roars sounds optimistic that a trade deal with china will be signed this month and says president trump might not need to put tariffs on imported cars. the world's most profit able company with dividends isn't enough. and easter brook walks the plank. mcdonald's fires it's c.e.o. for violating company policy. even though the staff almost doubled since he took over. welcome to bloomberg daybreak on monday, november 4. you woke up i'm alix steel. in the markets trade optimism that's seeping through. particularly in europe where you have auto makers at the highest level in six months. futures here up by .5. building on that record close we saw on friday. a year ago, pretty much slide, a risk on story and currency faces well as the stronger teller. yields up by four basis points. we are looking at underarmor

coming out with earnings this morning. the big story that cut its full year revenue view seemed to maintain its earnings and increase its gross margin forecast for the rest of the year. it's revenue at 2% versus 4% on the high end. remember this is all in part as well as the stock plunges. they did not comment. they won't comment on any further investigation. they do say they are cooperating. our time for global exchange. we bring you today's market moving news from around the world. bangkok to london to washington. our bloomberg voices are on the ground with this morning's top stories. we want to start off with the latest trade development. the u.s. and china say they are close to agreeing on the first part of a trade deal. wilbur ross spoke to bloomberg expressing optimism on the so-called phase one deal. >> i think we are in good shape. we are making good progress. and there's no natural reason

why it couldn't be. alix: joining me on the phone from bangkok is ed in a -- edna. also that exclusive interview. what were some of the other take aways? eenda: the u.s. commerce secretary wilbur ross sounding optimistic about the phase one trade deal. he talked about how president trump suggested hawaii, alaska, possible location force the signing as well. along with cities in china. secretary ross also says it's been a particularly complicated process. both sides wanted to ensure the other had it correct, clear, detailed understand of what it was for the phase one deal to come through. china to buy ants more goods, open it's financial markets to us us companies. for china it wants the u.s. to suspend tariffs due to be

slapped. if the u.s. would do that, he was noncommital. he said it would depend on the legislation, enforcement mechanism without which he says you just have a pile of paper. his words. also, willburg ross says the u.s. will issue licenses for u.s. companies to sell components to huawei very shortly. this is significant. the government received 206 requests which was more than what it can expected. president trump targeted huawei for national security reasons. it added 28 other companies in what's known as the entity list. alix: what have we learned about europe? what about that? >> to do with the auto and auto parts. he suggested that perhaps those tariffs may not be needed to be carried out. he said his talks with carmakers have been encouraging. he thinks push comes to shove

that will not take place. alix: thank you very much with great interview. we want to go to london. i.p.o. may be $1.5 trillion or less. the amount well below the $2 trillion target initially set by the sing come and suggest as struggle to pinpoint a precise value racial. r. > mco says it will list on riyadh and likely start trading next month. as the chairman offered reassurance it is would be a good investment. >> it is very safe. it if you want to have full proof to that you see the oil prices. oil prices went up the first two days by about 20%. then it came down by 10%. and all the future traders saw event, we have 1/8 of the oil production in the world.

and the oil traders they saw this as a nonevent. that means it is really safe. alix: joining me is the executive editor for commodities. the money might be saying. what's the market saying in terms of the big questions now going forward? >> good morning. it's been an epic three years. we are not there yet. certainly this is the furthest forward we have ever been. we have the official launch yesterday. we expect trading sometime in december. the key question between now and then is what exactly will they be able to do in terms of the valuation. the slides you pulled up there, the estimates are absolutely astounding in the sense that you have the same bank, remember these are banks that are supposed to be the smartest people in the room, having something like a $1 trillion gap in their val wations between the low and high case. where we get to remains to be

seen. in this initial phase they'll offer incentives in terms of tax cuts. some concessions on production of certain types of energy. as well as it a bonus for saudi investors who go in the first round. that may skew the valuation we see. the question will be what happens when we turn to the international investors if we turn to international investors to get more people into the i.p.o. alix: thank you very much. turn to mcdonald's, the company fired c.e.o. easterbrook for having a consentionual relationship with the employee t violated the company's policy. he wrote in an email to mcdonald's employee quote, this was a mistake given the values of the company i agree with the board it is time for me to move on. joining me from london is erik fanner. what happened? erik: clearly mcdonald is taking a zero tolerance approach on any sort of relationship with an employee. we don't know all the details yet. they say it was consensual.

they had had some allegations and questions earlier this year about sexual harassment within the company. so they changed their code of conduct. they had to act to the letter of the law. and move quickly to oust him. the big questionle is what happens next to the company. easterbrook is somebody who turned it around. moved it into a tech focused position. introduced all sorts of new apps and online delivery -- purchases and delivery and that sort of thing. now the successor has to erik that cord. we'll have to see how that turns out. in the even time, they are without a c.e.o. who is ho lifted the shares about 90% in his tenure. it kind of key performer here for this company is gone. alix: real staggering news. thank you very much. finally, we end up in washington. today marks exactly 365 days until the u.s. presidential

election. house speaker nancy pelosi sat down with bloomberg's david westin on issues of impeachment and health care and the economy. >> while you make some indications that the economy may be improving, god willing it is, in the lives of american workers they still feel a stagnation. stagnation of their wages. stagnation of their opportunity. alix: joining me from the white house is kevin, chief washington correspondent. the impeachment overwhelmed all of this right now. kevin: here we go. 365 days until the next u.s. presidential election. already president trump really saying that the impeachment inquiry will have no effect on his prospects to get re-elected. yesterday here at the white house president trump once again doubling down to reporters that he feels he will go full steam ahead through this impeachment inquiry. just as democrats continue to advance the matter.

there are more scheduled private hearings for this week. i'm told by senior sources on capitol hill that the more public round of hearings could begin as early as thanksgiving. the biggest unknown in all this is when and whether articles of impeachment will be brought to the house floor. if so, the timetable to do it because if we get into the next calendar year, just ahead of the iowa caucuses, several of the frontrunners, most notably senators elizabeth warren and bernie sanders, would have to split time between here, new hampshire, iowa, south carolina, and that could pose a political threat for them. if you look at the polls, however, most americans feel that this is an increasingly polarized time and at a time in which, well, there is not much democrats and republicans can agree on. case in point, elizabeth warren announcing her medicare for all plan on friday. that drew criticism from republicans, but also from the frontrunner joe biden. look for him to increasingly over the next couple weeks make his case known as this election

one year out draws closer to iowa. alix: thank you very much. and staying with drama in washington, dels serious shaving thrown here, president trump tells california's governor the state will receive no more federal money for wildfires. in a series of tweets over the weekend the president said that newsome has been a terrible job of forest management. he added, quote, get your act together. federal agencies own and manage 57% of california's forests and newsome responded to the tweets with shade of his own. he said, you don't believe in climate change, you are excused from this conversation. coming up on this program, much of more of the markets in today's first take. this is bloomberg. ♪ ♪

alix: time now for bloomberg's furs take. analysis from the markets. wall street veteran and insiders, gina morgan adams, chief equity strategist. also with us, christian lawrence , market strategist. you get the headlines on trade. you posted a record high on friday. what do you do today? >> it really smells by the rule ors. we are getting way too much positive enthusiasm coming out of the white house. just a little bit of follow through from china, when i look at the details of the trade, it looks like we are giving away the store to get the trade done exactly the opposite of where we were in may. i think the white house is finally realized that she is adamant what -- deis add--xi is adamant about what he want and

the white house is rolling over. when this comes to fruition and see the details, i don't think the market will like it. alix: ok. you agree? >> i have to agree. my colleague summed it up. it's like coaching a tennis commentator just giving the direction of the ball. it's risk on, risk off. no actual real substance behind this deal. markets are just trading those headlines. >> i'll take the other side because i think we have a tendency as commentators to over attribute everything to policy. while ignoring the rest. policy is the sexy topic. it's about tradepolicy. the reality is, we are in the middle of earning season. at the beginning of earning season the expectation was 4% drop. we are on track to less than 2%. we'll probably get 1% decline. that change alone is responsible for significant portion of the market's rally over the last several weeks. it's thot just about trade. the prevision downward to 2020

expectations is less than usual so far in october. which nobody is talking about because everybody wants to talk about trade policy, on again, off again. i don't think the market is positioned for an improvement in trade policy. i think what's happened is we are overly positioned for recession. it turpped out the s&p 500 earnings were not nearly as bad. even 2020 expectations are coming down at their usual pace. that's what's driven the improvement. i'm not saying we are not going to be disappointed by trade news because we probably will be at some point in the future. i don't think that's the entire story of what's been driving equities. >> i don't think it's the entire story. i continue to think that we have brought forward first quarter earnings into this year. i'm looking -- we have time, but i think the first quarter is going to disappoint in growth anti-market will have to come to terms with that new reality. is that a positive because we go back to that goldlylocks scenario where the fed is on hold? the economy grows 1.5% to 2%.

there is nothing we can do about it. we just crossed $23 trillion in deficit. there is no way we have ammunition to balance out if there is a problem without going over the top. it better be perfect because there is nothing left to save us. fiscal policy not monetary policy. >> i think people have argued this for years. there is nothing left to say 10 years now until the bull market. the fed is running out of ammunition. yet stocks continue to go higher. i think that the argument is valid but the other side is consequence get easier. you look at 2020 earnings expectations it's almost impossible for us not to postpositive growth and zero percent earnings in the first half of the year. as long as the economy is growing even just 2% you are going to get positive earnings growth. that's the dynamic underlying this market cycle. people are missing. you are thinking we are counting

right now to the worst part. a 30% growth pace a yearing a putting in a negative one. going forward you comp to zero. that's earnings cycle. the way stock prices trade is on forward earnings. the reason stock prices are riding depoun n.o.w. the comp will get easier. you are not going to see 10% earnings growth but 4% or 5% as long as the economy doesn't turn over. >> if you look at c.e.o. confidence data that's starting to plummet. what do they know? perhaps there is more negativity out there than equities are pointing to. i would make the argument that equities will continue to rally as long as we have the feds with relatively -- it comes down to the fact that companies are completely rely an. the fed market on pause at the moment. i don't think it can stay on pause. i think they have to start cutting aggressively next year. forward-looking data is all points in the same direction

other than perhaps earnings. but the macrodata is painting a poor picture. alix: what you are talking about highlights exactly potentially binary situation we are in on trade. there with as a note that said if global p.m.i.'s stop falling and you get uncertainty removed from trade, you are off to the races. trade in the rally. rotate in cyclicles. on gina's point that news is not priced in. >> i don't think you can be fooled by the stock markets is at new highs. when they have bven driven by ever increasing levels of valuation multiples for defensive sectors. ever increasing rise in the equity risk premium. yes, the stock market is at new highs and monetary policy is a huge part. but it is getting easier. the balance sheet will expand next year. this is a huge part of what restrained over the last two

years. i also think investors have priced extraordinary risk. you wouldn't have defensive equity sectors trading all time high premiums relative to cyclicles if we weren't priced for a lot of risk to emerge. the i.s.m. is late to the game. manufacturing is declining. equity priced that in over the course of 2018. >> we have never seen a decline in manufacturing without services following suit. that has to give and we'll see services lower. as soon as services turn lower, recession will be there the next screening word. >> to both of your points, when the data came out on friday for manufacturing, i was surprised how negatively the markets took that given verse services such a small component of the economy. somehow that made investors very, very nervous that that number missed. as much as it did. alix: the creak we can ahead anti-crazy stuff that's happening. based on that, what do you care about most?

>> this week actually there's not a lot of u.s. data. i think we need to worry about this week. it's mostly in other -- canada probably has the most data coming up. i traded the canadian dollar for for 30 years. you can help brexit. trade headlines. >> we do have two interest rate decisions, bank of england, it will be the same message. on hold this week. but cuts will be coming next year. alix: just to wrap it up, just touching on the saudi aramco story. i wonder if them coming to the market regardless of valuation will paul the top of the oil market. the saudis -- now they need a small tight range. >> in my opinion the tops of the oil market was in 2011. i think they are very late to

the game because the cycle for oil peaked in the last cycle. we made a mess of peak and oil prices in 2008. then confirmed that that was the ultimate top with a peak in 2011. confirmed that again with another lower peak back in 2014. it's been in a bear market since the great financial crisis. we are way late in the game f anything they may be finding oil prices near their bottom than their top when you think about the long-term secular outlook. i think the e.s.g. factors and enviesments is a bigger force in markets than anybody wants to acknowledge. and aramco is getting caught up in that. just like we were caught up in that. granted they are issuing on a very different exchange. how big can these government issues be, but the investibility of this company is coming into company. >> i wanter about the transparency of the earnings given what the issue is and what the government has involved in

those numbers r we looking at china great? who knows? what's going to be the real demand at any price. obviously the investment bankers want it as high as possible. alix: what they say about climate. that's what i'm super interested in. you'll get a chance to talk bout this in a second. i appreciate it. chris and lawrence will take with me. you can find what we'll use through the gtv go on your terminals. this is bloomberg.

alix: you're watching bloomberg daybreak. mcdonald's firing c.e.o. steve easterbrook. this for having a consensual relationship with an employee. the relationship violating theburg burger chain'spolicy. he revived sales at mcdonald's with all day brake breakfast.

he'll be replaced by the u.s. head of operations. fitbit is trying to avoid u.s. tariffs. moving its manufacturing operations out of china. until then it wants the trump administration to give it a tariff waiver. fitbit agreed to be acquired by google. ryan air posted earnings that beat estimates. getting a revenue boost from extras. including speedy boarding and reserve seats. that outweighed the impact of lower fairs and the grounding of the boeing 737 max. -- ryanair th rye c.e.o. >> to be fair boeing haven't been easy to deal with in the last 12 months. but it looks like the f.a.a. are moving ahead the aircraft will return to service in north america. >> o'leary went on to say this winter will be challenging for ryanair.

alix: thanks. another company we are watching this morning, under armour, shares are plunging in premarket trading. federal officials have been investigating its accounting practices for more than two years. that revelation comes as kevin plans to sit down as the c.e.o. in january. it is cooperating with the government and doesn't think it's done anything wrong. meanwhile, the pain for investors continues. underarmour just cut revenues. coming up on this program, saudi aramco long awhite waited are for ow it's been a shareholders. this is bloomberg. this is bloomberg. here, it all starts with a simple...

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european stocks on the front foot. here seeing the highest level since january 2018. automakers also strong here. big boon for automakers that have been struggling. other asset classes, you see the strains in the cyclical currencies. you are also seeing a selloff in the treasury market. about 17 basis point spread in the twos-tens. dollar-yen down 0.2 percent, looking around the 100 day moving average, so what's that level as well. saudi aramco finally launches its long-awaited ipo at a $2 valuation -- ipo. that $2 trillion valuation not likely, though. joining me now from dubai is ellen wald, atlantic council senior fellow. great to see you.

what kind of valuations you think the crown prince can actually live with versus what is realistic? ellen: we've been hearing reports that he could live with a valuation of maybe $1.6 trillion to $1.8 trillion, but even that is suspect at this point because we are seeing valuations that could be as low as $1.2 trillion or lower. apparently, a lot of this does depend on the price of oil. right now, the price of oil is not looking good. alix: that was the rhetoric that they needed a higher oil price. now i am hearing the conversation is a bit different. now it is about showing the market that there is stability, that there won't be sprite -- there won't be price spikes or falls. ellen: exactly. i don't think they would be particularly successful if they try to push oil prices up by cutting production. what is probably best for the ip about this point is to go with that slightly lower valuation for the present and keep producing at a steady rate,

particularly since we've seen those attacks on saudi aramco's facilities. right now they are producing at higher rates to refill all of the stores that were drawn down as a result of what was needed to deal with those attacks. they maintained their very strong reliability and delivery rates, but they have to refill that storage. we are hearing talk that a wrong -- that iran wants to cut more production at the next opec meeting. it will be interesting to see if any of the ipo issues come into play at the opec meeting. alix: no doubt. the other question i have, what are you hearing about how they are wooing investors? if a retail investor holds something for 180 days, they get an extra share for every 10 shares. how are they going to get people to buy this thing? alen: they are really egging huge push for the domestic market. if that domestic institutional investors, and we've also heard

that they were pressuring or heavily encouraging wealthy saudis and businesses to. invest and hold the stock. if everyone -- to invest and hold the stock. if everyone buys in themselves, the stock tose plummet. they really need to keep the stock up if they want to have a successful ipo on a foreign market later. when it comes to retail investment, they are a whole host of issues with this. in particular, they are loosening the regulations and encouraging banks to lend more money to retail investors who want to buy shares in aramco. this is a very dangerous proposition for the saudi economy, and for retail investors who may very keen to invest, but aren't sophisticated investors. this push to have them hold the stock for 180 days is definitely a sign they are looking to maintain a higher valuation in

the event they decide to do a foreign ipo. alix: still with me on set, christian lawrence of rafa bank. bank --reak -- of rafa of rabobank. what do you think? very difficults to value a company of this size, but it is nice to see an ipo from a company that actually makes a profit. alix: fair enough. this is not an uber or lyft, to be sure. you know the dividend is going to be growing. christian: it should be a relatively solid investment basis, but it all comes down to the valuation. that is where the uncertainty really lies at the moment. alix: that brings me to the dividend. like i said, part of it is, here is this enormous, stable dividend that they will be able to pay. they can increase debt. they can cut back on. 1.6 in that world, at a

trillion dollars valuation, this redline is where they would be at, 4.7%. l, belowbelow shel bp, below exxon. ellen: that is a huge issue. and you have this mystery dividend which the government takes, which varies based on how much the government sees that it needs. that should send warning signs to investors. this is a company that makes a huge profit, but at the same time, the question of the relationship between aramco and the government is a huge issue that investors need to contend with. the government can change that relationship at any time. . it can change the dividend. it can take more of a dividend. you've got to ask yourself, is this really a real guarantee? this is not a country that really exists in terms of rule of law. investors really need to be aware of what they are getting into when they invest in an on the foreign market. alix: to that point also, i

wonder how you model a valuation because part of that is going to be taking into account the oil on the ground, but going forward, that is going to be worth less because there is conservative energy -- there is alternative energy, the conversation of peak oil. ellen: that is definitely an issue. we've heard from some institutional investors that are really uninterested in pursuing this ipo because they don't see oil as part of the future. aramco has a very different perspective. they believe that we'll will continue to be a very valuable component of the global economy and global energy seen. it may not necessarily play the same role that it has come up at they are really banking on this. it does depend on where you fall on that spectrum. do you believe that peak demand is coming, and when would we see that, and at what point? alix: we were talking also about we are oil, but we are also

chemicals and materials, and we can invest in wind, trying to show they can be diversified. christian: which i think it's important. the world is starting to move away from oil. even if we look at a 10 year horizon, oil will be critical, but the future is moving to more alternative energy sources. alix: are we range bound here? is this a fair value we see? christian: i think we have a couple more bucks on the upside. i think supply is a bit tight. about are not talking a breakout to the $100 levels we seen in the past. alix: in the longer-term conversation of when you rotate the over to soil play into that conversation -- you rotate, here does oil play in that conversation? christian: i think interest rates are the real key here. i think we will continue to see

that dynamic over the next year. i think the growth stocks are going to start outperforming value stocks as we start moving into the middle of next year because i think the fed is going to have to cut aggressively. alix: are you wooed by dividends? christian: certainly. you get a much better yield than from the fixed income market at the moment. this is the big dilemma for pension funds. alix: which leads us back to saudi aramco with that 4.7% dividend yield. going forward, what is going to be the plan to try and list else?ere what are you hearing that saudi arabia is going to have to find and see to go list in london, in the u.s.? ellen: i think they are going to have a really hard time committing to listing in london or the u.s. one of the issues it comes down to is shareholder rights. this is a country that really come of the government and the king are used to making all of the decisions and not really having to be beholden to anyone.

the benefit to them of listing on the saudi market is control, to some extent, the control they maintain over the company. i have heard rumors they may be interested in the tokyo market. we will have to see where that goes. i also think that a lot depends on how this ipo shapes out. do they maintain the share price after the ipo, or does it drop? i think they are putting a huge effort into encouraging people to hold onto these shares, but at the same time, there's so much out there about all of the interference the government is having in this. will foreign investors really take that for what it is worth? will they be skeptical that aramco is being price determined by the market? alix: what do you think they are going to use all the money for? where does it go? ellen: david: that's one of the

reasons --ellen: that's one of the reasons this isn't a typical ipo because they want the money to go to their sovereign wealth fund. they want to use that money to make all sorts of investments that they believe will help diversify their economy. a lot of those investments are quite suspect in their ability to create jobs and diversify saudi arabia's economy. alix: ellen wald of the atlantic council, thank you. bobank,an lawrence of ra thank you as well. viviana hurtado is here was first word news. viviana: this month, the u.s. and china will agree on a phase one trade deal. today at a regional summit in bangkok, wilbur ross met with china's premier. ross says this month, the u.s. may not need to put tariffs on european cars. he told bloomberg the u.s. had good conversations with european carmakers about their investment plans.

last month, the u.s. struck a deal with japan that averted the auto tariffs. and hong kong come the latest protests, at least two people were arrested. more than 70 are hurt. police battling demonstrators at a shopping mall. police used pepper spray. protesters blocked roads and vandalized public facilities. 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: thank you so much. coming up, if you are spending hundreds of thousands of dollars for an mba, where should you go? "bloomberg businessweek" ranks the best in the country in today's wall street beat. check out tv . you can check out our charts and graphics, interact with us directly. just go to tv on your terminal, scroll through, check it out.

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viviana: you are watching "bloomberg daybreak." moved ahead of rival boeing. the past three months, boeing received just 16 orders. the company has struggled to revive its grounded 737 max. starting -- volkswagen starting production for his first battery-powered car. stationsays charging for electric cars are still an issue. >> the situation is quite different in europe. many countries are already quite developed.

norway, for sure, but also holland. we see a fast buildup in france. germany is a little bit limping behind, but i think after the latest position in government, we will see a fast buildup in equipment. viviana: customers placing deposits for more than 35,000 of the electric cars. private equity executives expecting are political candidates to protect their industry. they are staying away from democratic presidential candidates elizabeth warren and bernie sanders. private equity is focusing on swing races in the u.s. senate. ,mong the biggest recipients john cornyn, mitch mcconnell, and susan collins. that is your bloomberg business flash. alix: thank you so much. we turn now to wall street to cover three things wall street is buzzing about this morning. first up, saudi aramco's army of

global banks that competed for a piece of a deal. then the shadow banking reality. the former head of bank of america's global investment banking discussed increasing risks from shadow banking. and the top business schools in america. "bloomberg businessweek" compiled data to rank the best schools in the country. joining us is bloomberg's sonali basak. i want to start with saudi aramco. who didn't get involved? do we even know anyone that's out? sonali: there are definitely people that missed outcome about we were wondering where is morgan stanley, where is citigroup, where is bank of america. for a lot of people, it was unclear leading up to it who would have the leading roles, but the people are who you think it would be. i think what's wrong about is not just the -- what's remarkable is not just the banks come but how all over the place these valuations are.

alix: how do you do that is a bank? sonali: this is the world's biggest ipl, but a lot of the allure of saudi arabia's concurrent work with them. think of america's bravery, setting -- i think what was interesting was bank of america's bravery in terms of the low end of the valuation. we have seen banks move up those valuations to get more deals, but we are seeing low numbers here. hsbc's is my favorite here. what is that? we have to wonder, do saudi aramco go with the lowest or the best -- the highest or the best? sonali: it depends at the end of the day what they are going to be able to buy this for. saudi arabia is hustling to add more sweetness for investors, but in chile raising the div -- for investors, potentially cutting the dividends, raising the taxes -- raising the

dividends, cutting the taxes. alix: let's go to the second-story. you spoke to christian meisner on shadow banking, the former be of a head of investment backing. here is what he had to say. >> direct lenders in shadow become more broad. the regulation post crisis has encouraged the whole new set of into a market previously dominated by banks, so that is a logical consequence of those factors. hasbigger question, systemic risk increased because some of these don't have the same systems or don't have the same risk management processes and what have you? i think there's an argument to be made that that is probably true on the margin. alix: what is your take away from? interesting --s

i thought the idea of systemic risk was interesting. you go into any bank nowadays, that complaint. you say you haven't heard regulators come out and say there might be systemic risk. to hear a banker say that is really interesting. meisner is also in between jobs right now. it will be interesting to see whether he ends up in private equity. alix: how much is he talking or not talking his book? he was up for a lot of potential jobs. sonali: that's for certain. for somebody running a big investment bank that was impacted by shadow lenders, you could say he's talking his book in that way. but what if he ends up in private equity later on? executives are. also have d.c. coming for you. they are on to you. sonali: and something not in this part of the interview, he also talked about private equity

being able to edge into the ipo market. remember, kkr capital markets is blowing up. there is a lot of competition on all aspects of traditional investment banking here, which is what you sign that interview. alix: interesting. let's get to the third story, near and dear to your heart, the top business schools. what are the top business schools, and when do you graduate? [laughter] sonali: three months, thank goodness. dartmouth jumped 17 spots. leon black must be smiling somewhere. it rose, but something interesting, bloomberg has actually ranked it for different types of education. if you care more about compensation, then better than dartmouth is morgan. but if you care about the network, dartmouth is a better player. alix: that is interesting.

if you want comp, wharton gives you the best. it?would you rank sonali: it's so funny. i go at night. a lot of the part-time students don't get along. it is a rivalry. the part-timers and full timers don't get along. but i'm glad i did it at night. i would have never been able to talk about aramco with you if i had done it the other way. alix: amazing. super big props. sonali basak, thank you. we are going to speak to the of stanford, so stay tuned for that. in today's women of all street, today we take a look at the highest ranking elected women in u.s. state -- in u.s. history.

house speaker nancy pelosi would like to see more women in leadership in the house. david westin spoke to her on bloomberg's "balance of power." rep. pelosi: nothing is more wholesome for the system then increased leadership of women. when women succeed, america succeeds. we want women to have the confidence that there is no secret. they can do the job, so don't be shy about that. alix: don't be shy. got to love it. coming up, or the wheels about to fall off the good mood of brexit? if you are heading out, tuning into bloomberg radio on sirius xm channel 119 and the bloomberg business app. this is bloomberg. ♪

♪ alix: time now for trader's take. joining me as vincent cignarella, voice of the bloomberg audio squawk.

you are looking up the cable rate, for good reason. what do you think? vincent: the talk of the town basically is nigel farage. which way does he go? initially, the thought was he would pull his campaign from the election. that would give boris johnson -- excused majority me, i'm stuttering like brexit. now it looks like he is trying to get a better deal, threatening to put his candidates into the mix. then we would have a hung parliament, which is devastating for both the economy and the pound. just look over the last year. alix: so what is this, then? vincent: the initial optimism of cable taking us up to $1.33, then fading back down as we look at the potential for a hard brexit, and the big bump in october when things started to look positive again. the way the talk is now,

farage's insiders really wanted to get a better deal. that boris johnson deal isn't brexit. lookther going to have to for a better deal or field his own candidates. look for an opportunity for him and his party to step in because he doesn't like this deal. alix: so is that downside to $1.21? vincent: i say initially $1.27. the upside looks tough to me above 130 -- above $1.30. alix: coming up, pgim fixed income economist. this is bloomberg. ♪

♪ alix: welcome to "bloomberg daybreak" on this monday,

november 4. i'm alix steel. let's take it right from the top. sec. ross: there's no natural reason why it couldn't be. alix: the u.s. and china are signaling or optimism on a trade deal. >> it's been a particularly complicated process. both sides want to ensure the other has a correct, detailed understanding. alix: the two sides are working on an interim agreement that president trump wants signed in the u.s. in hong kong, another weekend of violent confrontation between police and pro-democracy demonstrators. roads and blocked vandalized storefronts. more than 70 were injured. at least 200 arrested. , crown princea mohammed bin salman has finally decided to offer shares in the world's largest oil producer, key to his grand plan to cut the country's reliance on oil.

about 53,000 runners set off on the new york city marathon. later, two85 yards young canyons were the leaders -- young kenyans were the leaders. marathon.run the in the markets, you've got some trade optimism here. the s&p and the nasdaq closed at a record on friday. you have the risk on currencies rallying, and a selloff in treasuries. joining me for the hour, ed hammond, bloomberg deals reporter. did you run the marathon? ed: i did not. i also do not remember it being that warm yesterday. maybe brooklyn was in a microclimate. i would be lying on the floor stretching. alix: what are you looking at this morning?

ed: a story we broke on friday of a medical group putting itself up for sale. one ofected striker was the most likely buyers. we just confirmed it is selling to sryker.trike -- alix: the u.s. and china are signaling that a deal could get done. earlier we spoke to u.s. commerce secretary wilbur ross about the prospects of a phase one trade deal. in. ross: i think we are good shape. we are making good progress, and there is no natural reason why it couldn't be. alix: joining us now, nathan sheets, pgim fixed income economist, and daniel wolf, kirkland & ellis. good morning. it's a start macro with you, nathan. do you believe it, is this phase one in actuality?

nathan: it looks like a limited deal is likely to be signed in coming weeks. content does not seem like it is going to be watershed. trump will hold off on some tariffs and china will buy some agriculture. i think that is good. i think the more important aspect to this deal is i think we can take it as a signal that, going forward, we are less likely to see a further increase in tariffs. either, in the run-up to the election come on a somewhat declining trajectory, i think it will remove some meaningful tail risk from the global economy and the u.s. economy. ed: what do you think we will see in terms of substance in the deal? alix: soybeans. [laughter] nathan: soybeans, pork. maybe that says it all. it seems like trump is going to

inee not to hike tariffs december. if he does that, i think he is making a virtue out of necessity. the u.s. economy was starting to feel some meaningful headwinds from the trade war. fed easing is helping offset that. but i think another round of tariff increases in mid-december, particularly on those consumer goods, could have been quite a blow to u.s. growth. so he was kind of in a corner. this is really quite a artful way out of that corner. ed: how important is it to the market that there is any deal rather than a continuation of what we have? as you say, when we have a deal, that suggests there is something. ed: exactly. i think having --nathan: exactly. i think having any deal is important because it removes those severe tail risks. in a world where we have to deal

with the tariffs we have on now, corporate america are not thrilled about those tariffs. absolutely not. have we learned to live with them in some way? i think we are learning, and i think that can be absorbed in the economy and in the markets. a deal is a big deal. alix: that's a quote for you. daniel, in your world, a company that wants to buy a chinese company or a chinese company that wants to buy an american company, do you feel better about that? daniel: i don't think so. we seen a complete tail off of deals both ways. i think what we have really seen is national security regimes and foreign-exchange regimes being used to pursue political aims, and also trade goals. perhaps the piece of it that's been directed at trade goals, maybe that tails off a bit, but i don't think we see a huge followthrough. there is so much noise among the regulatory bodies in congress

about the risks of allowing china and chinese companies to acquire u.s. technology companies. i think a part one trade deal is not going to change that dynamic, and we are going to continue to see that severe drop off in cross-border activity. ed: we saw this over the weekend, sify us reviewing the acquisition of tiktok. what does that mean from a legal point of view, when these deals are done and are going to be unwound? daniel: i think some u.s. parents might have pursued that tiktok. alix: i don't get it. my daughter is only five, but i still don't get it. [laughter] daniel: truthfully, i think that is a reflection of the new focus areas we have seen on a lot of technology, infrastructure, but one of the new areas that we have been particularly focused on is data.

the concern that the regulatory authorities have said is that if you get access to these enormous bodies of data, you can abuse that access in order to pursue various goals, whether it is a lesser company, an online company -- a leisure company, an online company. i think going forward, those are the types of deals that might not have gone through under the new regime. there is retrospective jurisdiction to look at already closed deals and seek to unwind them. we saw that with the grindr app, where they were looking at that a year after the deal closed. ed: is there anything buyers and sellers can do to create a provision for that? how do you compensate if it gets unwound? daniel: i think you are going to see those deals not happening at all. i think there are deals where you try to create compensation .or a deal not going through

i think they are just generally not going to be struck. i think the risk of a deal not being struck is so high. alix: to your point, a phase i deal is a deal. not's great, but it does make a deal in the c-suite. of ongoingterms integration between the u.s. and chinese economy over the last several decades, there has been a wedge driven into that process , and firms have got the memo about china as an element of their supply chain, about , aboutorder cross-border investment, about huawei as a counterparty. i just don't think we will see the same kind of integration.

ed: and it is not a trump thing at all. alix: even someone said friday, i'm glad he brought up the china thing. he didn't do it in the right way, but i'm glad he brought it up. ed: china and the companies that come from china that do business in the u.s. can suffer from beijing industrial policy. nathan: this was previously a debate, as to whether china's rise could be win-win. the economic community was arguing it could be. there are almost no voices inside the government saying that today, or within the political system. alix: let's move to something else that wilbur ross said when he was talking about europe. this is what he said when he talked about potential car tariffs and what that means. our hope is that the

negotiations we've been having , theirdividual companies capital investment plans will bear enough fruit that it may not be necessary to put the 232 fully into effect. alix: in real terms, it means maybe the tariffs don't go to into -- don't go into effect. is that a game changer? does that help sentiment? daniel: the whole tariff discussion really hasn't had the type of direct impact on the m&a markets you would think. i think the overall geopolitical situation has been the driver for the falloff in cross-border activity. uncertainties in europe because , with china that we talked about. when you look at the market this year versus last year, the most notable drop-offs have been in the cross-border stuff in the europe only and asia. only areas.

. we haven't seen a huge amount of discussion about the impact of the tariffs other than the overall reflection of geopolitical situations. ed: haven't companies and boards gotten fairly and ordered -- to jew political tuff -- two geopolitical stuff? daniel: i think the overall geopolitical environment does help fuel the coming year, coming two years. if you are going to take a bet, you are probably not going to do it at a time when you don't have a great deal of confidence about where the economy is heading. even though the stock market is hitting all-time highs, you feel good about that, and people can go home every day feeling that another record high, but i think when you are sitting down talking about, do i want to drop

$10 billion, $20 billion on a company deal, you are going to take a broader view and say, is this the market i want to be putting a bet down on. nathan: we are seeing exactly the same story in the broader picture for business investment. , in the yearsment since the global financial crisis, has been very soft. i think it is the broad uncertainties in the macro and geopolitical environment. 2018, with the tax cuts, we were starting to see some shift, and then the trade war has come with renewed geopolitical uncertainties and smacked it down again. dragess investment is a and a major source of uncertainty for the u.s. economy right now, i think for exactly the reasons we are discussing. alix: really great conversation.

daniel wolf and nathan sheets will be sticking with us. coming up, saudi aramco launches its ipo. devaluation may be a lot less than $2 trillion. we will break that down next. this is bloomberg. ♪

alix: saudi aramco finally launching its long-awaited ipo. that to trillion dollar evaluation now looking not so likely -- that to trillion trillion nowat $2 looking not so likely. to me, a spread when you have an $800 million valuation between the high-end the low end is bananas. daniel: it is not something we see in the m&a market. alix: i would hope not.

[laughter] daniel: the question is what we are seeing across the board. there's been evaluation disparity. theink that's been one of drivers in slowdown in m&a activity during the third quarter. you have record high stock market valuations, so seller expectations are, i am going to get that record valuation whether i am in the private or public market. buyers are looking at the underlying fundamentals of saying, that's nice, but the earnings in the overall outlook doesn't support that valuation. and i surprised there's that disparity? probably not because we are living that every and the deal market. ed: in the market, obviously with public companies, the market has decided on valuations some extent. but in the ipo market, it is the bank's to decide. alix: and the investors, but sure. ed: let you have this bazaar bizarre range.

are banks any good at evaluating these companies? daniel: i think this is a particularly difficult one. you can probably look at some of the valuations put on technology companies and ask more direct questions about that based on how they trade immediately after the ipo. this is a unicorn. how do you really come to a valuation of this company? the business is so different than anything out there. $800 billion sounds like a lot, $2t in the context of a trillion, $3 trillion valuation, it is not that much. given the elements of aramco and all of that, it is not shocking that you have this disparity. alix: nathan, what do you think? nathan: i think the underlying uncertainty is mainly about,

what is all that oil worth? alix: yeah, how do you know that? nathan: you don't. what you know is a couple of things. arst, the world has become lot better at extracting carbon -based energy. in october, we are likely to be in a place where knit imports are zero -- where net imports are zero. that is a dramatic shift in the way the world is extracting carbon. the second reality you've got to face in looking at this is that many in the world are looking forward to a world where we are no longer using carbon-based energy. i think both of those issues raise enormous uncertainty about how to value aramco and all

that energy it has claims on. i think that is the source of this enormous range. what do you do? are the futures prices right? i think that's the best we've got come up with -- we've got, but is that the right value for investors? ed: i think they've now cut the tax on it for the third time. does this make it harder for a company like aramco to list in the u.s.? whether you like it or not, it becomes state-sponsored. is they willeality ipo 1% to 2%. that means it is still vast majority a state owned firm. the tax regime and a number of other factors specific to the policy authorities are likely going to dominate that. i think that does create

complexities of thinking about it as an equity play versus a fixed income play. alix: but you get some investors that you know won't sell. they are like, they strongly recommend that you don't sell. [laughter] alix: i also think this is a broader conversation when they are trying to put a lot of money into the dividend to entice investors, and even still investors are wishy-washy. i want to highlight a note from morgan stanley. "investors face a lower and flatter frontier compared with prior decades, especially when compared to the 10 years post financial crisis. you will have to re-rate that kind of world." that is a different conversation. what do you think about that call? nathan: i think it is broadly correct. of slowers a reality growth going forward. we can talk extensively about what is driving that, but i

think at root and core, it is a demographic issue. it is slower growth and lower long-term interest rates. i think that reflects demographics and debt levels, central banks and low-inflation, etc. we will be in a world of lower nominal returns, and most likely lower real returns as well. i think it is almost unavoidable going forward. daniel: i think that's exactly what we were talking about earlier in terms of being asked to pay at today's valuations. the stock market is at record valuations, which doesn't necessarily link up to this future of lower growth, lower returns. i think smart buyers are looking at the market and saying, i'm going to wait until the valuations come down, and reflect that reality of the lower growth environment.

until those to match up better, you are still going to see a slowdown in deal activity because the returns, when you run out the projections, you try to figure out, what am i willing to pay today? i think the net present value of the future cash flows from the targets are not computing up to the value you are seeing in the stock market for these targets. there's a mismatch there. alix: nathan sheets of pgim fixed income, daniel wolf of kirkland & ellis are sticking with us. more to come next. this is bloomberg. ♪

viviana: you're watching "bloomberg daybreak." shares of under armour plunging in premarket trading. the athletic apparel maker disclosing federal investigators have been looking into their accounting practices for more than two years. earliero stepped down

in the year. shares of o'donnell's -- of mcdonald's are lower, the chain firing their ceo for having a consensual relationship with an employee. the relationship violated the burger chain's policy. easterbrook revising valuations of mcdonald's. buy wrighteing to medical group at about $4 billion. the medical device and medical technology sectors have been consolidating. that is your bloomberg business flash. alix: i have a quiz for you. we did the rankings of the best business goals out there. number one and two, do you know what it is? ed: i am going to go harvard. alix: that's number three.

ed: that's harsh. alix: number one, stamford. ed: number two? alix: dartmouth! ed: that's impressive. alix: did you go to business school? ed: no, i went to school in the u.k. much less arduous, and cheaper. alix: don't you go to college when you're 16? ed: no, 18. university when you're 18. alix: dartmouth, there you go. coming up on this program, health care on the road to the 2020 election as elizabeth warren reveals her medical for all plan -- her medicare for all plan. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. a pretty solid risk on date evolving in the market.

s&p and nasdaq closed the record on friday. s&p futures at the highs of the session. european automakers posting higher. s&p and nasdaq closed the record if you do not get any sort of tariffs on car imports into the u.s., there a positive from wilbur ross. switch up the boards. pretty standard story. risk on with the dollar. the selloff continuing in the bond market, the other performer in the u.s. yields up five basis points. year outficially one until the 2020 presidential election in the u.s. candidates making a big push, with health care on the minds of most voters. on friday elizabeth warren release the details of her medicare for all plan. the proposal would limit things like private insurance, reduce payments to providers, and see drug prices go down. nancy pelosi is not optimistic of the plan. fan of not a big medicare for all. i welcome the debate.

i think we should have health care for all. the affordable care benefit is better than the better care benefit -- is better than the medicare benefit. still with us are nathan sheets and daniel wolf. the i was talking before interview, i want to get a feel of what sectors will get hit matter who wins. you have a read on that? where's the big risk? nathan: that is a wonderful question. we know who gets hit if we have a health plan like the one elizabeth warren is proposing. we know who gets helped if donald trump is reelected. know who thedon't categorical winners are going to be. great question. ed: there again mind that

divergence of outcomes, how does anyone acquire a health care company? or indeed any company with exposure to the u.s.? take one of two approaches to the question. in the first half of the year you saw a lot of that. you saw pharma companies looking at their portfolios and saying it make play out warren, it may play out trump, but i have to continue. if i just sit here and not do anything, i will probably just end up telling off. in the second half of the year, as the reality of the election has said in, some people of slow down and said to themselves, do i want to be buying this compound, which is going to be priced in the market at $1 million per treatment when i'm faced with the possibility of medicare for all and a plan which says certain drugs, if they do not have a return, will not be reimbursed by this new

medicare for all and you can find yourself having bought a drug that does not have a market. ed: who is going to be the best for the m&a market? alix: that is like the same question but reversed. i probably have to say a continued trump administration. if you get the certainty of that and the reduction of risk around tax, taxes going up, regulation going up, glass-steagall, all of those questions get resolved, that will generate the most m&a activity. alix: it echoes what you are talking about earlier. you swing here and swing there. how do you deal with that? daniel: it is a world of extraordinary political uncertainty. the challenge we face is that traditionally sound macro economic policy has been crafted at the center of the political

distribution. that is where there is support for physical restraint. -- for fiscal restraint. that is where there is support for free trade and the supply side of the economy. we are in a place where we are swinging -- on the one hand, we have trump who has cut taxes and deregulated it i think the business community has welcome that. you have also fought the trade war in an unorthodox operating style. there were a lot of uncertainties associated with it. on the other hand of the isctrum, elizabeth warren likely to be bringing dramatic changes to huge swaths of our economy, including health care, the financial sector, energy, and so forth. enormous, likely increase in taxation.

worlds,e very different unlike what we have seen in the last 30 or 40 years. ed: the market is similarly confused. if we jump at my terminal, i have pulled up the big companies that would be the worst hit under a worn plan. -- under an elizabeth warren plan. nobody knows how to trade this outcome. warrenit between a presidency and a trump presidency is so wide. alix: i also wonder if we are looking at something broader? if you expanded out in terms of what we are seeing in chile, ecuador, argentina, hong kong, brexit. if you created a narrative relating all of them together, we are looking at unstable governments where you have a huge portion of the population miserable and finally pushing back, even if it is 10 years after the financial crisis. how do you think about that? >> this is one of the

extraordinary developments of the postcrisis period. coming out of the global financial crisis, high levels of unemployment. i understood a lot of the populist pressures. i also thought as the economy recovered in the employment rate came down that a lot of these and return to normal. as the years have pressed forward, the political environment has become more disruptive. i think it is reflecting something deeper than the crisis. inre is a continuing sense the united states and a global sense that the capitalist system is generating benefits, but they are not being broadly shared. we need to think more about inclusive shared prosperity. that is easy for me to say we need to think more about it.

where it gets difficult is what are we going to do about it? we have heard president trump give suggestions and we are hearing elizabeth warren give different suggestions. the underlying drivers are exactly what -- ed: goes into the business roundtable, capitalism has to work all the time, is that changing the kind of deals being done or the way companies are approaching deals because they have to serve 70 different masters rather than the shareholders? daniel: is is part of the conversation people are having in the board room. when you announce a deal, what kind of reaction are you getting from the wider constituencies? 70 people are trying to find their voice. whether it is the workers, communities, you do a deal that results in consolidation of a plant and a whole community loses a factory.

synergy is a great word for us on wall street, but for people that is real life. they are losing their jobs. their community is losing a focal point of the town for the past 40 years. people are trying to spend a little more time thinking about the impact and how it could mitigate this impacts because people are saying that while the stock market might share your deal, you might get a tweet from the president or a comment from someone on the campaign trail about the impact this deal is having on real people and you might win the first day on the stock market, but you have to think about the impact on your reputation. the question is not just for the politicians. it is something that has entered into the board room discussion. alix: this harkens back to saudi aramco talking about esg and how that is playing into how you are looking at valuations. what is the net-net?

what does that mean for politicians and central banks. what does that mean for the sectors? it means-- nathan: they have to be operating in an environment where they are aware of more than just bottom line, more than just growth rates, more than profit rates. we need to be thinking more about the distribution of gains, the distribution of earnings. you have an array of constituencies that say i may not have a lot of capital but applying for meaningful stakeholders. i think we are seeing this in the sg debate. seeing in the ballot box. people are saying i'm the stakeholder. when people are talking about -- daniel: when people are talking about esg, they are not talking about is an abstract thing. they are talking about it as a driver of long-term value. people are trying to translate esg questions into questions of

long-term value/profitability and realizing if you do not fix , climate questions, environmental questions could affect your stock market value a few years from now. alix: all of this sets me up perfectly for one of my favorite parts, the cold open on snl. it was kate mckinnon doing elizabeth warren. this is the end of that cold open. >> your insurance is like a bad boyfriend. girl, listen to me. you need to leave him. he is draining you. you deserve better. dump his ass. >> i know. you are right. i am settling. becausered to leave what if it is the best i can get? to say willes on you vote for me, and she says i

do not know. it sounds great in your into it but you have to deliver it to make it happen. that cracked it up. -- that cracked me up. ed: you have to raise a lot of taxes to make it happen. alix: convince people get out of the way and to be able to do that. i wonder how do you find a sector that is not influenced by all of this? i wonder if that is a question for daniel? it is definitely a challenge. every day you wake up and there could be someone else in the crosshairs. 12 months ago we were talking about how the antitrust authorities and tweets from the president would affect consolidation in that industry. i do not think in today's environment there is sector you can point to and say we are immune to everything that is going on. ed: i would throw in something like old value retail because they're under so much pressure,

this does not make a difference. if you're a gamestop, you all already in the swamp. said, people need to go about their lives, and i think that pushes you to staples. is we have tonse look through the environment and all of this uncertainty it is absent the geopolitical environment, it is a pretty good environment for investors. investors. we do not know how it will turn out. alix: thanks a lot. appreciate you both being here. nathan sheets of pgim fixed income and daniel wolf of kirkland and ellis. we want to give you an update on what is making headlines outside the business world. viviana hurtado is here. viviana: wilbur ross is optimistic that this month the u.s. and china will agree on a phase one trade deal.

ross telling bloomberg there is no natural reason and agreement cannot be signed. ross met with china's premier this week. ross also said u.s. may not need to put tariffs on european cars. he told bloomberg u.s. had good conversations with european carmakers. last month the u.s. struck a deal with japan, averting auto tariffs. in hong kong, at least 200 people were arrested and more than 70 hertz. police and demonstrators babbling at shopping malls. police used pepper spray. protesters blocked roads and vandalized public facilities. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. alix: thank you so much. coming up, mcdonald's sinking premarket as analyst cut recommendations on the stock after it ceo gets fired. a bloomberg news

or, you can interact with all of the charts we are showing at gtv . check it out. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." i'm viviana hurtado in the hewlett-packard enterprise greenroom. united auto workers president gary jones is taking a leave of absence. there have been reports he is involved in a years long corruption scandal. joan says he does not want to do anything that distracts from the mission. he led negotiations that ended the recent strike against gm. airbus has jumped ahead of boeing. the european plane maker has taken orders for more than 350 planes in asia. in the last months, boeing received just 16 orders. it has struggled to revive its grounded 737 max.

the parent of british airways agreed to by a spanish carrier for $1.1 billion. the deal would give iag further access to the spanish market. the company also owns two other spanish airlines. the deal will help iag reestablish itself as a leader in the europe to latin america market. that is your bloomberg business flash. alix: time for bottom line. we'll take a look at three companies worth watching. first we are joined by snarly basset -- we are joined by sonali basak. under armour is down 14% premarket. over the weekend, the wall street journal reported federal authorities are examining the revenue recognition practices at under armour and whether they had shifted sales to make the numbers look better than they are. also remember the company said today that the full-year revenue

not be where they wanted it to be. so far the company says it is cooperating with the doj and it does not believe it has done anything wrong. elsewhere, you have the ceo stepping down after almost two decades at the helm. thank you so much. now we are looking at ryan air. brooke: ryanair is one of the biggest customers for boeing 737 max. they say they expect to get their deliveries in march or april after previously expecting january february to start flying those again. part of the problem is european regulators are taking a longer time looking into the max software fix than the faa. ryanair ceo expressing concern about that to bloomberg television, saying he thinks they need to pick up the pace a little bit. european regulators saying they will take all the time they need to make sure the plane is safe. alix: thank you so much brooke sutherland.

we are also looking at mcdonald's. moffat is here with more. can you walk us through what we have learned? : the board at mcdonald's voted on friday. they learned about a consensual relationship steve easterbrook had with an employee and made the decision quickly to terminate him. we learned about this sunday night and immediately name the replacement, a guy chris who had been leading the u.s. division for mcdonald's. there's a lot of question around who this relationship is with, the fact that it was consensual, the fact that easterbrook was divorced. that said, there is inherently an imbalance of power. nobody is equal footing. i think the company decided they need to act swiftly. ed: he is also on the board of walmart. you think he keeps that board seat? anne: we have not heard yet. walmart, much like mcdonald's,

much like all of these big employers are trying to take a hard stance on things like sexual harassment, inappropriate workplace relationships. mcdonald's revamped its harassment policy earlier this year after a series of groping issues at the franchisee level and also people getting in trouble for speaking up, for retaliation. no wiggle room for error here. alix: the market loved easterbrook. i can show you comparable same-store sales growth. he did well for mcdonald's shareholders. anne: a bloomberg intelligence analyst said that arguably easterbrook was the best ceo in the restaurant industry. it will be a tough pill to swallow. he made a lot of changes people know and recognize. things like all day breakfast. he did a good job of getting ticket prices up. even if you are customers came in the door, they were spending more, and that was great for

mcdonald's bottom line. ed: just the all day breakfast. alix: which is hard to do. you are thinking about the temperature for the eggs and berger are different. it is a whole thing. an is there such a thing as workplace relationship or will this just be the new normal? any relationship is considered taboo and therefore ceos or other executives will lose their jobs? anne: certainly doing -- certainly during the me too era there is a lot more scrutiny. when you are the highest level you cannot have a consensual relationship where they have the same level of power. they did not have the chance to say this is ok but what is happening at the supervisor level is not. alix: tell us about the new ceo. anne: he has been running u.s. operations for mcdonald's, that is 14,000 chains. he has been very involved in a lot of the decision that easterbrook made like leaning

into technology. you may remember it mcdonald's has been investing in startups that let you talk through the , or starts to scan theylicense plate so if know you always order a quarter pounder with cheese, let's start getting it ready. i do not think anyone is expecting a strategy shift. we will see. maybe he will have a different relationship with franchisees or will lead into breakfast even more. i do not know how you do that. alix: bloombergs and riley moffat. thank you very much. ed, a pleasure. ed: thanks for having me. i will go and get my all day breakfast. alix: coming up, more mcdonald's. now changing -- now trading dangerously close to a $189 support level. if you're jumping in your car, go ahead and check out bloomberg radio heard on sirius xm channel 119 on the bloomberg business

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alix: time for technically speaking. bill maloney, a voice of bloomberg's squad joints me now. check him out all day. donald's, kick it off for me. bill: mcdonald's down 2% in the premarket. current bid around 191. stock was weak friday. you can see it has been going down since september. the first key support level, $189, that is the january peak. it needs to hold $189 or back in his 173 to $189 range. alix: it will be a hard data trade that stock. under armour totally pummeled before they announced the thought in the revenue guidance. this was what wall street journal reported. where is the support? bill: another stop we have been

talking about all morning. going back five years, down 14%. the stock has been in a downtrend 2015 to 2017, been trading sideways since. the carnage may not be that bad. the first support level you want to look at. it did fish 17 in the premarket, but the first support level is 17.60. level, 17.60 good alix: we are off the lows of the premarket session. thanks a lot. appreciate it. bloomberg's bill maloney. that does it for me. coming up, jack caffrey, j.p. morgan private bank equity portfolio manager. happy monday. this is bloomberg. ♪

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jonathan: coming up, stocks .allying the latest u.s. official talking up trade talks. there ramp ipo back on. lift arabia planning to the largest oil provider in rehab. donald'srbrook out of for violating company policy. good morning. here is your monday morning price action. four straight weeks of gains on the s&p 500. we had another 18 points to futures, up .6%. in the fx market, euro-dollar down to 1.11 $56. treasuries lower, yields higher. let's begin with the big issue. inching closer and closer to a phase one trade deal. >> we have some positive news from the trade deal. >>