henry mcvey,e with head of global macro and asset allocation at kkr.or of this report, hotspot. there's no bigger hotspot on the planet for investors than china. most people who have a view on china are armchair porter backs -- armchair quarterbacks. you go there regularly. you meet with people in the real economy and gather facts. what is the single most important thing you learned from your latest visit last month? henry: not to date myself, but i've been going since 1995. with china, the government is keenly aware of the global slowdown in government manufacturing. about 75 measures , both monetary and fiscal. time two, relative to last we talked about it, it is clear that multinationals are pursuing alternative supply chains. they are going to thailand, korea. i think mexico, ironically, given the trade tiffs with the u.s. right now. it has actually been the number one beneficiary of supply chains moving out of china, and addition to vietnam. the third important thing, which i think is a very testable chinese companies don't want to rely potentiall

financial service companies that you know well like kkr. there are some sectors that seem to be totally neglected even as the markets recover. david: the united states economy was in a recession that ended june 2009. for 10 years we have been in a growth cycle. it is one of the longest in the country's history. but there has not been a lot of depressed stock prices for this time, so are you kind of hoping that as -- if some point there is a recession, you can get things at lower value prices? like to buy bargains but we don't want to see a recession. all of the turmoil that happens, impact on our society and citizens, recession is not great for america. david: i watched you and are -- you are a good value investor. what kind of rate of return -- return can i expect from your products? john: over 36 years we have been able to compound money roughly 11% per year. that is something we are proud of. ariel funds have been around since 1936. it is one number one in its category. we are one of those rare firms that has the 36 year record with the

financial service companies that you know well like lazard or kkr. there are some sectors that seem to be totally neglected even as the markets recovered. david: let's talk about the economy. the united states economy was in a recession that ended june of 2009. now, for about 10 years, we have been in a growth cycle. it is one of the longest in the country's history. therefore, there has not been a lot of depressed stock prices for this time, so are you kind of hoping that at some point there is a recession so we can get lower stock prices? you can buy more things at lower value prices? john: we like to buy bargains. we like seeing sectors that are cheap, but we don't want to see a recession. all of the turmoil that happens, the impact on our society and our citizens, recession is not great for america. david: let's suppose i say i watched you and you are a good value investor. i will give you some money. what kind of rate of return can i expect from your products? john: over 36 years, we have been able to compound money at roughly 11% per year. that

campbell's soup has sold its cookie business and other international assets to the private eity firm kkrthan $2 billion. campbell's was up a fraction t 32.34. >>> cbs and viacom havech reportedly r a working agreement on who will lead the combined company if a merger is approved. the "wall street journal" says cbs's actingou executive over see cbs's branded assets while the head of viacom wouldk he ceo role of the proposedombined company. viacom shares were also off a fraction at 29.78. >>> to this week's market monitor who has the names of three well-known global companies that he believes have good prospects for growth in the future. alan bond is back with us. he is comanager of theerjenson quality growth fund. welcome back. >> hi. >> we start with johnson & johns johnson. we know about the lc-related lawsuits it faces. a junior in kentucky found in favor of johnson & johnson but it is only one of tens of thousands of lawsuits it still faces. i assume youis don't feel i a big overhang on this compa? >> yes, so johnson & johnson, obviously a well-known health care business with wide ran

finally, for a birds eye view of the week in markets, we shut down for an exclusive conversation with kkrbal macro and asset allocation. ultimately, i don't think china is going to do a large devaluation. i don't think that's in their interest. they are trying to build a consumer economy. weakening your currency hurts you. they are sending a shot across the bow that they have other tools to match what president trump is doing on the tip front. >> let's talk about them. if this situation keeps escalating, what happens next? halt exports of advanced technology to china, huawei tote and their knees? do they hobble the u.s. economy? >> the first thing you will see is a pullback in capex from all sides. most executives are watching the situation. one of the fax that we feel strongly about is, if you had all the tariffs and say president trump does auto tariffs, that is less of an impact on gdp than a 10% pullback in. capex. >> how long until western capital is no longer welcome in china? >> when people say it's a cold war, it's not like it was with the u.s. and russia. china and the u.s. are a

shares there are up 2.5% after kkr and part of the eqt are among interested parties for the elevatorsivision the stock is up be.5% now. there will be lots of talks and they have been spending it off and it appears now that a group of private equity firms have gotten together to buy that particular movement. that's one reason they're shooting up on the news. we'll keep you posted on that story. now the g-7 will not and the french president decided to abandon the statement following deep divisions in 2018 last year's joint communique was thrown into chaos after president trump attacked canada. he said the world is living in a very deep crisis of democracy and described the statement as pointless. meanwhile, president trump says russia should be allowed back into the g-7 he said it would be easier to conduct international affairs with moscow at the table >> he totally outsmarted president obama on crimea and other things including the red line in the sand he outsmarted -- he made a living on outsmarting president obama and because of it, obama was upset. i think it would be a good thing

a deall soup has inked to sell international operations to kkr.sn the asset sale plan announced last august. the company trying to pare down debt. that is your latest bloomberg business flash. still ahead, rounding out a big week dominated by central banks and trade headlines, we are speaking with david riley, riley, asset bluebay asset management chief investment strategist come on how he is positioning, particularly in his outlook on rates. this is bloomberg. ♪ guy: from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. this is bloomberg markets. time now for futures in focus. joining us from the cme is bought by a chino -- is bob iac chino of path trading partners. busy.t has been good morning. the jobs report specifically has been taken two ways, leaning more one-way than the other. the slowdown we are seeing in the hourly work week is a bit troubling. as i learned from taylor riggs this morning when i was watching jonathan ferro's show come of the overnight rates in germany actually all touched negative. that is very troubling

birds eye view of the week in markets, erik schatzker shut down for an exclusive conversation with kkrlobal macro and asset allocation. >> ultimately, i don't think china is going to do a large devaluation. i don't think that's in their interest. they are trying to build a consumer economy. weakening your currency hurts you. they are sending a shot across the bow that they have other tools to match what president trump is doing on the tip front. -- tariff front. >> speaking of other tools, let's talk about them. if this situation keeps escalating, what happens next? does the u.s. halt exports of advanced technology to china, bringing zte and huawei to their knees? or does china retaliate or perhaps take the initiative by cutting off exports of rare earths, hobbling the u.s. industrial economy in the military? >> the first thing you will see is a pullback in capex from all sides. most executives are watching the situation. one of the facts that we feel strongly about is, if you had all the tariffs and say president trump does auto tariffs on top of that, that is -- anless of an umag imp

bird's-eyey, for view of the weekend markets, erik schatzker set down for an exclusive conversation with kkr's mcvey. henry: ultimately, i don't china is going to do a large devaluation. they are trying to build a consumer economy. erik: 5.8. henry: if you weaken your currency, that hurts you. they are sending a shot that they have other tools to match what president trump is doing on the tariff front. erik: speaking of other tools, let's talk about that. if this situation keeps escalating, what happens? does the u.s. halt exports of technology to china? huawei to their knees? or does china retaliate by cutting off experts of rare earths? hobbling the u.s. economy in the and the military? henry: i think you will see a pullback in capex from all sides. because most executives are watching this situation. one of the facts that we feel strongly about, if you add up all the tariffs, and then you say trump does auto tariffs on top of that, that is still less of an impact than a 10% pullback in capex. erik: so there's less capital coming into venture and less in to real estate, for example. how long

. >> kkr. >> >> sjm. >> good stuff. thanks for watching. dow right now up 407 points. "the exchange" begins right now. >>> thank you, scott hi, everybody. here is what's ahead a tariff bomb shell, the u.s. delaying some china tariffs until effectively after christmas. that, plus word of a phone call between our two trade reps has that market soaring today. is the worst over, and what does it mean for the fed now? we will ask. >>> plus, worsening protests in hong kong. the local leader warning protesters they've gone down, quote a path of no return as skirmishing break out in the airport. we'll have the latest, and talk about how this factors into the china trade talks. >>> and bringing skilled workers back to america's heartland. a look at how so-called heartland sri srinivasvisas coue answer to that. >> kelly, so much green on the board, every member of the dow jones industrial average is right now in positive territory. that's the reason why you're seeing, we're up 390 points, up 1.5%, but at the highs, the dow is up 529 points we'll keep an eye -- if we can push hig

they have accepted the offer r.om kk there is the response mechanism on the bid from kkr as you can seee minimum threshold has been accepted. the conversation about rates. the breakeven rates in the united states of america, that miscommunication last week i think unseated the inflation expectation. this is the 10 year breakeven. they absolutely walloped it. this is what they are supposed to be fixing, not breaking, isn't it? >> collect -- correct. most central banks are flexible inflation targeting. we have seen, this is a major issue for the markets, we have seen relatively ok growth. .he weakness is coming through the trade and investment side, not jobs in consumption. on inflation, we have seen the deceleration across every economy in the world. emerging-market central banks, almost 30 of them have used this year. we can see this in europe. the growth deceleration, but the disinflation is more troublesome. that is why all policymakers -- we measure them relative to global gdp. we are up to 55% of the world's central banks that have cut rates so far. we expect that to go to over 80%.

. >> kkr. >> >> sjm. >> good stuff. thanks for watching. dow right now up 407 points.e exchange" begins right now. >>> thank you, scott hi, everybody. here is what's ahead a tariff bomb shell, the u.s. delaying some china tariffs until effectively after christmas. that, plus word of a phone call between our two trade reps has that market soaring today. is the worst over, and what does it mean for the fed now? we will ask. >>> plus, worsening protests in hong kong. the local leader warning protesters they've gone down, quote a path of no return as skirmishing break out in the airport. we'll have the latest, and talk about how this factors into the china trade talks. >>> and bringing skilled workers back to america's heartland. a look at ho

goldman really preparing to make a kkr type vehicle within goldman sachs.g appears to be -- sonali: it could end up in the courts for several years. there are a lot of critics of this rule. believe that it exists in a significant way still. we do see $100 million loss here and there, but still nothing like the multibillion-dollar losses. taylor: generally, what are the regulators saying? sonali: the banks love it, critics hate it. they think the banks are going to dive back into risk. regulators in this administration are ok with this, but they want to get it done before the next election cycle. taylor: that is very true. another story we are taking a look at, blue mountain capital management originally made a ton of moan me -- a ton of money. now unfortunately, as we've seen with a lot of hedge funds, just a big decline in his performance a now trying to selloff his firm for probably less than he wants. sonali: what a we saw yesterday. andrew feldstein was a harvard law professor of obama. he was a star credit trader. this is a lot about what was happening

campbell soup inking a deal to sell international operations to kkr. 2.2 billion dollars deal completes the soup maker's asset plan made last august, trying to pare down its debt. --th korea is warming that south korea warning that it could take japan off of its easy trade list. that is your bloomberg business flash. alix: thank you so much. if techs needed anymore problem,s this is the breakdown we have seen in the semis. the stoxx heading for their biggest asked the stocks heading for the -- the stocks heading .or the biggest decline volatility is really rising. just to point out what the big losers were yesterday, this is function showing semiconductors getting hit as much as 4%. we will break that down. coming up on the program, industrial commodities also getting hammered as trade fears resurface. bp's cfo talks about the political risk. ♪ alix: this is "bloomberg daybreak." it is jobs day, and a huge bond rally day. 2.5%, andf by over increased trade fear is that economy is very levered to china. and other asset classes, it is in a norm global bo

this from henry mcvay over at kkr.good context for the trade war talk we've been hearing about thinking about the last year and a half, this shows you that global total trade in merchandise as a percentage of gdp has been on the decline since basically 2008 so from right before the financial crisis you essentially had a peak in merchandise trade. a lot of countries just becoming more internally oriented in terms of their economies look at capital flows, it's a pretty similar story right around that same time you peaked much more dramatically. this is right around the time of the commodity boom, the credit boom, emerging markets boom and subsequent bust. there's a little bit less to go around in thamerms of export mae share and a lot of countries are fighting for it and separating off into trying to become a little more self-sufficient or have some advantage in these flows, guys. >> everybody wants to know an exporter. >> exactly. >>> still ahead, the president tweeting a clip of our jim cramer challenging the consensus

kkr was also interested. what is the appeal of entertainment one, that brand of peppa pig.it from germany to china where it is a huge hit, and hasbro is trying to break into the market of content to stabilize their ties and become a farce and that kind of market. -- force in that kind of market. scarlet: there could be competing bidders. what are you hearing? maria: they have other come -- benedikt: they have other companies that have looked at this and it may become a real opportunity. we are not hearing anything yet, but i tv was one of the suitors. this might attract private equity companies. they are on a roll and buying a lot of assets. this might not be over yet for hasbro. for hasbro, this has been a long hedged dream to move into content to become something more like disney. they have the transformers, the toy business, my little pony. they have managed to franchise those out to media companies and with peppa pig they can keep it in the house. nejra: thanks to benedikt kammel. lucy, you pointed to u.k. appetite. globally, is this a good environment for mna given low

you recently announced plans to become a c corporation along with flagstone, kkr and apal to get lotocks. i don't want to get too wompgyf about it -- wonky about it. if you look at publicly traded partnerships, which is what we were priorq to initiateing the conversion strength. 80% of public investors are unable to own publicly traded partnerships our investors can'txdown it for tax reasons. individual investors don't want to own it they have to have k2s. it complicates the filingles hedge fund, if you look at blackstone areas of apollo's publicly traded ocompanies. we weren't trading because we ininvestible the thesis wasoi if we okconv whatever economic delusion there would be from the tacks, we would see a boost in the level. >> the change in the tax structure made this possible >> for lpmost, yes for areas unique we were positioned, we were able to go first. we have a high percentage of /u assetsÑ not in ep.e. that we paying corporate taxes on probably 80% ofçóour income. >> has it worked >> absolutely. if you look at our stock we are up 62% since we converted. >> h