table. china is open to a limited agreement as long as president trump implement snow more tariffs. productsould buy agfa without giving in on -- would buy ag products without giving others. venture jay powell says the fed is close to balance sheet expansion -- fed chair jay powell says the fed is close to balance sheet expansion, but says it is not qe. welcome to "bloomberg daybreak" on this wednesday, october 9. in the market, all about trade. some optimism because i'm a little skeptical about what that all means. equity futures up by 0.8%. if we see a partial deal, will that be good enough for the market? euro-dollar up by 0.2%. it is a mixed dollar story.

you had greeks being able to sell bonds for the first time a negative yields, so there is still search for demand in that negative yield world. time now for global exchange. we bring you today's market moving news from all around the world. current --is in the is in the current -- is enda ant, anna edwards, and kevin cirilli. reportedly, china is still open to a partial trade deal with the u.s. as long as no more tariffs are imposed. enda currannt -- joins me from hong kong. enda: the fact that the hong kong delegation is still heading to washington speaks to the idea that china is in the market for some kind of agreement on the trade front. colleagues in beijing are reporting today that china is willing to do more, perhaps step up its purchase of agricultural

goods in the hope that at the --y least, the u.s. doesn't that the u.s. withholds additional tariff increases. at the very least, it seems that there is some kind of play to get a partial agreement. alix: thank you very much. the national basketball association continuing to face backlash following a tweet from basketball officials in support of hong kong protests. major sponsors now suspending ties with the organization in response. our correspondent joins us from hong kong. explain who's dropped to the nba now and how bad it could get. reporter: actually come of the nba lost almost all of its major chinese sponsors. thecal joint venture was latest to distance itself from china's league, joining largest sportswear maker and a

smartphone brand who all said they were pulling out. tencent said they won't show preseason games, cutting off all of the official watching games for the country's hundreds of millions of viewers, and this week is supposed to be nba's china games. we are seeing all of the events canceling, including press .onferences and charity events we are seeing all of these gamesainties, whether the tomorrow and over saturday can still take place in shanghai and shenzhen. alix: thank you. we turn now to turkey, where kurdish troops are starting to cross into northeastern syria to force back kurdish militants controlling the border area. onur ant joins us. what can we expect today? groups ofe are two

turkish troops that entered syrian territory earlier this morning. we think this is in preparation of a major, full-scale operation where turkishria, forces will be fighting against .urdish militant group ypg there was a phone conversation between president trump and president erdogan over the weekend. the most interesting outcome from that phone call was the fact that trump said the islamic state in syria is now a problem for turkey to deal with, and that is what is keeping everybody monitoring the situation in syria. kurdish forces say they may not be able to contain 12,000 or so jihadist militants they are holding in makeshift jails in turkisht syria should forces seize the surrounding area.

turkey has a plane it is working on to deal with the challenge. alix: thank you very much. now we turn to london, where it is a brexit blame game. talks between the u.k. and eu leaders are at a halt, each blaming the other for failing to reach the deal, this all ahead of a queen's speech next week. joining me now from dublin is anna edwards. walk us through what to expect the next couple of days. has takenblame game me to dublin, the center of things as we wait for boris johnson and leo varadkar to meet either tomorrow or friday. varadkar said overnight he is not hopeful that a deal to break the impasse will be possible by next week, and next week is important because that's what we see the european leaders rather for the european council meeting in brussels. another date to watch out for is october 19, with the u.k. a

government has agreed to meet to consider the outcome of that you meeting -- that you meeting -- that eu meeting. the sticking point still the irish border, how to settle the customs agreement between northern ireland and the robotic of ireland -- the republic of ireland. i will be speaking to the irish finance minister a little later on this afternoon dublin time to find out more about the irish stance on this. alix: looking forward to that later on in this show. thank you very much. in the u.s., the fed will grow its balance sheet once more. fed chair jay powell has said the fed will resume treasury purchases, but don't worry, it's not qe. chair powell: i want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with large-scale asset purchase programs we deployed after the financial

crisis. alix: michael mckee is here in new york, fresh off the plane . what was your take away? michael: that it was definitely not qe. qe was the purchase of longer maturity treasury's. you take them off the market, drive up the price, drive down yields, and help stimulate the economy. a lot of debate on whether that worked or not, but in this case, the fed is not trying to push down yields. in fact, they are trying to keep them steady. as the economy grows, so does the demand for currency. u.s. dollars around the world are liabilities on the fed balance sheet, so they have to buy assets to balance the mall. that means -- to balance them out. that means they are going to buy treasuries. if you look at this chart i brought along, this is what the fed has always done since they were formed in 1914 because they have to have the balance sheet balanced. so as i said, it's been long expected that the fed would do

this. it just seems that the timing was moved up a little bit by the repo issues we had in september because they messed with interest rates and maybe misjudged the amount of reserves they need in the system. one thing pebble didn't say, whether they would cut rates are not at the end of october. that's an issue for another day, although the markets have decided that because he didn't say it, we are going to get it. alix: michael mckee, thank you very much. in d.c., the impeachment inquiry into president trump. in an eight page letter to house speaker into pelosi, the white house counsel called the inquiry "unconstitutional and invalid." white house counsel writes, "you have designed and am limited your inquiry in a matter that violates fundamental fairness and constitutionally mandated due process. you seek to overturn the results of the 2016 election and deprive the american

people of the president they have freely chosen." kevin cirilli is in washington. kevin: the white house is preparing for a long battle against, kratz over that impeachment inquiry -- against democrats over that impeachment inquiry. the behind-the-scenes notions of that letter's adjusts republicans have calculated that politically speaking, they are daring democrats to challenge them in the court. that would essentially prolong this impeachment inquiry months into the next calendar year, leading right ahead of the 2020 election, and republicans are banking that the longer this impeachment saga plays out, the better it will prove for them, not just as a presidential reelection effort, but also on down ballot races for the house of representatives for more moderate leaning democrats who flip conservative districts to blue in the last mcdermott elections -- the last midterm elections. democrats say bring it on. they are looking at polls that suggest increasingly, americans

are behind speaker pelosi's decision to investigate this impeachment inquiry. the bottom line, democrats are hoping to have this wrapped up by the end of the calendar year. republicans, as illustrated by that letter, maybe the longer this goes on, the better. alix: kevin cirilli outside the white house, thank you very much. another story i'm watching this morning's california. pg&e is carrying out power cuts that will affect millions in the state. the bankrupt utility has begun shutting off power to 800,000 homes and businesses in an attempt to prevent its quit from causing wildfires. unprecedented. you've got parts of napa valley and oakland among those that will be hit. officials say it could last five to six days. the company is already on the hook for tens of billions in liabilities for these wildfires. coming up, more on your morning trade and analysis in the markets in today's first take. this is bloomberg. ♪

alix: time now for the bloomberg first take. you get the trade and trade analysis of the markets. is vincente cignarella, plus former trader david lebovitz, jp morgan asset management vice president and double market strategist. what do you do? doing doctor people, by the way, for those of you can't see evil, by the way, for those of you can't see it. [laughter] vincent: you have mnuchin on the

president's shoulder saying, do the deal, and navarro, the little devil on the shoulder, basically saying the seven deadly evils of china, we have to squash them. if we get deal lite over the next couple of days, which is likely to be nothing but soybeans and pork, do we drop the tariffs in the middle of october? do we drop the tariffs in december? negative for yields, positive for the economy overall. we don't know what the u.s. is willing to do. david: the administration has a key interest in keeping the economic machine running through november of next year. when you look at what's going on, capex has been contracting for the past couple of quarters. you're seeing a pretty significant slowdown in employment growth. we are finally but begin to see constraints. it's not clear how much juice this economy really has left. when we are going to hit the

accelerator, the administration needs to make sure they hated at the right time. otherwise they run the risk of the car slowing down. vincent: unfortunately, i think they missed that time. one of the problems is if they reach a deal, it is going to take a couple of weeks to actually get it all put together , and then you have to worry coming did the chinese live up to it? does donald trump live up to it? neither side has followed through on their promises in the past. you sit here going into next year going, do i want to take a chance? it is an election year. why don't i wait to see was elected president? that puts off any significant decisions until after the election, so you're not really juicing the economy. david: regardless of whether we get a deal, what is more concerning is the pause in over the lasteen

few quarters. this is a 2% economy. we've been talking about slower growth for a while. slower growth is no longer a forecast. it's a reality. the economy cannot sustainably grow at a pace much above 2%. he's skating on some thin ice. vincent: it's a psychological factor. if the tariffs are listed, there will be a positive sentiment from the consumer, as well as business, and it will take a while to get things going come but the positive psychology will likely keep the trend sable -- the trend stable, if not improving. as you said, we are only growing at 2%, so now we are flat to zero, basically. alix: i'm struggling with the market, why be up 0.8%. you have soybeans up. it makes me think maybe the

market is taking this for real. but so what? at what point is it actual responding to fund a mental growth and ceos investing more versus taking some risk out of the market? i don't get it. vincent: this deal lite i don't think does that much because we are pushing the soft for a year. the real difficult point -- alix: but we are moving the tariff increase, though, if this is legit, from mid october and december. that would have been a huge overhang, right? vincent: right, but what does that do? it digitally stimulates retail sales in december because tariffs that would have hit in december -- it's potentially stimulates retail sales in december because tariffs that would have hit in december are taken off. david: from a market standpoint, i think the market is looking for the can to get kicked. i think the stock markets expectation for the better part

of this trade saga has been some sort of deal will get done. there will be some sort of positive resolution. the unfortunate reality, i think it is more about if we get a deal, there's probably not much upside beyond where we are, but if we don't get a deal, we see things turn the other way, and there is considerable downside. even if we do get a deal, i think that is going to be challenging for these companies. michael: remover, traders got to trade. if there's a headlined, they will trade on it. wait until we see what the details are, what actually happens. then you can price the impact on individual companies. alix: which is interesting. in addition to the qe talk, it was also jay powell talking about how the economy is not booming yet. but it was an interesting little line he tried to walk. things are good. we are not booming, but we are good. what do people make of that? michael: the fed's problem is

they are looking backwards when they look at the economic data. this is what has happened. they are trying to project what is going to happen going forward. we are in a good spot now, but are we going to continue to be in a good spot? it is very hard to tell because the trade wars. are we going to get this 2% decline that the imf is forecasting, or are we going to have a trade deal and then the economy can get back up to manage growth? vincent: that's a perfect segue when you say traders have to trade. dot do trade wars -- what traders do if the temperatures go down and they don't have to cut rates? how do you handle that one? alix: we don't have to cut rates, but we are going to do some form of qe which is not qe. i get. [laughter] alix: i totally get it. it is not qe, but isn't it still a green light to go buy the short end? isn't it still increasing the

reserves? does it have the same effect? vincent: you had that in the 1980's when they did system are peas and match sales. alix: and when you have hair. [laughter] vincent: that's when rates moved come up because that was traders trying to figure out what the fed was doing. we didn't have the transparency we have now. there were no speeches by all of these fed governors and presidents. the good old days. you sat down in front of a ouija board and tried to figure out what the fed was going to do next. --id: they are going to michael: they are going to buy estimates to try to match liabilities on the balance sheet. so if you are in the markets, why not? going toe the price is rise. that's not going to have a major impact on the economy or interest rates. that's why it is not qe. david: i think it's definitely

more technical, but coming back to where our conversation started, how is the fed thinking about this, this is a small adjustment on the periphery. this is an oak in market operation -- this is an open market operation. that's what has offset this weakness in manufacturing. jay powell is saying the consumer consumption, real consumption can't grow forever more. things are going to start to come down to earth. what is an appropriate level for interest rates that allows the consumer to keep consuming, but not so low that you stoke the flame of inflation? alix: i just passed up a 90% sale. i'm part of the economy, not spending as much. [laughter] alix: michael mckee and vincent cignarella, thank you so much. david lebovitz of jp morgan asset management will be sticking with me.

check out all the charts we use in the next two hours on gtv on the terminal. this is bloomberg. ♪

viviana: you're watching "bloomberg daybreak." it's the largest jury award in the u.s. this year. billion in punitive damages hitting johnson & johnson. it involves the antipsychotic philadelphiaury in find was wrongly marketed to teenagers. seek aforce j&j to settlement of 13,000 similar lawsuits. saudi aramco reportedly will publish ipo perspectives before the end of the month. according to "the wall street journal," that paves the way for a final decision to proceed. the ipo is expected to be one of the world's biggest ever. activision blizzard facing a backlash and calls for a boycott. a unit of the american gaming

company banned a player for supporting the hong kong democracy movement. they will not let the player take part in its e-sports competition for a year. players and fans accusing the company of bowing to chinese censorship. that is your bloomberg business flash. alix: in china, along these lines, the flagship chinese, have party newspaper -- the chinese communist party newspaper criticizes the items store for carrying a song -- the itunes store for carrying a song that has been a rallying cry for protesters. david lebovitz of jp morgan asset-management is still with me. western is it to be a company operating in china right now? it seems like a minefield. david: it is certainly pretty

complicated. when we zoom out and take a 20,000 foot view about what's going on in the world, that you political conflicts broadly, whether it is china trade, brexit, lack of resolution in other parts of europe on fiscal deficits, all of this is creating so much uncertainty. as we were talking about on the last segment, the first knock on was a reduction in business confidence, a slowdown in investment spending and manufacturing. now that is branching out to the consumer, which is a big concern. alix: david lebovitz of jp morgan asset-management sticking with me. coming up, one of the best-performing stocks on the s&p 500 this year. coming up next, rick mcveigh. this is bloomberg. from the couldn't be prouders

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it's a different kind of wireless network designed to save you money. save up to $400 a year on your wireless bill. plus get $250 back when you buy an eligible phone. call, click, or visit a store today. alix: this is "bloomberg daybreak." i'm alix steel. markets seem to forget that

yesterday happened, and all of the contentious headlines on trade. now potentially china would be willing to buy more soybeans if the u.s. took future tarasoff the table. that's enough -- future tariffs off the table. that's enough to lift markets. the optimism kind of started even before that headline broke. in other asset classes, sort of a similar story. i say sort of because there are some idiosyncratic factors. you have a selloff in the bond market, so the curve a little steeper in the u.s.. u.k. the hardest hit, yields backing up four basis points. in greece, they sold bonds at a negative yield for the first time. so we areeece, still clearly seeing the search for yield. italy also drawing over $10 billion in orders for its first dollar bond debt offering since 2010. all of that happening in the market, so optimism is to a question mark for me. this also leads us to earnings.

if you come inside the bloomberg terminal, you can see one stock where that is playing out. caterpillar fell to a one-month low over concerns of a slowing economy and impacts on demand. william blair cutting the company's earnings estimates. the yellow line is earnings estimates. the price is the white line. the price target for the company is the blue line. so there. jp morgan -- so there is a widening there. jp morgan's david lebovitz is still with us. what does it tell you? david: caterpillar really sits at the epicenter of everything that is going on with trade. they have their inputs and outputs, everything tied to this uncertainty that's been created around what is happening with the u.s. and china. when we broaden out and think about what is happening with earnings more broadly, one of the issues with the s&p 500 is the s&p 500 is not the u.s. economy.

about 50% of the revenues come from abroad. it leans much more intimate new factoring than services. -- much more into manufacturing than services. with earnings season more broadly, you've seen downgrades across the board. really only a handful of sectors doing the heavy lifting in terms of driving earnings growth or lack of earnings growth this quarter. the unfortunate reality is a lot of the things we've been talking about of the past couple of quarters are finally coming home to roost in the form of slower global oath, stronger dollar, lower energy prices, and brought uncertainty, which is obviously clouding the outlook for business spending and hitting the companies like the ones we are discussing particularly hard. alix: the question becomes to me where is the biggest relating. this is the white line s&p earnings estimate, the blue which is mid-cap, and the yellow which is small-cap. do we understand this is the big international companies are actually ok, or those earning estimates need to start coming

down? david: i think it is more the latter, that s&p estimates need to start coming down. alix: and they still come down even if we don't get those tariffs in october and december? david: exactly. our top-down models are suggesting something closer to flat, and that does not assume further escalation in the trade war. this usually happens over the course of the fourth quarter. analysts begin to think about the next calendar year and bring their estimates in. in this chart, if you decompose the russell 2000 or small caps more broadly, 35% of those companies don't make any money. when you see a slowdown in employment, when you see wage growth stagnating, because they have a more to domestic orientation and the fundament was are beginning to soften, you're seeing earnings estimates fall further for those names actually do generate positive earnings within that investment universe. alix: so what's your playbook? david: we talked about this in the past.

we are big fans in quality and yield at the current juncture. that leads us into some parts of the market that are certainly unloved. we think financials continue to look interesting, obviously getting beat up as expectations begin to crystallize for the end of the year, but we do see value there when we thick about dividends plus buyback. it's the highest in the s&p 500. we still like tech. tech sits close to the center of what is happening with trade, but when we look at the cash flow those businesses are anerating, there's always conversation around growth versus value. there's been some really interesting work done which suggests a lot of these highflying growth names are actually a bit cheaper than traditional valuation multiples would suggest. spending that&d creates things like software just goes away rather than showing up as an asset on the balance sheet. if you were to rerun those numbers, you see that some of these names people view as being expensive are not quite as expensive as meets the eye.

so quality and income is really where we shake out at the current juncture. alix: do you need a trough in earnings to believe that the? -- that view? david: i don't think you need a trough in earnings. at the end of the day, our view is the economy will continue to grow at a relatively moderate pace. i think there is a vested interest on the part of the administration to keep the economy growing through the election next fall, and i think part of the problem is right now, analysts are saying we are going to get a deal on trade, growth is going to be 2%+. those things need to crystallize , and probably not as bad as what we are seeing for the third quarter earnings season, but not as good as what people are expected for 2020. i think we need to see the bands compress a bit and suggest a more realistic path for earnings going forward. alix: david, so good to catch up with you. thank you very much, david lebovitz of jp morgan asset management. it's time now for a deep dive

into the stories making headlines and moving markets, with insight from industry veterans and insiders. today we take a look at the sixth best-performing stock on the s&p this year, marketaxess, the $13 billion electronic bond platform that's changing the way wall street trades fixed income. wall street and bankers are trading with average daily volume increasing at over $2 billion a day. joining me is the ceo and founder of marketaxess, rick mcvey. thank you for joining me. so 50% growth so far. what kind of growth do we see ?ext year rick: we seen really consistent growth over 10 years. what we are seeing now is the race toward trading automation by both dealers and investors because they are seeing the lower cost of trading automation, so dealers are

eneratedo algo-g markets, and traders are moving to automated trading. alix: so where? what areas are you seeing the biggest increase? rick: you are really seeing it across the board. we focus primarily on credit markets, so what we are seeing on the market access -- on the marketaxess system is high-yield, and even to a certain extent em. there is a focus on getting trading costs down, and that is driving to focus on technology improvement in the transaction process. alix: if you game theory your business out, how much percentage of electronic corporate trading is going to happen? anyone, optimistic as we will see higher levels across fixed income in the year ahead.

our largest market today is high-grade corporate bonds. in the quarter we just completed, we were about 20% of the overall market. i think it could reach 50% in the years ahead. high-yield emerging markets are even lower levels today, closer to 12%, 13%. if you see investors and movinge direction, it gives me confidence that they share numbers will continue to grow. alix: when you wind up having things like 0% fees at e*trade, td ameritrade, how does that conversation move your business? is there a line you can draw with me here? rick: i think everyone is attracted to moving to lower-cost models. alix: so we have to then go to electronic trading to do that? rick: it's a little different in fixed income because we don't have a commission structure in fixed income. it's an over-the-counter market, so the transaction fees are in the bid offer spread, but investors are hypersensitive to transaction costs because lower transaction costs creates higher portfolio returns for their

investors, and the highest returning funds draw in the new assets. so there's a ton of focus on transaction costs in the industry right now. inx: the big conversation the trading platform was the years long review treasury report -- the treasury department did on how much they are going to show on volume and price. they are all about showing how much volume is trading, but not the price. where you stand on this? surpriseda little because we are big fans of price transparency. we think it introduces new participants and moves costs down. we are happy they took the first step, and i buy the argument that the recently issued or on the run treasury bonds have plenty of transparency today, but there are a whole series of off the run or older issues that don't have transparency. alix: what about the argument that then i am not going to trade a big block or these less liquid or older bonds?

is that argument not real? rick: if you use the experience of corporate bonds, i think liquidity has gotten better over time because of the importance of drawing in new market for dispense. participants. we believe transparency will lead to lower market costs, not the other way around. we are happy to see the volume data, but we hope the treasury will follow with price data in the same way finra did with corporate bond and high-yield data starting in 2002. alix: this is a macro view. if we wind up getting higher yields from central banks, higher rates, and we see a move into other asset classes or even back into treasuries, what do you think that is going to do for the volume of trading, for your business? rick: we are going to go through a variety of interest rate cycles over time. we are at a very low point in yields around the world right now. fixed income will still be a very important part of lots of

portfolios come from insurance companies to etf's to pension funds. alix: does it change your growth ratealix:? rick: oddly enough, we've done better in difficult market conditions because people really flock to market access as a center for liquidity when times are more challenging. the fourth quarter last year was a good example of that. we actually do better if credit spreads are widening and yields are increasing, so that environment would actually be good for us. alix: because you are a ceo and you run a very successful company in the u.s., and a very popular stock, what is your biggest risk? what keeps you up right now? rick: we built-in a lot of growth expectations, so we are working very hard to sustain that growth for a long time. we think we are doing all the right things. we are investing heavily in trading automation tools for our clients. we are expanding to new and large markets, continue to expand in em. we are acquiring a company in

the u.s. government bond space this quarter. we just have to keep investing, and we are very confident that our growth rates are sustainable. klix: and you haven't pared bac any plans due to macro uncertainty? rick: we've actually been increasing our investment because of the optimism for electronic trading. alix: rick, thank a lot. really appreciate it. mcveigh of marketaxess, thank you -- rick mcvey of marketaxess, thank you. viviana: china is signaling it wants to limit the damage from a trade war. this week, talks was a. -- talksncial times resume. "the financial times" reporting that there could be a deal.

pelosi saysr nancy the white house is trying to cover up the president's but trail of democracy. turkish troops begin moving into northern syria to move kurdish troops away from the border. the trump administration says it won't stand in the turks' way. kurds as as the security threat. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so muchalix:. coming up, credit suisse is targeting latin america. more on that in today's wall street beat. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour, bob dudley, bp ceo. now to your bloomberg business flash. $228l will report a million right down in the third quarter, a lot of it going to her. bowl --ays -- super going to uber. is reportingt financial results two weeks from now. treasury secretary steven mnuchin is preparing to sell a painting for as much as $35 million. baba nguyen acquiring -- bob mnuchin acquiring the painting for 1/3 of the price. canill be sold at sotheby's

to bury art auction. i'm viviana our tonto -- on viviana hurtado. alix: we turn now to wall street beat. first up, credit suisse eyes a return to wealth. lender said to be making a return to the wealth management business with a new office in miami. then, i would be -- then, abby --bie -- then, abu dhai -- joining mebie now is bloomberg sonali basak. let's start with credit suisse. vocus back. we got out of the wealth management business. what's happened here? sonali: they paid $2.6 billion to the u.s. to settle and plead guilty about helping u.s. citizens move money abroad. they really did get out of the

business at that time. it sent a lot of assets to wells fargo at the time. you have other people, morgan stanley doubling down, morgan down,ubling goldman sachs. for them to come back as a very interesting time to do so with all the competition around. alix: yeah, so why? sonali: the u.s. is a huge market? -- is a huge market. alix: why miami, by the way? sonali: even a lot of new yorkers are moving down to icahn., cue carl you also see it as a base for latin american wealth. alix: and carl icahn employees. let's go to the second-story. we talk a lot about investors in the softbank second vision fund, but we usually focus on saudi arabia. this is abu dhabi.

sonali: it is still evaluating the vision fund 2. it is interesting. they did say they were still evaluating, but the rest of the tone was pretty defensive about the rest of the vision fund portfolio. 5%,ork -- wework is only and the fears are overblown about the overinflated values of the rest of the unicorns. let's be clear, there are other people who believe softbank may down $5 billionwn worth of their uber and wework stakes. i think it is going to be hard to see how investors really absorb all the news. alix: fairpoint. the third story coming out yesterday is that trump is looking to roll back some of the rules when it comes to corporate inversions. what do you make of this? sonali: also huge. between 2013 and 2017, this was

a humongous deal. pfizer and allergan had to scrap a merger because there wasn't so much scrutiny in washington. antonio weiss was up for treasury secretary. elizabeth warren was one of the people very against his nomination. as a banker at lazard, he worked in a lot of inversion deals. this was very politically heated at the time. if trump decides to roll some of this back, you can bet there will be some pushback. alix: i also wonder, if it actually happens, how many companies or m&a bankers are like, cool, now we will get pretty done? sonali: probably pretty excited, let's be honest. people will be careful to dive back into bit given the political considerations, but if available, but the

thing is, bank stocks plunged back then on higher pressure on inversion. they rose back up when inversions were more available,y because inversion deals were so big. alix: interesting. cinelli vasek, think you summit -- sonali ba sak, thank you so much. as bader ginsburg has spoken about her career for the latest episode of "the david rubenstein show." david asks her about the early challenges she faced. david: when president clinton became president, you were obviously someone being considered, and president clinton said, well, women don't want her. how could that have been the case we knew where leading lawyer in gender discrimination? justice ginsburg: just some women. overwhelmingly supportive of my nomination. but i had written a comment on not 100%de, and it was

applauding that decision. court has anas the easy target because the texas law was the most extreme in the nation. alix: you can watch part two of david rubenstein's interview rubenstein's interview with ruth bader ginsburg at 9:00 p.m. eastern time. coming up, treasuries extending their decline. more on today's traders take. if you are jumping into your car, tune into bloomberg radio on sirius xm channel 119 and the bloomberg business app. this is bloomberg. ♪

alix: time now for our traders take. joining me, vincent cignarella come a voice of the bloomberg audio squawk. what are we looking at.

vincent: this is an interesting proposition. i think we seen a low-end u.s. treasury yields for a variety of reasons. one could happen today, and we want to see what the dissension was in the fomc. if there's a great deal of separation with the doves and the hawks, this could definitely way on yields and we more than likely will not see the cuts in october that everyone is looking for. we may have to wait for another month of data. alix: meaning higher yields. vincent: higher yields for the fed to process that. we also have the trade talks taking place this week. what will the administration do? we know what china wants to do. ?s it enough there's a lot of things, at least in the short-term, that potential he could weigh on trade risk. lots of return coming into the quarter, another weight on

treasuries. what else moves? obviously dollar-yen should move higher as we see yields go up. probably should see gold trade off a little bit. it bends on how the trade situation goes. emerging markets could take hold in that situation. how does the curve play out? the curve plays out if the trade situation is positive, we will see steepening. if the fed is driving it, we will see a flatter curve. alix: great stuff. that was like a list, bam, b am. vincent cignarella, thank you very much. he's talking all day on your trades. coming up, constance hunter of kpmg. this is bloomberg. ♪ everyone uses their phone differently.

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daybreak" on this wednesday, october 9. here's everything you need to know to get you through this wednesday. china is still open to reaching a partial trade deal with the u.s. in return, beijing would offer non-core concessions like buying american farm products. negotiations are set to resume this week. president trump's counterattack against house democrats taking shape. the administration is vowing to stonewall the widening impeachment inquiry, declaring it unconstitutional and invalid. turkish troops have begin crossing into northeast syria to prepare an offensive against kurdish militants. president trump says the u.s. won't stand in turkey's way. dozens of u.s. troops working with the kurds were pulled back. s are looking at the option of using your phone or fourt as a portal

tv, removing the cost for hardware. you have s&p features up by 0.9%. don't forget yesterday. yesterday was a really bad day for traders. what is the conviction like? what is the followthrough? we will check that out throughout the show. a little bit of selling in the long end of the curve. mix dollar story. crew jumping up, along with exit east -- crude jumping up, along with equities. we have some breaking news in terms of boeing. american airlines has pulled 737 737 its schedule -- pulled max from its schedule through january 2020. at affects lots of different things. it cuts back capacity, so that might be a good thing in terms

of pricing. on the flipside, you don't have the clean energy or fuel-efficient airline plane as boeing 737 max 8 would give it, so they are losing that on the margin as well. that stock still up 0.7%. it is a powell repo remedy. that was the talk yesterday. fed chair jay powell says the fed will resume buying treasuries to calm money markets, but it's not qe. chair powell: i want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs we deployed after the financial crisis. neither the recent technical issues nor the purchases of treasury bills we are contemplating to resolve them should materially alter the stance of monetary policy. alix: 20 me in new york is amy rbc capital, markets managing director and equity derivatives strategist,

and constance hunter, kpmg chief economist. thank you for joining us. what was the scuttlebutt on the ground when it came to this expansion of the balance sheet that is not qe? constance: well, i think this distinction between qe and not qe is really important, and one that i think, if you read twitter, look at the markets, he's getting a fair amount of flak, and the community in general is getting some flack for. in my view, that is a bit unwarranted. they are buying bills. they are doing what they did before the financial crisis to control the level of reserves in the system. they are not doing anything with regard to yield curve shape or you will curve management. it is just to make sure there's enough liquidity in the banking system so that we don't have spikes in the overnight funding market. take on the flipside, one basically says the fed has

chosen to effectively carpet bomb the banking system with more liquidity, and the idea is what prevents the fed from adding more and more liquidity and more reserves, and that sort of expands the balance sheet that has the effect of weighing on short-term yields. that winds up moving investors into riskier assets. constance: well, i think they don't want to use this as a policy tool for yield curve management. they want to use this as a policy tool for overnight rates, and they are going to try to calibrate it as closely as they can so that they don't have too much excess was herbs, but they have enough in time when ,iquidity dries up a little bit they have enough reserve in the system. one thing that underlies some of ,he concerns of the markets maybe this wasn't just a plumbing issue.

this isn't some uncertainty about large banks. maybe this speaks to a shortage of dollar funding and china. maybe this is the canary in the coal mine. i think when people are concerned about this, they are channeling that concern and saying it is qe, and what is the benefit of doing stealth qe. i think the fed doesn't view it that way, but that doesn't mean there might not be more going on than just a short-term funding forward -- short-term funding shortage. i think the fed is open to looking at that and keeping all of their sensors out in the market. but i really don't think it's the same thing as qe. it might be a little hard to grasp, but there is a difference between buying short-term treasury bills and using it to keep the market liquid, and then the long-term asset program, purchases program, which went out on the curve, which involves yield curve management and

things like operation twist. this isn't anything like that. traders' give us the perspective. that there isate deftly a nuance. the market was tough and li na trading like that -- alix: actually, we are going to have to switch out your mic, so hold on, because we want to go stops. -- to get those thoughts. so start again. you get the information, then what? amy: if we look at intraday volatility yesterday, it is clear that the market was not liking the powell comments. the minute you got the china news, we sold off again. i think the nuance is often lost short-term on the market. as soon as they hear powell is going to be the savior, he's

going to step in, we rally intraday. the minute we hear more issues on china, then we sell again. i think intraday volatility is a ping-pong back-and-forth. alix: fair point. also turnedtion into come over the last 24 hours, what happens with the ustd bund spread. what is your take on that? well, i think it's not the intended outcome, and the fed will have to deal with that if and when it happens. alix: what does that wind up meaning? does that put a different kind of pressure on the ecb? the narrowing effect would be very surprising if you wind up having the ecb still in the market. how does that play out?

constance: this is an excellent question. i'm not sure what the ultimate end game on that is. alix: what was the sort of rhetoric on how good or not the economy is from jay powell? is it still, like, we are ok, but? constance: that was a question that was asked of him, if the fed is running the economy hot. he said no. this is not what i would call a hot economy. this is a solid economy. it is a study see. -- it is a steady sea. we have steady gdp growth, but there is concern about inflation. there is concern that we could as a resultn fall of our close trading partners like europe and japan. have's a fear that we will

falling inflation expectations here, and that will really move them further away from that 2% target. so the economy is solid, but it's not on fire, and we are not in danger of overheating here. alix: how cheap is inflation protection? are we there yet? constance: i've been saying this is a while, but protection really not that expensive. you start to see the tales rich and when the news comes out, but then on days like today, it cheapens. the best way i can describe what i hear from investors constantly is fatigue. they are fatigued about how long this is taking. they are fatigued about the fact that they can just gets kicked down the road, so how did price anything going on? at a certain point, that fatigue

makes people underpriced things, so i really think that things continue to look inexpensive because the fatigue just makes people overshadow what really is going on under the hood. alix: does that mean investors just don't want to buy protection and they should be? constance: what's interesting --amy: what's interesting is days like the last few weeks, you've seen people monetize their hedges, but that has become more difficult to do because the volatility comes and goes so sharply. it's not the days of 2008, where you put on a hedge in that monetization was so huge and large. you really have to be much more nimble, and because of that, i think your larger, bulkier places are not as willing to be that nimble, or they can't. so i think you do get a lot of people who are less likely to do it, but that doesn't mean you shouldn't be doing it. alix: good distinction. 80 will silverman -- amy will silverman and constance hunter

will be sticking with me -- amy wu silverman and constance hunter will be sticking with me. anticipation of the u.s.-china meeting. this is bloomberg. ♪

alix: china reportedly still open to a partial trade deal with the u.s. as long as no more tariffs are imposed by president trump. highly anticipated trade talks should kickoff tomorrow. here's what some bloomberg guests are expecting of that meeting in d.c. >> we are going to be talking about trade peace, not about trade war. everybody is a loser in the trade war. therefore, everybody would be a winner in trade peace. >> the concerns about

unreliability of supply chains we see in and around the u.s.-china conflict, that is a little more enduring and a little more of a change. >> if the rhetoric is worse, you may even be in recession simla because the consumer will lose faith in what is happening. alix: still with me, constance hunter of kpmg and amy wu silverman of rbc capital markets. de-risk risk of tomorrow was a binary risk, now it seems asymmetric. amy: this is sort of a temporary appeasement, but one thing i've been talking about for a while is the china etf. it has really been interesting to me because we know, on the upside of the downside, one way or another, this is the most highly correlated to what happens with the outcome of trade. from an options perspective, i'm very surprised by how inexpensive it is relative to all the other liquid etf's we look at. the fact it is so cheap from an options perspective, but so dependent on what is coming out

with trade. i think it is been a good trade put on from a call side. point.air how do you look at the trade conversation when we've moved from an economic war to a cultural war between the u.s. and china? constance: i think that cultural war has been happening behind the scenes for many months, and maybe it just moved to the fore in terms of what the broader public sees. --t this really is, a few but this really is, if you read lighthizer's original complaint, this is a cultural war. this is a very different approach to how the government interacts with companies and what the government sanctions in terms of electoral property the chinesew much military really is in there, using its companies to achieve ends around the world. so there's absolutely a cultural

war aspect to this. lostnk what is easy to get perhaps in the commentary, and i think here it is helpful to read not just u.s. news accounts of this, but to read other accounts. some -- so make sure your reading the south china post, or the german or french newspapers, because the u.s. is always reporting that the u.s. has the upper hand, but china perceives that it has the upper hand. it is an interesting situation when both parties think they are the one with the upper hand. i've been fairly skeptical that we are going to get a meaningful deal at all, especially because what we have is big headlines which say a truce is coming, we are going to do a deal, and then we have these small sort of headlines, these under the radar headlines of 28 more companies

added to the list of don't do business with them. there's all these little mini- headlines under the surface that speak to the persistent nature of the aggression that is occurring. so it's possible we will get something, but i agree with amy, it is not going to become prince of. and if it is cheap -- going to be comprehensive. and if it is cheap to hedge against it, it is probably a good idea to do so. alix: this is the open interest ratio for the s&p. you are now looking at two and a half puts per call. what's the good trade? amy: right now, the skew essentially is starting to tick up. the demand for downside is ticking up again. this shouldn't be surprising. people are thinking about the 2020 growth forecast coming down , obviously the china overhang,

obviously brexit. people were here december 1, 2018, and room number what happened. i think this is why you see this ticking up. have highertend to payouts, lower cost on the s&p. i just want to say one thing i thought was interesting to constance's point. when you think about trump and china, the game theory is so interesting. one person is the president for life, essentially. another person has got about a year, maybe shorter with forachment, but at least another election. so you got the patient's going on with this -- the patience going on with this trade agreement, so who is really motivated to make some the cabin? -- to make something happen? alix: if we don't get an inherent increase in october and

december, is that enough to materially shift ceo and cfo confidence, remove hanging headwinds for the markets and the economy? constance: two things about that. in 2018 hour tariffs were up about 12 point type percent, up -- about 12.5%, up from about 3% for this all started. assuming we don't add any more tariffs to take it up to 25%, obviously that is that if the economy, but let's not forget, we have an almost doubling of the tariffs so far this year, and that will feed into gdp growth next year. so that is a drag on growth. if we overlay that uncertainty or certainty drag, just because we don't increase the tariffs doesn't mean we have removed uncertainty. i think we would need a much steadier hand at the helm and a much more consistent message

week after week in order for people to feel that there's some durability in the status quo. right now, that hasn't been the case. we would need a real shift in tone in order for that to be the case. alix: on a sector level, when you rep that in to earnings, where is the cheapest production on sector level? think arelaces that i still mispriced relative to the risks ahead, one is industrials using xli, and the other is health care using xlv. outside of all the earnings going on, there's a lot of election dynamics at play which we are starting to see priced in. these start to richen the next few weeks come about from a historical basis, i still think that is an attractive place to own volatility with everything that could happen.

with everything we talk about from bernie sanders, his health is now a question, so our equity strategist posits, where did those votes go? they don't go to biden. they go to warren. does that make more in a very serious contender for the iowa caucuses? what does that mean for the market? i think we all know where that side stands on medicare for all and the continuation of, especially energy, too, on no fracking and a green deal. the market is fatigued, so i think a lot of these risks end up underpriced to what is actually realistically happening. what, 4:00 a.m. where constance is? thank you, really appreciate your perspective there. amy wu silverman is sticking with me. we will take a look at

california's epic blackout. this is bloomberg. ♪

viviana: you are watching "bloomberg daybreak." the ceo of shell says the world can't solve the problem of climate change just by blaming oil companies. tv thes bloomberg industry needs to take article steps to reduce carbon emissions, but consumers must do the same. saudi aramco will reportedly published its ipo perspectives for the the month.

that paves the way for a final decision on the share sale. the ipo is expected to be one of the world's biggest ever. california bracing for historic power cuts that will affect millions. bankrupt utility pg&e began shutting off electricity to keep its quit and from causing wildfires. more than half a million customers were affected in the first phase. parts of napa valley and oakland are among those areas that will be hit. $30 billion facing in liabilities for fires the last two years. that's your bloomberg business flash. alix: thanks so much. to stay on that, it actually may be cheaper for pg&e to turn off the lights then be on the hook for the damage caused by a wildfire, but the blackouts still going to have about a 10 figure price tag. experts estimate that cutting off the power may cost california as much as $2.6 billion in the total economic impact to all of those affected. the cost could be even higher if power cuts extend beyond a few

days. amy wu silverman of rbc is with me. how do you hedge utilities with these exams in us risks? amy: utilities and staples have become some of the few hiding spots left. i think most people aren't hedging them. i think the most they are doing is overwriting to collect that additional income, but the actual sectors themselves, one of the very last places for people to hide, and i don't think that is the first thing they think of when their hedging. alix: fair point. amy wu silverman of rbc is sticking with me. coming up, we will be speaking to paschal donohoe, ireland's finance minister. this is bloomberg. ♪

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morning person. the leesa mattress is designed for every body. providing strong support, pressure relief and optimized airflow to keep you cool. hello bed of my dreams. order online, we'll build it, box it and ship it to your door - so you can try the leesa mattress at home. love it, or get a full refund. and rest assured, returns are free and easy. i love my leesa. today is gonna be great. find out why so many people love the leesa mattress, then try it in your own home. order now to get big savings - but only for a limited time. just go to leesa.com today. you need this bed. alix: this is "bloomberg daybreak." i am alix steel. , we are seeing a bounce back from yesterday's selloff. that was pretty brutal, but the question for me is how much conviction there will be in the

market or is this just lack of confidence on headlines. in other asset classes, i am taking a look at what is happening in the u.k., you are seeing yields up three basis points but off the highs of the session. the curve steeper in the u.s.. fruit getting a boost along with risk appetite. other interesting happenings like a greek option with negative yields. italy withdrawing $10 billion in orders for its first dollar bond sale since 2010. all of that still in the market despite the risk on hopes due to trade. the other event we are watching is brexit. hopes for a breakthrough are fading as boris johnson scheduled a rare weekend parliament meeting for october 19. island announced a $1.2 billion euro package to counter any harm from brexit. anna edwards is in dublin with the irish finance minister for more. anna: i am joined by paschal

donohoe, who is the irish minister for finance. let's get straight to that conversation. welcome to bloomberg tv. let me ask you about the possibility of the backstop coming back into negotiations in a limited fashion. how much is that still part of the conversation, the possibility of a time minister backdrop? >> we have always been very clear we need a form of insurance policy that will be sustained into the future. there is an opportunity for engagement in relation with how the community of northern ireland comports, but from our point of view, we need to get to a place that the principles behind the backdrop are preserved. anna: you cannot put a time limit on it? minister donohoe: i will not get into engagement between the commission in the u.k.. what we have said is we are open

-- if something else legally operable can take its place. when you do -- we do need to consider the role of the communities and institutions in northern ireland. we have always been clear that we want to avoid happening is anything that will keep northern ireland in an arrangement they have concerns about. has: the prime minister said northern irish consent to whatever is put in place is important. what kind of mechanism can be landed upon to craft that consent? various that the suggestions so far-left table of problematic. minister donohoe: there are a number of options. the importance of consent in the context of northern ireland is a cornerstone of the good friday agreement and something that has been a knowledged by the british and irish government. what we do need to have is an architecture which is at the heart of the good friday agreement which respects the

role of the communities but looks beyond the how the voice of the people of northern andand good be recognized something they have a deep stake in. what we are so focused on are all of the issues on the island of ireland, not just the issues we are focused on an island. island -- thehern northern irish assembly does not sit at the moment, it seems difficult to fit what you described with the way the voting system works in the assembly. minister donohoe: it is one of the issues we have to seriously consider. in april for the institutions has to be compensated by the fact that the same institutions have now been -- it has always been a shared priority of both governments to see what we do to resuscitate them and have them up and running. that is all part of what we need to do to ensure the communities of northern ireland have their voice heard. anna: you would rather do that, use the northern ireland assembly then create some other

mechanism. minister donohoe: that is quite a leap from what i said. there is a need across the in all the to engage ways the challenges can be dealt with. the prime minister said last night that he will work until the last second to see if there is a way that delivers our national objectives and is of thent of the decision u.k. to leave the eu. anna: is it possible for northern ireland to leave the customs union? that seems to be a stumbling block at the moment. minister donohoe: we have always focused on alignment between customs policy in northern ireland and customs policy within ireland and therefore the eu. the main reason for that is the absence of a form of alignment. that creates the path to define infrastructure and the applications of tariffs.

that could have political consequences we all want to avoid. again, it goes back to the point i made earlier in the interview that all roles lead back to the -- ifop and if there all there are other ideas that will deliver the same objective, we want to play our part in exploring them. anna: it sounds like there were not be any possibility other than the backstop. minister donohoe: there were many possibilities explored. in dublin we have an understanding of the different issues the british government is raising. we did have a sense of where this was going to go not so long ago. we did have support behind the backstop. much has changed in the u.k.. what we now need to do in the time that is left is see if we can craft away which respects the priorities of both countries, but also that of the eu. jonathan: three weeks -- anna: three weeks ended day until october 31. do you actually want to see a delay?

is your assessment there will be a delay? prime ministere: johnson and his government have to make a decision themselves regarding how they wanted to happen. role to speculate on what they're going to do at that point. it will not surprise you or them for us to say we are in a position where the british government decided an extension could play a part in their future roles. we could see the role that might play. again, if such an extension is there or is granted, we all need to ensure playing the role in helping us get to a better place. the decision for that is prime minister johnson and i understand the view he has already articulated. anna: can the state finances in ireland handling no deal? you presented a budget based

around a no deal, even if that is not your central scenario. can the finances and ireland handle no deal? minister donohoe: yes they can. in the scenario while i outlined yesterday, i presented ireland's budget on the basis of a no deal. on the back of that happened, i made a decision to defer a set of decisions in relation to personal taxation change. even when we had that on, that brings us to a position of .6% of our national income. that is a deficit that will be a setback from the surplus we currently have. it will be a smaller deficit in the deficits we have had in our recent past. all of that being said, the truth is there are lots of caveats around it, it would be an inherently unpredictable event. i am confident our national finances and the agility of the private sector economy in ireland would be able to handle the economics. anna: something very interesting for the banking community and

those who operate in the financial services sector in ireland is the cap on those payments you have in place for state owned banks. are you about to come forward with results of the report? ont time horizon do you have reviewing that cap or removing it in some ways? minister donohoe: we have a lot going on. yesterday i presented the budget, cognizant of all you choose we raised. i do have a report, i'm considering this, and i have to make a decision on what we are going to do. i would make the point we have banks in ireland that are performing very well, really good people running them. i also have to be conscious of why there are economic and policy priorities in addition to the renumeration of our economy. theocus at the moment is on broader issues about our economy and the sustainability of our jobs that are national finances and undeniable points of change.

anna: there's a lot happening. paschal donohoe, thank you very much. mr. for finance in the republican -- in the republic of ireland. -- minister for finance in the republic. ireland. republic of optionssk reversal, traders looking for short-term come back. what you think is priced in? what is a good trait? what do you see? amy: the market at this point, the next meeting after the 19th is the october 17 european council meeting. there is a 70 to 80% probability of delayed to november. you are also seeing that being priced in an priced into the volatility curve. if things were really going to happen in the next two or three weeks, there would be more of a bump. this is saying we are at least one month out, if not more. let's see what the november election say, let's see what

boris johnson does. alix: we talk a lot about what it means for the u.k. european cars will get hit with more tariffs. if you look at volatility for european stocks, really low. is it cheap? amy: it goes back to fatigue. it is not just overall volatility. there are so many tail events and yet the tail risk is not price that expensively. do i think there is an opportunity to own? yes. what happens is when things get can-kicked, those options decay quickly. this is a function of that. doesn't mean you should not own it? i think you should. there is risk we get a repeat of october through december 2018 across the board. alix: what would shake investors theof -- complacency is not

right word, but what would shake them out? amy: i think earnings. we get kick off next week. we see the 2020 growth forecast, which people believe are still too high. everybody knows where the tariffs have been and they have increased even though they are still ongoing. they are still there and they would get a hit. when you hear the ceo of the company say it or when you hear we are not going to do this, we are not going to do this or that , and the 2020 forecast,, that shakes people by the shoulders and says wake up, the volatility is here. alix: too late to my options? --: i think they are alix: amy wu silverman will be sticking with me. viviana hurtado is here with first word news. viviana: president trump has called on trey gowdy to help lead the legal strategy of the

impeachment investigation. he will also cordon eight republican lawmakers. a white house lawyer calling the probe unconstitutional and invalid. nancy pelosi called the president's actions around the call with leader of ukraine a betrayal of democracy. the trump administration is pressuring china over human rights. it opposed bands on chinese official ties to the mass band of muslims. the band is symbolic, those officials rarely travel abroad. china planning tighter visa restrictions for u.s. national. the target's employees sponsored by intelligent services and human rights group. china turning up the heat on the nba. more local sponsors of nba events on the mainland are suspending ties after state run tv said it would not show the league's preseason game. the trouble beginning when the houston rockets general manager sent out a tweet that back hong kong protesters. the brooklyn nets and the l.a.

lakers are in china to play two exhibition games. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: still on the nba committing that foul in china, one of the first stars to speak out was james harden. the houston rockets guard said flat out, we apologize, we love china, we love playing there. he has a lot of financial reasons to stay on china's good side. his jersey was the third best selling jersey in the country, and his sponsor adidas counts on him to sell shoes. nba players themselves should be insulated from the backlash that began with the houston rockets manager tweets. we will bring you our interview with outgoing bp ceo bob dudley, next. remember, bloomberg users interact with the chart using

gtv on the terminal. browse the features and check it out. gtv . this is bloomberg. ♪

viviana: you are watching bloomberg daybreak. i am viviana hurtado in the hewlett-packard enterprise greenroom. coming up later today on "balance of power," democratic governor phil murphy of new jersey. now you're bloomberg business flash. -- isan airlines has pulling the 737 max 8 from its schedule through january 17. american is having to cancel about 140 flights a day following similar action by southwest airlines.

it is the largest jury award in the u.s. this year. in a billion-dollar punitive damages verdict hit johnson & johnson over the antipsychotic drug. a jury in philadelphia finding the drop was wrongly marketed to teenagers. the award is likely to be reduced on appeal. it also may force johnson & johnson to seek a settlement of 14,000 similar lawsuits. paypal will report a $228 million right on investments in q3. a lot of blame is going to uber. wasal says its investment $500 million at the ipo. it has now declined 34%. paypal reports financial results two weeks from now. that is your bloomberg business flash. alix: in the markets, we are looking at a rise in u.s. equity futures after yesterday they got pummeled. a lot of questions as to whether there is a lot of conviction. over the last two sessions, the

dow has dropped an average of over 400 points, negative for the year. not great when it comes to that. the dax participating in a risk on rally. if there is movement on trade, that would be a benefit for germany. taking a look at a mixed dollar story in the g10 space. euro-dollar up 1%. -- euro-dollar up .1%. yields up just two. off the highs of the session. a little bit steeper here in the u.s.. all eyes on tomorrow and the china u.s. trade talks. will we have the sweetheart deal japan got with the u.s.? this is bloomberg. ♪

alix: the oil conferences in full swing in london. annmarie hordern is there with

outgoing bp ceo bob dudley. anne-marie: i am joined by outgoing ceo of bp, bob dudley. i want to start in 2010, october 1. oil was trading at $83 a barrel. today we are at $58. we just had the massive attacks in saudi arabia, yet the prices is lower than before that. i know in russia you said there is too much oil on the market you think that is it, or are we not pricing in geopolitical risk? bob: i think this not -- this would not of happened 20 years ago. what aramco did in getting facilities backup quickly and at the same time announcements of storage facilities around the everythingalmed and down quickly. the markets are generally in balance. i would not say there is so much oil. a little bit of economic slowdown is happening. i do not think the world is at

risk of recession. opec and opec plus are doing a good job at regulating the price. i think the world is healthy when you do not see these spikes. annamarie: are you worried you spent so much of your career rehabilitating bp after deepwater horizon that it might just be fruitless with the climate debate, and even here in london the royal shakespeare company decided to drop bps its corporate sponsor. what is your reaction dollar of this? bob: this new environment will create lots of opportunities for companies that adjust to it. people want an instant solution on everything. -- are investors wants to do lots of things. we will be leaders in this space. the energy companies of the wind and solar and biofuels, we have thousands of people working on that. it is part of a transition. i think bp has a lot of opportunities. annamarie: what is your advice to the incoming ceo?

bob: he will do a great job. he has been with the company. he knows it inside and out. it will be focused on the fundamentals, bring your team together, and be dedicated to the job. bp has a great foundation around the world. the balance sheet is in good shape. a good team. i am happy to pass the baton, no drama. annamarie: most oil and gas companies are not compliant with the paris climate agreement in the sense they are not taking on the omissions. they are counting on the omissions of their customers. tote out -- total and shell are doing this. you think that is something bp will consider doing in the future? annamarie: we drive -- bob: we continue to drive down the energy efficiency of our products. when people say this, they talk about two things. the energy efficiency of your products, and some people want you to put an absolute number

out. scope three is defined several different ways. we are on that path and we want to make sure when we set a target we are clear on it. will you consider the omissions of your customers? bob: it depends how you do that. comes into aour petrol station with a small car to drive to birmingham and someone else comes in with a huge suv to fill it up. we will not say we sell it to you but not to you. this will have to be consumer preferences and markets before we can say an absolute number. i do not think we are different than that. annamarie: some companies are take on emissions. they are accounting for those omissions. i think you are -- bob: i think you are dictating who you sell to in the future. it is unknowable. annamarie: you were talking

about how gas is being demonized in the united states and europe and you say some climate activists are misguided. what is the risk your business? bob: i think the world will need lots of gas. i hate to see it shut out of markets where it will be the only way of reaching the climate goals. i spent a lot of time with this. the world has turned its back on nuclear. we need as much renewable as we can in this world. the only way to get there, we need to clean it up and the technology is coming. you set the world up for a hydrogen economy, carried by natural gas, which is for hydrogen molecules attached to one carbon. attach it to the future. i'm optimistic we will get there . gas has to be part of the future of energy transition. bob: i do not know how we can get there without it. we will need all forms of energy, with no fossil fuels i do not think we can get there.

annamarie: how do you entice investors in this kind of environment? we have seen investors run away from big oil. bob: some have. annamarie: is it higher dividend, more buybacks? bob: we have a high dividend, 6.5% is a healthy yield. the world of investors are a bit confused. is sometimes big in the s is small and the g does not count. there are 30 different esg ratings. fund managers one certain returns, governance people say no fossil fuels. markets want to sort themselves out. -- annamarie: i know we spoke about the aramco attacks. everyone is waiting for them to announce the ipo. what is your advice to that private company. we see a lot of investors

shunning oil and gas, now they are about to go public. bob: they are probably targeting a different set of markets. the big i have sees, a lot in europe and a lot in europe, i think aramco will target the world where those interested in investment may look at it differently. i think they will do a good job. you may know more than i do in terms of when and what they will do, but they are being professional about it. annamarie: when you step down next february, where do you think we will see the price? i think we are in a $60 to $65 range. who knows? a lot of things can happen. i will step down from the day-to-day role and stay on through the end of march. there is nothing that tells me i would expect a downward spike or an upward spike. annamarie: you think opec will have to cut more off the market?

venezuelat trading, is at 2003 lowe's, it was to a barrel -- and we still have $50 a barrel. bob: i do not know what oh blech plus will do -- i do not know what opec plus will do. i think a lot of it depends on what happens. venezuela, libya, and what happens to the pace of production coming out of the permian. they are all variables. annamarie: bob dudley, thank you very much for your time. that was outgoing ceo of bp bob dudley. he is stepping down and has a new boss, bernard looney who was speaking with us at oil and money. he is very excited about gas, bleeding include -- being included in an energy transition. alix: thank you so much. annmarie hordern joining us with bill dudley for -- with bob dudley from bp. coming up, "the open" with jonathan ferro.

a relief rally in markets. relief markets holding onto the highs of the session after yesterday's brutal selloff. the potential when is if we wind up seeing china by more agricultural products. they say they will do that if the u.s. winds up taking off the tariffs in october 15 and december they have threatened to put on. that is the dynamic playing out as we headed to talks for u.s.-china over the next 24 hours. in other asset classes, not a lot of movement selling in the u.k. and the bond market, that has eased off. the dollar turning weaker in the g10 space and you see crews bouncing along with risk on feel as bob dudley winds up stepping down after just a few months as ceo of bp. this is bloomberg. ♪ jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open"

starts right now. ♪ jonathan: coming up, market whiplash. headlines caught between increasing u.s. china trade tension. chinese officials still hope they can partial deal despite an ugly start of the week. waiting for the minutes from the feds last meeting. jay powell leaving the door open for another cut. 30 minutes until the opening bell. good morning. here's your wednesday morning price action. futures positive 22 points, up .3%. the euro firmer, we approach 1.10. yields grind higher, up two basis points. let's begin with the markets whipsawed by trade headlines. will get those gyrations over the next few days. >> on-ai