he -- to the tape, julian castro was wrong, but he almost said he was senile. kevin: it was like he was ticking a page out of -- he was taking a page out of president and i'm not sure

it resonated. that exchange was met with audible groans and gasps from the audience. in the spin room, julian castro doubling down on those attacks, saying he was trying to draw a policy differentiation, but the broader take away is that that might be political poison for julian castro, but it signals that the biden campaign is willing to have a medicare for all debate with any of these candidates. biden took on not just castro on that point, but bernie sanders, at one point calling him a socialist and urging senator elizabeth warren to put out a plan for how she would pay for her plan, questioning whether or not taxes would go up on the middle class. david: so much of the debate was given over to the health care issue. vice president biden said he would stick to his moderate position, saying we are going to different ways.

kevin: he embraced his political ideology and away he had not in the first two debates. there was one exchange where he did struggle in terms of communicating, but candidly, you could look at all of those candidates and pick out where they struggled. it was a marathon three hour debate with limited breaks come about for joe biden, he largely comes out of this unscathed, as does elizabeth warren and bernie sanders. i've got my eyes on these polls in the next 72 hours to see ,hether any of these candidates who else is going to get a bump in these polls? can they make it into a four-way race? david: it will be fascinating to see those poles. it seems like the question is who will step in if vice president stumbles. i don't think i saw that stumble last night. kevin: i don't think i saw that either. so much of this is about the

theatrics in the spin room, where all of the candidates gather afterwards. joe biden has still yet to make an appearance in the spin room. that projects confidence from his campaign after the third presidential debate. elizabethders, warren, and kamala harris were in that spin room. david: kamala harris was aggressive last night, but i had a sense she used some canned lines. did you have that sense? kevin: when i talk to the strategists about that, the criticism the harris campaign is gathering at this point is that she can't pick a policy position and stick with it. she's tried to carve out this position that she would be able to unify the more progressive wing, butthe centrist her plans have been attacked by all sides for either being too far to the left were not centrist enough, so she struggled after that strong debate show performance in miami. she tried to restart some of that momentum last night. there's going to be pressure as

we head into the next round of the debates in ohio. tonighting to be a debate, but if candidates start to drop out, the pressure might be on former hud secretary castro following that performance last night. virtually all of the candidates admitted he was a bit out of line with that exchange with joe biden. senator klobuchar could make a case for that centrist lane as well. david: great reporting from houston on that. that is kevin cirilli reporting from houston. coming up jim pauln, leuthold group chief investment strategist, will join us. live from new york, this is bloomberg. ♪ devices are like doorways

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september 13. here's what you need to know. china is moving to ease trade tensions with the united states before the two sides resume talks. the u.s. is encouraging the resume purchases of agricultural goods. the thirdbattled in presidential debate. >> they do not have to buy in. >> you just said that two minutes ago. you just said two minutes ago they would have to buy in. you said they would have to buy in. >> they would not have to buy in. >> are you forgetting what you said two minutes ago? david: the democrats' differ ences on other issues tended to be muted. johnson'sime minister government is something upbeat about the chances of a new brexit deal. >> i'm feeling increasingly

optimistic. there's still a lot of work to do, and i think people need to understand we do need to end this. we will leave, and we want to leave with a deal. but it is also understood that whether it is a deal now, if it is a no deal outcome, eventually we will need some kind of deal. david: billionaire investor carl icahn is leaving new york for florida to avoid higher taxes. bloomberg has learned he is moving both his home and his business. that is what you need to know. let's turn to the market. it is a risk on day when it comes to equities. the euro is up somewhat against the dollar, about 0.75%. crude is up again. it's been up and down all morning long. at the moment, up 0.25%. bloomberg reported yesterday the trump administration is considering a cease-fire in its trade war with china. this morning, china announced it

would exempt imports of u.s. soybeans and pork from additional tariffs. we welcome now rufus yerxa, national foreign trade council president. always great to have you on when trade is the subject. there seem to be a series of these almost every day now. a former major trade negotiator, what do you read into it? rufus: good morning. it is certainly better than waking up to tweets about tariffs being increased, but we've seen lots of false dawns in this u.s.-china trade fight, and it is too early to tell whether this means a real deceleration of the fight and beginning to resolve the differences. what we do know is that there are a few products on which each side will be backing off from new tariffs, or at least making commitments.

there's talk of doing some kind of interim package on a few issues, but that is a long way from a complete deal. it is worth remembering that the vast majority of tariffs on both sides still stay in place. from a business point of view, we are optimistic that there weren't be further increases, but we are waiting to see how this will be resolved. david: take us into the theater of negotiation for a moment. announceddent trump those tariffs would be postponed two weeks, he specifically tied it to that anniversary of the founding of the people's republic of china. how important might that gesture be? that anniversary is very important to them. rufus: i think those kinds of gestures during negotiations are somewhat significant. they don't change the fundamental underlying differences between the two

sides. it seems there's a little more goodwill at the table, but remember, the trump administration has acted very quickly in the past and surprise andtariffs increases -- surprised the chinese with tariff increases, so i don't think there is complete trust on both sides of the table at this point. i think they are still very itpicious of each other, and will be very difficult to resolve the larger underlying issues. the one other thing i would say is clearly there's a large area, a large element of the domestic politics and all of this for trump. it has become clear that his latest a seller ration of tariffs, this extra $300 billion because it began to hit some and he consumer products, really began to be problematic for him. the fact that farmers are also unhappy, i think they are looking at ways of getting some

and about the political risk for the president. david: they are no doubt very conscious of the 2020 election coming up for president trump. at the same time, if you listen to the debate stage last night in houston, it was not clear xi administration would be better off. will not hear them sounding like they are going to be weak on china. i think most of them are going , and believea hard that there are lots and lots of practices in china that need to change, so that doesn't surprise me at all. i think anybody besides trump is going to handle tariffs

differently in the future. i think we will use them more sparingly and in conjunction with more efforts to build allies around the world for our position on china. david: we are not really talking about an overall deal. we are talking about an interim step. at the same time, does president trump need to have something gained, some peppercorn, as it were, to take back to his base, rather than just having a cease-fire and we are back where we started and haven't accomplished anything? rufus: he's got a couple of big problems with this. he said that he was going to win and get a beautiful deal, and then the fight accelerated. secondly, the retaliation by china has hurt a substantial part of his base. the farm states are the ones

being hit hardest by all of this. he's looking at ways to minimize the hard for them. they got some problems on the with a bailout for farmers. they are looking for some way of getting the kind of headline .hey got that is hardly an ironclad commitment for the chinese to eliminate the restrictions on all u.s. ag exports. the bigger challenge is can he get exports back to where they were before the trade war started? david: it is a very important point. finally, is it more likely that there will be meetings in washington? they said that they would have them, but it was far from clear. we still don't have a date.

do you expect they will get together and talk about something next month in washington? rufus: i think the fact that both sides have made some , they've offered maybe not all of branches, but all of branches, but to each other, i would be surprised if they announced they would not meet. that is really up to the two sides. david: really appreciate you being with us. that is rufus yerxa, national foreign trade council president, coming to us from washington. for more on the trade story, we welcome jim paulsen, leuthold group chief investment strategist. give us your take from an investor's point of view, how excited should we get? there's ahink

difference between needing a good trade deal and just getting trade off of the front burner of concerns. there's a lot of evidence here that we are maybe getting finally close to some deal. whether it results in a good trade deal for the united states, maybe for the markets, is less relevant at this point then getting beyond this. an interim deal would be great. it would put trade on the back burner, even if it didn't do a lot. agreement and of some sense of harmony between the two countries. i think it would be very positive. are seeing that with the market -- we are seeing that with the market reaction. certainly was backing off tariffs and suggesting some interim step. the pressure in china and the pressure of the president facing election is

getting strong enough that they are going to announce some deal, even if it is not the best ever, so to speak. david: thus far, we've only had hints, not really a lot of action. if they did get just a cease-fire, just to say let's not add any tariffs --

david: we are going to go to helsinki, where bloomberg's maria tadeo is standing by with finish central bank governors olli rehn. here for are eurogroup meeting the day after the european central bank rates, ande2, cut forward guidance. we are very happy to speak to the finish central bank governors olli rehn. the big question today was how much agreement or disagreement was there yesterday?

we hear some of your colleagues did not like the measures announced. n: the ecb governing council indeed decided on a highly accommodative monetary policy stance and a comprehensive policy package. this was a response to a shortfall in inflation expectations, and it is aimed at supporting sustained growth in europe. maria: so you get was justified, the level of support that came out? we know some of your colleagues actually felt perhaps it was a little bit too much that was not needed. gov. rehn: it is very normal that we have a discussion within the ecb governing council. as preside mari draghi said yesterday in the press conference, there was a broad consensus on the need to act,

and there was no vote on this issue. it is indeed, based on our analysis of the current economic , that betrayed tensions after into an amplified trade war. context --ion that our conclusion in that context was that it was sensible to remain on a highly accommodative policy stance. maria: all of this chat coming from other governors from other central banks. do using this damages the european central bank? gov. rehn: it is always better to avoid excessive division, especially in public. normal debates within will maintain unity in public

appearances. that is why i think it is important that we will defend this decision because it was based on the current incoming outlook.he economic it is the best effort we can do to react to the economic owdown in the global economy for the moment. maria: the market was expect in some form of qe, but the fact it , many wereed surprised. this is not going to end for a very long time. gov. rehn: i've been long enough in the business that i've stopped second-guessing what is the market's view, what are the market forces' views. dilip -- the logic behind this was expressed in our statement

very clearly, that they want to restart qe in order to support the accommodative monetary accommodatee and the financial conditions in europe. enter this additional resuming the net asset purchases shortly before we do the first interest rate hikes, so it is fairly clearly expressed. maria: when you look at rates, the market is saying the fact that we have a tier system and we cut again means you could go way lower if we wanted to. do you have more room to continue cutting rates? gov. rehn: at least for me, this that willstification help our monetary policy transmission, but yes, it is

also providing more space in terms of interest rates, if needed, and as appropriate. maria: a final question on the 2% inflation target, many think it is time to rethink this target. why so fixated with the 2%? gov. rehn: that has been a global consensus among economists and central bankers. not unified, but i think it is considered appropriate in a sense that it is keeping the economy moving while avoiding thatsive inflation so there can be a proxy for a meaningful level of inflation. my view is that it is important that we conduct a study of the ecb monetary policy framework. i proposed this a year ago. i'm glad this is now moving forward. thank you so much for

joining us. always good to see you on bloomberg television. david, that was olli rehn, the nish centralthe fin bank, who said yesterday's decision was justified when you look at growth and inflation forecast. david: thank you so much, maria. another important and timely interview from helsinki. now i want to go back to jim leuthold -- to jim paulsen of leuthold. did the ecb do the right thing? jim: well, i guess i'm encouraged by the market reaction. i think the vote of whether they did the right thing or not is showing up in bond markets across the world and throughout europe. is above -50nd basis points, climbing steadily. it didn't blink with the ecb announcement, so the bond market

is suggesting a lot of confidence that what the ecb has done and is doing is likely to help growth in the euro zone, as well as the world as a whole. i think that is the best signal we have. renewed confidence among the bond market or bond investors pushing yields higher. if there was really disappointment, i think we would see a continued drop in long-term bond yields. david: next week we have three central banks, including the fed, as well as the bank of japan and bank of england, to hear from. when you look at the fed next week, does what the ecb did affect what they do next week at the fed? some people are saying maybe they shouldn't have gone that far. does this indicate perhaps that they might be less likely to cut the 25 basis points? fed well, i think that the is in a tough position. i kind of agree with that a little bit, with really

aggressive easing coming from other parts of the world. maybe too much when you look at the situation in the united states. the united states has never slowed as much as the rest of the world. we are growing more than twice as fast year on year than barely and we are fullng away from employment. it puts the fed in a box, i think, but i do think they are going to come through with a quarter-point cut, if are no other reason than the federal funds rate is still so far out of bounds with almost any other interest rate in the world. they can continue to focus on here, atty, if not least globally with economic growth and trade uncertainties. i think they are going to come through with that, but i've got to tell you, it is a tough call here. kidding to be a tougher call for the federal reserve. we'll see what that retail sales number does today. david: on the subject of growth,

i want to refer to a note i got from you yesterday on productivity great increases. will put up the chart that you showed. productivity growth is one of the biggest indicators of economic growth. it is doing better than i had thought. jim: i think that is interesting. if productivity has finally showed up in this recovery for the first time, just in the last two and a half years, and really with little fanfare. no one is really too focused on it. for 29% ofounted total gdp growth. by comparison, in the last five years of the 1990's boom, productivity accounted for 70% of gdp growth. but what is interesting is in the last two and a half years since 2016, productivity has grown 1.5%, 1.75% in the last year, 2.6% in the last quarter. what i think is most outstanding

is that in the last 10 quarters, productivity in the united states has now accounted for almost 60% of total gdp growth, which makes it feel a little bit in character like the late 1990's. here we are worried about the recovery ending, and the best thing you could have happen would be a boost in productivity, which is a recovery extender. david: something i think may have been overlooked. think you so much, jim paulsen of leuthold group. please stay with us. coming up, gm strike risk is at a 12 year high as union vote over the key weekend. this is bloomberg. ♪

david: general motors faces a strike vote this weekend in conversations with the uaw. for more, we welcome our detroit

bureau chief david welch. the uaw has contract negotiations periodically with the big automakers. this time they said they are going to target gm, not least because gm profits are up, and many ways the strongest of the big auto companies. gm has also announced idling of some plants, including a large one in youngstown. i spoke yesterday with the ceo and president of the detroit regional chamber of commerce about why it is they may be having this strike vote. this is what they had to say. >> the uaw is looking for leverage. they've got a lot of issues obviously with the plant closings, or idling, i should say, at general motors. they are looking at general motors' profits. i think they think that pre-authorizing this strike is a way to kind of level the playing field. david: part of the reason they need to level that playing field, as you may recall, there is criminal investigation into the uaw that included the fbi

rating the home of the leader of the uaw and a former leader. surveyors -- so there's a lot of rank-and-file saying they are not sure we can trust the union in their discussions with automakers. coming up, we are minutes away from the latest u.s. retail sales. bonds are continuing to selloff in the wake of the news about trade and the hopes which are springing eternal. live from new york, this is bloomberg. ♪

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i'm david westin. let's check the markets. this is interesting after what the ecb did yesterday, apparently banks are starting to like a. theeuro is up against dollar. the pound is up with the news that rigs it may be going forward. , not's a selloff on bonds only the 10-year, but in europe. we have retail sales numbers for the last month. gas,u take out auto and retail sales are up 1/10 of a percent. overall, they are up 4/10 of a percent. a lot of it has to do with the things you take out when you take out auto and gas. we still have with us jim polson . retail is critical. it's a little less than what we hoped for. ex-auto,ex-gas. a little weaker.

i think there was some expectation that we would week the amazon, mainly in july.es event we have consumer confidence may be affecting it. but i would say all in all this is not a bad number, particularly after the strong july results. this is a number that does not necessarily accelerate the movement in bond yields to the upside, but maintains it. maybe it is just about right for a fed cut. any less, maybe would increase pressure. fed continue to hold up this economy? i think so. job creation maintains at a healthy clip and more important, real wages continue to climb at

a robust level. trend, the at the income trend is good. i think they will continue to be a sizable force. ok, jim, thank you. headlines just crossed. error grass is closing. it blames central bank policies. there was a report on bloomberg yesterday where some from credit sweeties said we will see -- ditdit space -- cre see hedge we will funds shutter. the retail industry is going to fundamental changes and bricks and mortar will merge with

online and mobile. here to break it down, our correspondence. -- our correspondents. talk about the fundamental shift in retail in this country. consumers are looking to shop whenever they want, wherever they want, so that shift to online, which is 50% of total u.s. retail sales. it may not move as quickly as it has in the past, but the risk certain retailers face they do not have the experience or the customers get excited. taking aoks like it is greater share of the retail space. david: i'm put up a chart. the blue is general merchandise.

it's not coming up dramatically. the yellow line is department store equities divided by overall. how does this tell us about retail is emerging in this country? are seeing a huge emergence of direct to consumer brands completely disrupt the retail sector. you see it across categories, whether it is intimate apparel -- a whole host of categories. you see this line in the chart driving trends and taking shares away from department stores and other retailers. talking about brands now. prince that are direct to consumer. forget amazon. >> it's true. i think the intimates category is the perfect example. these next gen brands are speaking to the consumer and understanding the consumer need and talking to the consumer in a clear -- consumers are more

receptive. gen.: next some of this is age specific. it,a: yes, i think part of younger consumers are more open to brands being targeted for buying online, even big-ticket items. they like to see what the brand represents and that's what a lot brandsdirect to customer represent and that is driving a lot of, i think, the volume. you focus on m&a on the retail space. cathy: it's interesting. we have seen a lot less deals, we have not seen the billion dollar-plus deals we have seen in the past. it is more needs must. the deals are getting smaller. we have not seen the tech deals

this year, tech into retail. we will see more and more consumer deals where brands by these brands. they need the access to the consumer. david: is a traditional retail buying back or tech buying retail? lord & taylor, you essentially had tech buying retail. it was an interesting convergence of legacy retailing and new economy retailing. seema: i would say broadly, the retailers are buying the brand to expand the portfolio. i think you will see the retailers more apt to buy. ofhy: we are hearing a lot noise around there. we have seen several deals. , the greats. they are an interesting brand with customer propositions. weid: what brands are talking about? in the foods area, there is a move away from the global brand,

the big brown, more to the local, seasonal brand. is that true more probably? more: it's more specific, net, more targeted to the consumer. david: who has the advantage in that? seema: the brands really have the audience attention. this is also about innovation and dna. we saw walmart by jet. people were like, what are they doing echo but their market cap andp 100 billion dollars, it has completely change the thinking and that dna. example.at's a great it was expensive acquisition. was it the technology or the person? i think it's both. it's a dna issue, dna, and the thinking about going to the consumer. seema: i would agree with that. it's a different mindset. david: ok.

andseyou so much to cathy seema. it's time to get a look at what's happening with first word news. >> china is encouraging companies to buy american farm products such as soybeans and pork are those products will be excluded from additional terrorist. the trade wars will go on. more of andxpect to straight cuts. they expect a quarter-point cut and again in december. after that analysts expect the benchmark to be left for an extended time between 1.5% and 1.75%. barely bahamas recovering from tropical storm

dorian. say it is moving towards florida or the gulf of mexico. global news 24 as a day on tictoc on twitter, powered by more than 2700 journalists and analysts. i'm viviana hurtado. this is bloomberg. david? a little bit of a dippointment -- mixed is how they are being described. gas and auto, it was up 1/10 of for percent. the survey was to go up to tens of a present. you can see the renee mutchnik immediate reaction as the 10-year yield spiked up. up -- not smiling just yet. shares debut with sinking. more on that in today's bottom line.

this is bloomberg. ♪

are watching bloomberg daybreak. i'm viviana hurtado. ♪ now to your bloomberg business flash. million in an ipo, the sale valuing the company at 4.4 billion dollars. cloud square helps companies distribute content. they do say that they get negative publicity from white supremacists on the snap network.

a startup is making changes in its corporate governance. cofounder's the family will sit on the board. was valuedt, wework billion. it is expected to be valued at $15 billion in the ipo. that the has learned apparel chain is working to get $75 million for its restructuring. suggesteds have ining forever 21 rent exchange for interest in the company. i'm viviana hurtado and this is your business flash. david: thank you. today, we welcome in the chandra achandraand our guests.

unanimously has rejected the take over bid. initially we saw the stock drop on the news of the recovery. it closed at 2% higher on the day and the london stock exchange board said it had fundamental flaws. they also raised regulatory concerns and concerns about the uncertain political environment of hong kong and now that would of thethe share portion bid. when we heard about this, analysts did raise doubts about the london stock exchange. hong kong exchanges said they .ould have to abandon that

nevertheless, it may not be the end of this story. a number of market watchers say they expect hong kong's you bid for the lsc. david: thank you. you took care of that for me. well done. this.talk about we have these details. >> huge news broken from our colleagues in london. there's about 100 employees here. year.ot 2.5% on the you are seeing that there's a little bit of trouble. debt team distressed saidne of the employees

avoidhey were trying to investor reduction. you see here where they are down 5% and got another $1 billion here. stay with us. a third company is the smile direct club. what happens? the stock fall in more than the 5% after its ipo. the first time we have seen a decline of that magnitude. things looked like they were on the right track. ais is after the backdrop of really significant rotation away from momentum stocks into more

value focused names. investors are not having a lot and not ae for ipo's lot of profits. it is the latest example and it raise questions about pellet gun, david. david: yes, is it -- about pel eton, david. issues andual class is not profitable. asy are not valued nearly high as smile direct and they turn a profit. they kept having challenges there.

and there are states that are really not too happy. right, and they raise smileons about whether will be followed. david: you should have profits to go public. it has not been in the past. is there return here? >> i think a little bit. we have to see if this was a one-off. brooke was mentioning that this is a health company and a technology company. re, a software company much more in high demand, let's the how they treat today. onid: there was report bloomberg for the first time since 2001 or something that they are above $1 billion. weirddoes create this incoherence. these ranges are somewhat

arbitrary. just: arbitrary, but not picking a number out of a hat. you get a sense of where the marketplace is. >> the banker's job is making sure that they find the interest and that can really shake confidence quite a bit. we are seeing smile direct up a little bit. what does it mean future ipo's. they -- wework, they have some of the same issues with the lacko structure, profitability. of structure, profitability. david: they are trying to find that range with wework.

>> you do not know what this is going to go at. out of the door, you can wonder if it is going to happen. let's see if the corporate governance changes are enough to swallow the deal. i imagine they like the price high. how much of it is just negotiating back? you don't get these deals by saying we are going to go low for the company. they do not want to hear a low number, but it is interesting in the case of the ceo is willing to take some hits personally to get these ipo's out of the door.

in this case, softbank will take a hit there. they are having difficulty with their investments. >> that is part of the discussion. we have been reporting all week, they have the potential of the private capital injection from softbank. but without this ipo, there's a $6 billion package on the line. what happens to that? david: they need the money for the growth. they need that money in debt and equity which they needed to do to get that up. they say we can flip the switch and stop spending so much and just become profitable, but it just creates the tension of if you want to have the thought eurasian, you need to have the growth. do you want them to be more focus?ogy, growth

more: it makes amazon even interesting to look back on. it's a great question. thank you both very much for being with us. more bloomberg after the break. comingerg daybreak" is up next. if you're heading out and jumping into your car, tune into bloomberg radio. live from new york, this is bloomberg.

note, this personal

is my last day as the regular coanchor of this broadcast. debut a newll version of new york wall street week and il be the host. i will be joined by the top names in business and finance to talk about the stories that have affected wall street that week. toaddition, i will continue anchor "balance of power" at noon on television or radio and a radio show. thank you for welcome me -- homes.ng me into your alix steel be here. she will do great things.

this broadcast will be even better. sitting next to alix steel for for young -- four long years has been of the best jobs. she has been a terrific partner. and finally to the team, it is as good a team as i have ever worked with anywhere, and the control room, the edit suite, graphics. they will take it forward and do things i would not have imagined and i will be watching with great enthusiasm. day does it for bloomberg open. jonathan ferro. from new york, this is bloomberg. ♪

--athan: amit new york city from new york city, the countdown to the open starts right now.

i'm jonathan ferro. [bell ringing] ♪ jonathan: coming up, equity markets rally, bonds dropping. the u.s. retail space showing the american consumer continuing to support the broader economy and president draghi leaving pressure on the government to step up. here is your friday morning price action. they are up 6/10 of 1% and heading for a third straight week of gains. .he euro is stronger a move of more than 40 basis points. things will feel a whole lot better than they did three fridays ago. >>