Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20240714

Give us a sense of the area. Its a very strange vibe on the streets here admittedly. People are having a bit of difficult time just remember images that we saw come out last night and its the first time that weve seen in the protest already mass attackers coming after protestors and they were beating them pretty savagity with a baton. And it really added a bit of a new dimension to a pretty fast that until now, weve been watching over the past seven weeks and been surprised by the momentum it sustained and surprised the fact that carrie lamb is continuing to maintain ground. David carrie lamb denied the attackers on the protesters came from the government. Is there a sense that the government is behind the attacks . They did really attack the protesters. You know, that would all be speculation at this point. She and the Police Commissioner had a very somber press conference that came out with a lot of officials. And they really dug their heels and they said that these attackers were not related to he hong kong government. They said they would try to get to the roots but a lot of people found that kind of a shallow statement considering protestors have been very loud about their demands for weeks. And as you know, this stems from extradition legislation that carrie lam has tried to push through. And she refuses to officially withdraw even though she said the bill is dead. This is something that would worry people that the last firewall between hong kong and china was being eradicated and until she comes out and does something to address those concerns and address what protestors want, she just comes out and says that violence is bad and we condemn is and serve you better, thats only going to fuel the momentum of these pretty fasts and thats what weve seen over the past seven weeks. Alix great reporting. Thank you so much, karen ley joining us from hong kong. No futures up by eight. Youre seeing little bit of buying. Bond markets down. Geo Political Risk reflected today and oil but it feels like a really soft trading day as we set out for a very, very week for the markets. Its time for bloombergs first with marty. How do you understand what happens with the u. K. Tanker . Just seems to me that all sides in this very intense squabble are incrementally ratchetting up just short of a confrontation and of course as you mentioned before, theres always the chance of miscalculations, some sub, you know, some minor official pushing the wrong button and it suddenly turns into a violent conflict. David sounds like a this is an emergency session that the Prime Minister calls over for Security Service today. What are the options . They said they dont want to act militarily . Theres been talks of additional sanctions from the u. K. There isnt much for them to sanction. And, you know, iran launched those sanctions on them wants sanctions on them removed, even on the basis of humanitarian issues and this is donald trump and his Administration Want no part of that until they meet these demands on nuclear denuc accusation. Denucization. Theres a bit of complacency in the oil markets. The small one went up. It does not take into account the sufficient risk. Its there. As marty said the administration does not want to back off on sanctions on the street thinks trump wants to topple the iranian government. Despite what they say, traders are feeling this is the type of pressure he wants to put on that government to basically undermine the entire system. David ok, goes back to u. S. China trading. [laughter] alix where do we go from there . David lets go to u. S. China trade and maybe, maybe some happier news there. There are a couple of reports that i found curious. China, now we have people applying china to get some exemptions and on the other hand, the white house is having a media day with tech field. These are two things that are preconditioned from the two sides. Maybe this is working some sort of breakthrough . Almost hourly, you get some knapp of where the snapchat of what the talks are but i think its meaningless until theres some sort of high level breakthrough that this deal is going to get done. Every time that china and we meet, theres devil it is the details. This inextremele incremental stuff is going to drag on. David they can at least sit down at the table. Toa certain extent, theres a political calculation. At what point does he wanted to make sure he gets a deal going into this 2020 election. Alix it feels like traders are not buying in and soybeans are down. No, china cannot import physically, cannot import with six more months left in the year, the amount of goods that the Trump Administration is asking them to do. The scuttle butt on the street with china is that this is all or naught. She has told his committees that unless all trade tariffs are taken off the table, there will not be serious discussions and this huawei situation, this is at a very low level technical issue. Its not going to appease the chinese in a way that they want huawei into the system. The trade situation is really an underlying or maybe thats the front page kind of news but the real news is gio politically, economically, whos going to leave the world lead the world in the next five to 10 years . And thats the discussion going between both president s. And neither one want to bend on that issue. Alix a really big week that we have set up on all kinds of front. First, a third of the s p reporting this week. Awe government thats going to come out tomorrow in the u. K. The e. C. B. Meeting tomorrow. Vince, what are traders most interested in this week . The g. D. P. Numbers to be honest. When we look at the e. C. B. , the expectation is that there will using some in september if there is a surprise and they do something this week, then of course thats a different situation. The g. D. P. Numbers are expected to come in soft based on inventories. But what people i talk to have telling me is to look beyond that, look at the consumer portion which is expected to be very strong. And if those numbers are strong, thats going to put a little pressure on the fomc next week perhaps even though the odds are that they cut be more neutral. If they are soft, you know youre going to have starting tweets about jay powell. Whats wrong with that guy . [laughter] david its interesting to me that you left out Mueller Report muellers testimony on wednesday. Which i think is going to rivet the attention of a lot of traders on the street who will be watching that in real time. And Donald Trumps reactions to those hearings is going to be something to watch. David and it will ruin the attention of congress and washington when we still had to get that debt ceiling fixed and right now, the reports are maybe theyre not getting closer together. Well, secretary mnuchin and nancy pelosi have been talking multiple times over the weekend. The mood music is they want to get a deal done and no one wants a government shun shutout but how many times have we heard that before . The mueller testimony is a real issue but what they will focus on is the weeks that follow because depending on which way they go, it could be market directed and could influence the markets but the politics we look past and the same thing with the debt ceiling even though we always seem to get on the weiss, we always seem to get it done. It will only be if we trip over the line, then youll see the markets react. But we hesitate to react for that because its usually a losing bet and they come back in square one in the long run anyway. Alix thanks a lot, guys. And a reminder all the charts over the two hours, go to gtv go. Coming up, it is more on the big week for u. S. Earnings. Where a third of the numbers will release numbers. Tech and the spotlight. More next with Christian Lawrence. This is bloomberg. This is bloomberg daybreak with your Bloomberg Business flash. The Credit Company equifax gleed to pay to resolve investigations into a massive data breach the 2017 compromised some of the most Sensitive Information of more than 140 million people. Equifax will pay the bulk of the money to compensate consumers. It will also provide credit monitoring. Over to china. Thats where a trading frenzy gripped opening of the new Stock Exchange the first 25 companies that made their debuts rising an average 140 . The socalled star market is chinas attempt to avoid losing the next alibaba to exchanges in new york or hong kong. Phillips reporting Second Quarter profit that beat estimates. The Dutch Company introduced new products that rekindle growth at its Consumer Health division. Phillips also upgraded its hospital equipment with smart tech. And thats your Bloomberg Business flash. Alix . Alix trade talks between the u. S. And china could be back on the table soon. Over the weekend, Chinese Companies ask u. S. Exporters bout buying agent products and asked ag and asked for exemptions. Joining uses now is Christian Lawrence. Good to see you. When you take a look at these headlines what, do you make of it . Is it progress . Is it business as usual . I think its business as usual. I think as weve discussed before, this goes deeper than just trade and buying a few more soybeans from the u. S. Isnt going to end these trade disputes. This is the battle for the global hedge money and this is going to continue for the foreseeable. The only question is whether as we move closer to the election next year, whether we do see trump try and get something done purely on the base of boosting markets into the election. David is it a win if we dont make it worse . Is the market sort of adjusted to that possibility . Its fair to say, yeah. The big question is whether the u. S. Can essentially damage chinese growth. The u. S. Can slow down the pace of growth in china so that it doesnt continue to outpace u. S. Growth from the percentage perspective it will but in terms of that pace of growth. I think thats the real aim here. If we can get china to slow down relative to the u. S. , then trump will consider that a win. Alix what does this mean for ech incomes . What are you expecting . I think heading into the earning season, there was expectation that we could see around a 2 slowdown. Of course, we have seen Companies Beat estimates so far, more than 50 . But the big question is does that earnings recession that could potentially emerge as we do see negative growth the Second Quarter as well as the First Quarter . Does that lead to a real recession . Well, history says not necessarily. In the last 30 years, theres been around six earnings recessions. Thats only been followed by two real world recessions but i do think the u. S. Is head sfwag a recession next year anyway and so i do think an earnings recession will exacerbate concerns over that. David lets talk about that possible recession. You say that thus far, 15 of the company has reported, beating expectations but theyve been taking expectations now. At last chart that shows the index of taking it down and its really been down throughout the year and increasingly so. How much of that is a concern about recession rather than trade . Well i think its really Tech Companies are so reliant on low Interest Rates that thats the key here. Weve seen before when we saw the slowdown in equities earlier in the year and we saw yields move lower, we saw the Tech Companies continue to outperform. They really need these low Interest Rates to justify the valuations so much i would say the fed is more important than trade. David arent they going to get what they need . And thats why other than last week, we really have been buy everything mode whether its safe havens, emerging markets, equities, bonds, everything has been bid on this promise of lower Interest Rate. Alix david saying that you might not see the equity rally that we may have been used to if Interest Rates are lower because you still have equity on policy and earnings revisions for 2020 and even the Fourth Quarter of this year. So how do you understand the push and pull of that . Thats a very good point and its fair to say that what im really expecting isnt equities to continue surging higher. If we do get this sort of insurance cut from the feds and when we see that without data really lower than that provides the boost to equities. But as we move into this actual recession, then Interest Rate cuts can only provide so much support. But i think its fair to say that we could potentially see a scenario where the u. S. Start to slow and equities remain relatively well supported. Certainly it doesnt mean that we enter into a bear market when it comes to equities. David as we go into this earnings session what, are you looking for mainly on the calls . What would indicate to you an upside versus the downside . They are Banking Sector is going to be an interesting one. Weve seen quite a few numbers from that perspective and thats contrasting where were seeing in europe. David to your point about the u. S. Banks, you look at the total money made, it was a record. It was extraordinary how much money theyre making. Yeah, one has to wonder if cutting Interest Rates is going to dampen that Going Forward because thats one of the problems that we have in europe. Im not saying that i expect the fed to cut rate into negative territory but in europe, where that is the case, we are seeing problems. Alix so in the world where you buy stocks and bonds at the same time due to all the reasons that youve just listed what, do you do . Buy stocks and bonds at the same time. Alix youre going to follow the momentum trade . Yes. When we start looking further out when were really expecting to see the u. S. Data start to turn, then well probably see more of a move in to safe haven. With falling Interest Rates, we can see some support for risky assets, but lower Interest Rates cant fully compensate a real marked slowdown in the economy. David if you anticipate a recession, do you go conservative on bonds . You go into longer duration. Is that what you do in your bond buying . Eventually thats what we do, yes. For the time being, its still buy everything mode. But thats probably only for another month or so and then well start so show a rotation more into safe havens and well see that with the move out of emerging markets into develop markets in a few months time. David interesting. Christian lawrence will be staying with us. Coming up, unicredit weighs thousands of job cuts. Shares of the italian bank as it focuses on the Strategic Plan. More on that next and this is bloomberg. David roshts out this morning are the unicredit is considering cutting as many as 10,000 jobs. The c. E. O. s efforts to trim the bank and focus on core operations. This comes at the beginning of a week of European Bank earnings. So with us is Christian Lawrence of rana bank. The European Banks are having a ugh time with negative one of the Big Questions for the e. C. B. Is what level of what negative level does rates ecome contractionry. Alix unicredit said some of that job cut will come in italy. Its a significant lag. Youre talking about a couple of quarters but the question is what does it mean for the Overall Health of the Banking System and what does it mean for the Financial Markets and what does it mean for the e. C. B. . What can they do . David and the question is whats left . I mean, whether its Deutsche Bank or somebody else, you cant cut yourself to success ultimately. Where do you say im going to grow now . Christian well in this environment, its difficult. Earlier, we were talking about the geo political tensions were seeing everywhere. Every region seems to be having its own problems as well as these global problems. So i dont think theres any regional area where we say everything is looking rosy. Alix what do you think theyre going to do or say thursday . On thursday, theyre going to change their board guidance. So theyll say at present levels or lower and that really gives up gears up for rate cuts Going Forward. I think they go 10 rate points in september until we get to around about. 8 in the middle of next year. I tend to think theyll probably go more. David does it make sense for them to deal with rates alone . Without going back into easing and start buying bonds as well . Christian kink they will use Interest Rates first. But do we see them moving into asset purchases down the line . Thats possible. Theres only so far you can cut rates before you get to that level that it becomes too damaging and the Banking Sector is one of the sectors that is most sensitive to this and we could cowell see some tiering as well as the Interest Rates to try and prevent so much damage to the Banking Sector. Alix you have securities see six cuts have the fed over the next year and a half. What does that mean for the dollar . Christian weve discussed this many times before and essentially my argument here would be that yes, Interest Rate differentials are going to move so they put a downward pressure on the dollar but these other factors that are far more important than that even with the Interest Rate cuts, the u. S. Would still look like a high yield. Were seeing Interest Rate cuts everywhere in new zealand, australia, canada, across emerging market. David if there is a process of recession, is the dollar still a safe haven . Christian i think so. He other big point is trade. So we could get a bit of a squeeze in that external dollar market. Alix which we see at the end of every year. All right, Christian Lawrence of rabobank will be speaking with us. Coming up, tensions keep rising in the gulf. We will talk more about that. Alix this is bloomberg daybreak. Im alix steel. S p futures just up by seven. European Stocks Holding on to their gains. The nasdaq, the daxon in the outperformer in europe. It is a mixed dollar story. Eurodollar flat. Cable rate down. 3 of 1 . I think we have one quitter for the administration right now, already resigned and another administer. And johnson winds up getting le eck. And it literally dont know what kind of government youre going to have come tomorrow morning in the u. K. David apparently, one will agree with leaving. Alix and this conversation was like will they suspend parliament to avoid that to enable him to go full tilt . David turns out the queen has something to say with that. Alix did know that. David the Prime Minister cant do that. Alix there is a power there. David exactly. She knows hercule law, the queen of england. Lets get an update outside of the Business World with first word news. Congress and the the white house are closing in on the debt ceiling and budget deal but this week, the u. S. House leaves for its summer break. Both sides may have to resort to a short term fix so the government doesnt run out of Borrowing Authority and it is part of a permanent deal but the Trump Administration wants longterm spending cuts. India launched its second unmanned knowing the moon. Its trying to become the first country to land on the south pole of earths closest neighbor the indian spacecraft is due to reach the moon in 48 days. It will be at least two weeks on the surface hooking for signs of water and helium. Another sign of tension between iran and the west. Teheran arrested 17 people accused of being a part of the c. I. A. Trained spy network. A number have been sentenced to death the announcement coming after Iranian Forces seized british tankers. Today, the British Government is meeting to figure out is next move. Global news, 24 hours a day on air and ticktock on twitter powered by more than 2,700 analysts. This is bloomberg. David . David thanks very much. We want to stay in the subject viviana just covered the tensions growing in iran as she said theresa may will be meeting with her committee. We want to welcome now markkanen either from washington and he served as the secretary of defense for the middle east. Mark, thank you so much for joining is today. Lets start with the u. K. Right now. Prime minister may is meeting with her team. What can they do . They seem to have ruled out military actions . The most probable thing that they will do is join the americanled sentinel operation, which is equivalently a convoy operation, much like we had uring the tanker wars of 1987, 1988, providing guarding of all the ships going so the iranians cant impede their movement. David as i understand, theyre having some difficulty with that. They really are. Most of the countries dont want that get involved because they still believe there is some hope of bring the iranians backing into the jcpoa. If we have more incidents weve seen over the past week, theyre going to want to protect their hips and not leave it to the americans alone. David a critical opponent you said are the europeans. Does the squaring off of the United Kingdom and iran really damage irans situation with the western europeans . Are they more likely to go with the u. K. As this escalates . Well, i think they are going to continue to try to keep the europeans talking on their side but even germany who has been pretty neutral has started to speak out. I think everybody recognizes the effect of an iranian effort to stop the oil flow to the straits and particularly european cant handle that. Alix general what, is the possibility of a policy mistake on both sides at this point . Yeah, thats good question, alix. Im about a military mistake. Again, going back to the tanker wars of 1987 to 1989, we had an accidental shootdown of an iranian aircraft which killed 290 civilians and an attack on an American Ship that killed 37 americans. I cant imagine that a mistake like that would not lead to significant conflict in the region. So the mistakes i think as you said the thing we got to worry about most. Alix so how close are we to those kind of mistakes . The headlines, if we dont know the real tension in the strait. Whats your best read on it . My concern is that youve got a lot of lowlevel commanders down there trying to do the best they can that are begin the significant amount of autonomy to protect their equipment and their people. But those are human beings and those are the kind of mistakes that human beings made with the attack on the stark and the ttack by the on the iranian airline. So what im concerned about is miscalculation, mistakes being made and the closer we get to operating against the iranians, physical ply closer, theres more chance for mistakes in there. David i believe it was said famously that war is diplomacy by other means. It seems like iran is not coming to the United States and whether we sit down at the table and talk about it. Thats right, david. But were seeing an effort on the part of iran to play this good guybad guy routine. The irtc is playing hardball while sharief is running around the world trying to convince everybody that he wants to start diplomatic discussions. The fact is we in the United States prepared to start those diplomatic discussions but the iranians are set the preconditions that we lift the sanctions. So thats a nonstarter. So i dont think diplomacy is going to show any promise until the iranians back off of that requirement. David so both iran and u. S. Dont want go to war with each other but weve had Armed Conflict through history where neither side intented to go to war when they started out. How do you avoid it . Whats the most effective way to avoid it . How does one climb down off of the position that one has taken . As we saw with President Trump a couple of weeks ago, when there is a reason to start a war, sometimes restraint is the better action. You take a look again with the events and they could have led to a significant fight inside the straits and inside the persian gulf. But the restraint when an incident like that happens, i think is really the only way to prevent a large scale conflict. Alix what if the conditions to bring both sides to the table . Because it feels like randys going to need some irans going to need some export waivers to do that and im wondering the incentive for the taos grant them that whats your take . The United States will not pull away from that precondition, that they will not allow the iranians to impose on any negotiations the United States believes that the maximum Pressure Campaign will in and of itself create the conditions for the iranians to come to the table. It will be interesting to see if the iranians are willing to hold out for two or six years of this maximum Pressure Campaign before theyre forced back to the table. David how much of this is the United States plain and simple and how much is it driven or influenced by saudi arabia and israel as well . We have a saudi arabia that is opposed to iran and even if the United States wanted to pull back some and it strikes me that we have troops in saudi arabia since the First Time Since they were kicked out. Thats important that the saudis are so concerned about the situation that theyre overruling the battles inside of saudi arabia and allowing the american troops to come back. There clearly is a concern the region. I just came back from the region on friday. Throughout the region, theres concern that the iranians are continuing their milan activities in the region going from the low level maligned activity to a larger scale operations. The iranians think theyve got the military capacity to take on the countries in the region. And so i think thats why our allies who need us more than we need them are continuing to ask us to stay in there and expand our presence. David ok, mark, thank you so very much from washington thats retired u. S. Brigadier general mark kimmitt. Alix the oil price, obviously, youre seeing oils spike but volatility picking up but not all that elevated even earlier in the year. Christian, how do you understand the lack of movement in oil versus the pretty dramatic scenario that the general has outlined for us . Christian its quite remarkable, really but volatility is suppressed everywhere. We look at the tensions globally whether its with china or middle east, its still close to the lows which is the environment were in. Its become structural right across market. David he said Central Banks putting a wet blanket over everything . Christian thats a huge part of it and it becomes this selffulfilling loop where if theres not so much volatility, then they sell premium to buying premiums to sorry, selling premium to make some money somehow and that suppresses volatility even further and we end up in this feedback loop where the markets are structurally low volatility. Alix what do you do where oil . Do you want to buy it . Do you want to put the Options Market on that . What do you do . Christian i prefer oil moving higher. And of course, one thing that we do see in oil markets specifically is when we see an accelerated move, that really gets exacerbated by this systemic trading account that seems to jump on these momentum moves and the oil market does seem primarily being driven by these momentum accounts rather than underlying fundamentals. Alix if you look at global p. Myth. Versus oil, it feels to me that you have the geoPolitical Risk on one side and this story of weaker Global Demand and how that is suppress the oil price. The momentum really steams be towards the fundamental in this respect. Is that a mistake . Christian if we look at whats happening with fumbles on the longer term basis, that remains the key driver. But i think in the short term, we do need to look at what these account are doing because they will overshoot and undershoot when we are looking at the price action. We look fundamentally with all the potential supply risks Going Forward, the path of least resistance for oil will be hire. David but you also think there will be recession. How do you put those two things higher . Christian this is a timing issue. And one thing alix the higher oil could help exacerbate a recession. Christian when we saw Interest Rates last year, theres no coincidence that that was tracked by high oil prices. Because that does bode for some inflationary pressures which could put Central Banks in a difficult position if we do see inflation pick up from an oil perspective driven by that. Then Central Banks will be able to cut quite easily or find another excuse to lower Interest Rates further. David Christian Lawrence of rabobank, thank you for being with us. Coming up, the big job ahead for the incoming c. E. O. Switzerlands Third Largest private bank record its third lowest inflow on wall street eat. Alix this is bloomberg. This is bloomberg daybreak. Coming up in the next hour, we speak with mervyn king, former b. O. P. Governor. Heres your business business watch. U. S. Regulators reportedly are improving a merger between sprint and tmobile soon. They may get the goahead wednesday or thursday. An agreement could include a term that would lead to the creation of another wireless network. Big job cuts may be on the way at unicredit, the italian banks. Bloomberg learning that unicredit may cut up to 10,000 jobs as part of its new Strategic Plan. The banks considering reducing other operating expenses by as much as 10 . There is a new alltime champ at the box office. Avengers endgame has taken in an estimated 2. 7 billion worldwide. That knocks off avatar which was released a decade ago. Thats your Bloomberg Business flash. Alix so, yes, ok, avengers finally beat out avatar but lets suggest for inflation, a little pop quiz. The top grossing movie is . David it is gone with the wind. Alix but then it becomes star wars and then sound of music is Still Holding up at number three. David its a good day when you can put avengers in the program. Disney has a lot more of these things, particularly alix oh, no, its avengers. Just in different format. They did so well with black panther that they wanted to do more like that. Alix 100 . David thats great. Alix and everyone was into it, black widow. So she finally dies in the last avengers, sorry, spoiler and they finally give her her movie. David nobody dies. They just do time changes. Alix no, the one person that didnt come back. And rachel weisz is going to be in it too. It should be really fun. Looking forward to it. We turn to wall street. First up, julius bar, the slowest inflows in years it was the lowest inflows in seven years and bridgewater loses 5 . The Pure Alpha Fund will see its worst performs in decades. And unicredit cutting 10,000 job cuts as part of the Strategic Plan to cut operating costs david and joining is now is a reporter from bloomberg. You caught up with the outgoing c. E. O. Julius bar and this is what he had to say. We had some outflows and if i had that back, we are actually within the target range of four to six percent. If i look at margins and revenues compared to the second half last year, they have recovered. David so hes the outgoing c. E. O. We had a short term but he was brought in to clear the place up. Thats exactly right. He was there for less than two years, and so the new guy has a job to expand inflows again. But lets be clear too we were also in a market where most of the growth is coming from asia for a lot of large firms. Last week the u. S. Firms had really strong numbers. So to have lower inflows is a little bit of a concern, but, you know, its a new era, i guess, for somebody else. Alix consolidation. How much more has to go on this face . Thats the number one question. There are one of the biggest firms in switzerland but really around the world, people are looking for growth in the Wealth Management space. A lot of folks are looking for wealth growth abroad but whats interesting is europe has some of the slowest growth rate right now. David dont you have to acquire . Its all a relationship business. If you get the people with the relationships, youre going to grow. Like investment banking, you can acquire teams of people. Deutsche bank are stealing large groups of advisors and that can be cheaper than a fullon acquisition. If you want to grow bulk, you buy. Alix our second story is Bridgewater Flagship Fund losing 5 . Thats also a tough number because so many other funds are doing really well in the first half of the year. Thats exactly right. The fact that so many funds are doing so well and the global macro category, its not a great sign. Since the end of june, its pared quite a bit most on the losses where in january. What that indicate is they were mostly against the market when the time limit was rallying. David the market turned on them in january. It looked like we believe its going to keep going and it didnt. It did a uturn. And then you see a month later, betting harder on gold, for example, which says a lot about the changes in pieces but i do want to drive to a january story by kathy which it did say that the pure alpha fiveyear return has already got at least one pension fund nervous pulling millions of dollars and that could have more moving forward. What investors do from here is a big question mark willing at the annual return. David theres a question of what invest doris about unicredit . Unicredit have got a new Strategic Plan and it may involve cuts of as many as 10,000 people. Weve seen this before, havent we . This year, everyones strategy seems to be cutting jobs. With that said, unicredit has already cut thousands recently. So the plan for growth will be interesting moving forward as they start to reveal more of the cost cutting strategy and. Alix you have a sense of where the job cuts and hiring is all stacking up . A lot of it is in trading among the big european firms. I had a lot of calls about this, whos next . And then we saw the headline on unicredit more job cuts. And so its definitely what people tell me is j. P. Morgan, morgan stanley, goldmansachs are the winners in trading and that will continue for a while. So i think well see little more job cuts from more european firms. David and we had the European Banks this week and next week. I wonder if theres some strength in numbers if you see the c. E. O. Cutting next month, it gives you a little cover. We just saw Deutsche Bank stole the headlines all of last week. Today feels like a less of a blow even with 10,000 jobs. But ive got to say youve got to wonder if cutting more will lead to more consolidation moving forward. Alix and in fury, they probably like it. Whether or not it happens is different. So then talking to your sources to say u. S. Banks profiting off of Something Like this what, are you hearing . Oh, big time. On one hand, its not even just in terms of head count. Its in terms of client basis. You see the u. S. Firms just taking the best clients on the top of the house. Not even just in trading this was also for i. P. O. S and globally, right . You see j. P. Morgan on the hong kong i. P. O. And in europe as well. David its the executive swiss firms. Yeah. David a lot of businesses out there. Alix the one area where lawyers are not winning right now. David thanks so much for being with us. Coming up, a win that doesnt quite hit the mark. Im watch the japanese elections nd what the election means for the Prime Minister. Alix this is bloomberg. David japan had an election and shinzo abe won but he didnt get the two thirds of his coalition. You can show before and after. 51 plus the 60 and now hes 46 change the constitution and make some fundamental change. Alix he is the longest serving leader. It has to do with the military. David yeah. They also had some other things which is that sales tax, which is not very popular. He thinks they absolutely need to do that. And japans economy has not been doing great as you know. I mean, i think we have a chart that shows overall how its been in a downturn. And shinzo abes famous three arrows approach, one of which is the sales tax at the top of the list. And theres also talk about going in the fourth term. They had to change the rules about going to a third. Alix and also, you know, Police Station like where is it . So how do you change leaders when like nothing is moving the needle . I guess that core c. P. I. Hit a twoyear low and manufacturers are pessimistic as well. Theyre sitting a threeyear low in terms of their sentiment. He needs something. And if he doesnt get a super majority, you needed to get something done. Alix its been like that for a while now. Alix right. And now were talking about europe and then the u. S. David has a fight with south korea. Alix and the u. S. David and you got to fight with south korea. Hes got a lot of things on his platter. Alix all right. Coming up, a strategist will be joining us for his take on this week of a lot of earnings. You got the e. C. B. You have a new government coming out in the u. K. And you have the first read of the Second Quarter g. D. P. On friday. You got the micro and macro. This is bloomberg. Tinderbox in the middle east, conflict, officials try to deescalate. Were going to speak with richard nephew. And trade negotiations could start facetoface between the u. S. And china as companies talk about buying more Agricultural Products and the u. S. Tech companies tedhead to d. C. To talk about resuming sales in huawei. And it is a crazy week for investors with about a third of the s p reporting. David welcome to bloomberg on this monday morning. Hong kong. Those demonstrations continue on the weekend over there. They had an accident. The police said please disperse after theyve done it for a while and they didnt and they came in the theyre gas. There were reports that you had protestors hurling bombs and brings and setting fires throughout those clashes as well. But the bill is suspended, right . David yeah. Alix the bill thats going to allow extradition to Mainland China suspended but its not killed killed. David or not withdrawn. Alix theres still that tension bubbling up. David and demand keeps escalating wanting the chief executive leave. I suspect that will be up to beijing. And there are reports about some attacks on the protesters in a shopping area that was also a train station and we dont know who those people were or who they came from. With surge cal masks on. Eurodollar weaker now. The dollar getting a little bit of strength. A touch of buying bond curve down by one basis points in terms of yield and crude only up 75 cents. I just want to point that out when you talk about experts topping iran, its incredible. I told you a lot about what people think about global growth. David thats not good news. Time for the morning brief focusing on the week ahead. Its a week full of earnings with nearly one third of the s p 500 reporting including tech giants amazon, alphabet and facebook. On tuesday, theresa mays success ler be announced. And on wednesday, Mueller Report testifies. And on thursday, the e. C. B. Issues its Rate Decision with expectations for a until of further easing. And then on friday, its the big one. Were going to meet the first read on u. S. G. D. P. Growth for the Second Quarter. Lets turn back now to iran. Iran that Randy Theresa may ese meets with her theresa may meets with her. What im concerned about is miscalculation, mistakes being made and the closer we get to operating against the iranians physically closer, theres more chance for mistake there. David joining us now on the telephone is richard nephew on Global Energy policy Senior Research scholar. And hes also the author of the art of sanction. Thank you for joining us those sanctions were sanctions with andy you were involve iran. What is the escalating danger of a real conflict in the area . I think there is a very real risk of conflict escalating. Weve got military issues, cargo, attacks on tanksers, weve got the threat of additional violence in iraq and we have a Nuclear Program that thats the iranians are starting to get going on again with the iranian decision in may to respond to u. S. Sanctions by expanding the amount of uniform as well as by increasing its level. So we essentially got both the Nuclear Crisis that is coming back as well as a reasonable security cry says thats coming on. Alix if you see uniform to round 5 , how quickly could we get up to that 20 and how we need to start thinking about this . The way to think about it is enrichment of uranium is ruchly 7 a of the amount of work that you need to put in to get it to weapons grade. So it takes a lot to get natural uranium on the ground up to 3. A to go from 3. 5 to about 20 adds another 10 of the total work. So if iran was a substantial stockpile of 20 rich uranium, they would be potentially only matter of a few months, two to three, three to four, depend on the amount before they could actually build a Nuclear Weapon and that is going to be a lot closer to the breakout line than reliance that we and the israelis have. David thats what im concerned about, richard, is those red lines on the United States say we do not tolerate them having a Nuclear Weapon and as you suggest, theyre going to get breakout not too far from now. Does that leave us any alternatives but some sort of military option . The fortunate thing is thats part of the ryan outstanding while theyre playing on the margins of expanding the youk program, they are going slow and this is out of sec in addition that they can provoke a conflict with the United States or israel. But youre right. That over time, those thresholds are going to be reduced and the risk of conflict will emerge because both we and the israelis have set pretty hard lines. The one question we do have is the United States going to hold to the same perspective it had during the bush and obama years which is there is a difference between enriched uranium to bomb and having to bomb itself. If this administration follows through with its rhetoric they might be setting a earlier red line in the risk of earlier conflict. Alix thats a great nuance there, richard. Whats the one thing that draws the u. S. And then iran to the negotiating table . What do each country need to get . Two things. One, they need to be both scared. And i think that there is some measure of that now, but certainly, there is a lot of bravado going on and a lot of chest thump going on now. We havent had that crisis moment where they both fear the future and they fear what could happen if sanctions dont work or the Nuclear Program wont stop and deter the United States from attacking. That fear elements there. And second, they need have trust. Trust that in agreement, will be honored. And thats the real problem frankly for the remainder of at least this term in the Trump Administration the iranians have no basis to believe that the United States to already stick to an agreement that theyve reached. Thats part of the reasons why real negotiation before 2021 will pretty unlikely. David im not sure if it was a happy report but a helpful report. Alix Oil Volatility is still a twoweek high. Joining us now is Michael Antonelli. Do you want to play hedge or something, Higher Oil Prices here . Michael first of all, i want to make two predictions here for the next five to 10 years about the future. Here you go. Number one, disney will continue to make amazing movies and number, two theres going to be tension necessary middle east. Im quite certain were going to be dealing with this kind of topic over the next five, 10 years. I remember multiple topics in my past about this. The market is really focused on earnings and the fed much more than tensions in iran right now. Alix sure. Obviously that would be true, however, do you need to have a different strategy or do you need to play an outside spike in some way just to hedge it . Michael when i look at Oil Last Week after the british tanker recede, it did nothing, which frankly advised me quite a bit. Its a pretty Significant Development in the middle east. So i would think if youre an oil or an energy investor, you could use some upsides. Some of these Energy Companies have really been struggling with the price of oil altogether. Do you need the hedges vobblet . Maybe. But this stuff doesnt last very ong. David the fact that the oil and s has not gone faster, in another world where we thought the was going to be global growth, you will see Oil Price Spike up on this news. Michael whats yeah, its lost soifments sensitivity. Its numbed with the of the cane of slower growth. Its saying more than what we think. And frankly, also, technological advances. Oil is struggling with a battle gainst alternative energy too. So youre right. Alix no kidding. Michael antonelli of bader, youll be sticking with us. It is a big week of earnings where about a third of the S P Companies will release numbers from tech to caterpillar to mcdonalds. More on that next. This is bloomberg. This is bloomberg daybreak. The Credit Rating company equifax agreeing to resolve investigations into a massive data breach the 2017 hack compromised some of the most Sensitive Information of more than 140 million people. Equifax will pay the bulk of the money to compensate consumers. They provide credit monitoring. Phillips reporting Second Quarter profit that beat estimates. The Dutch Company introduced new products to rekindle growth at its Consumer Health division. Phillips also upgraded its hospital equipment with mart smart technology. And a battle is brewing over a busted goldmansachs bond deal. Goldmansachs teamed up with two obscure brokerages and the controversial financier acted as one of the deals architects. Investors snapped up the 1. 2 billion in bonds that channeled proceeds to a cost of airlines linked to airways of the deal has gone bust. Creditors have hired private detectives to dig out details of how the deal came together. David . David goldmansachs, he has to get a little nervous. But i really wonder if its not a bubble but when you have that much money sloshing around, some people are going to do some pretty risky things to it. Alix totally. And that creates other systems in the market. Hire an investigator . Are there things still . David sure. Alix i thought they would have an investigating team. David its not just what went into the deal but can they go after anybody . Alix excellent point. David yeah, how can you get some of the money back . Trade talks between the United States and china could be back on the table soon. Over the weekend, Chinese Companies ask u. S. Exporters about buying Agricultural Products and apply for exemptions from chinas retaliatory tariffs on the goods. Today, u. S. Tech Companies Intel intel, qualcomm and goog will be meeting at the white house to discuss the presumption of some sales to huawei. Welcome now from washington, shawn donnan, our resident trade expert. You and i talked when i was in washington. You said these talks are not going anywhere soon. Are you changing your mind . No, theres two things we need to make a clear distinction here on the talks that were seeing right now and these goodwill gestures from the chinese side, from the u. S. Side, these discussions about a sale to huawei are all about setting the stage for the actual talks to get started again. So were still in that flirtation before the real dance if you want. David its a necessary condition in order to move forward. They got to get past this before they can even sit down to talk. Yeah, no, absolutely. So theyre going to get past this. Theres a lot of mistrust that crept into the relationship after the talks collapsed in may. Theyre trying to rebuild that trust. Butter what they havent dressed yet address yet is the real big chasm between the two sides on some pretty fundamental issues including what happened to u. S. Tariffs on chinese goods if you get a deal. And none of that has been worked out. Its going to take them some time to work out those big issues and thats where they got stuck last time. David and thats a big hurdle to go over but could there be some relief for some farmers in the United States . Could this be enough so they could relieve some of the hurt theyve been experiencing . Its unclear. We know that we reported over the weekend that chinese officials met with some of the big soybean buyers in china on friday. We know that theyre gearing up for sales but were also hearing that some of the numbers that theyre talking about in terms of purchases are far lower than they were before hand, before the talks broke down. Theres also just the realities of the markets. Theres been this african swine fever in china that has hit the port heard there. There are simply less pigs in china than they were six months ago. And that means they need less soybeans than they needed six months ago. David and is it clear the white house has full roads in the huawei . Theyve got republicans that are a little nervous about the National Security issues. Its not clear at all what theyve got. The white house is really trying to sell this as a resumption of les of nonsensitive technologies, things like chips for handsets rather than the big 5g or the big sensitive 5g networking routers where the big National Security concerns are. But theres a lot of people on capitol hill on both sides of the ill who really feel issue aisle who dont feel like the u. S. Should sign with huawei at all. David ok, shawn, thank you so much for joining us on the telephone. Alix and thats the backdrop that a lot of crows had to deal with as they enter their earning seasons this week. Goldmansachs saying that the s p is trading near its fair values but they do see limited upside after a climb this year. David cosa saying the return of equity is likely to be challenging although lower interest and tax rates may provide support. Negative revisions of the earnings forecast and policy uncertainty will limit that upside. With us is Michael Antonelli of baird. So how do you square that . When you have a fed that could be looser but then you have the trade policy and perhaps revisions lower for the Fourth Quarter in 2020 earnings season . Michael so lets set the stage right now. 16 of the company have reported and the earnings declined is about 2 . So fact set says that on aggregate, at the end of an earnings seasons, cubbies beat by 5 . But if things kept going on their current pace, Second Quarter earnings would actually grow. Weve got a third of the earnings in the s p. Well get close to near half of the Companies Reported by the end of this week, early next week. The only thing a market needs is muddle through. Muddle through has been the best theory so far. Muddle through on earnings growth. Let the feds be on our side and thats been enough. Were up 18 yeartodate. Thats a lot. We could see a pullback. So the upside might be capped a little bit but all we need is muddle through and were getting that right now. People look for this next level of growth that hasnt happened yet when all we really need is muddle through to continue. Alix goldmansachs had a report out that analyzed 4,000 calls and took a look at how they view words like global and lots of them are being used negatively now. David has a chart that shows a downward revision for earnings. So thats this to me does not seem muddled. This seems to me not great. Michael these are pretty far from the future that theyre predicting here. When it comes down to growth, 2 in the u. S. , between 2 and 3 has been sign for the stock market. That lets margins continue to be maintained. If there is a slowdown in that, thats somewhere the five. Thats what a recession might look like. The thing we really want to be worried about is a recession. That would be the decline in growth and the decline in the stock market but nothing really says recession in 2009. So 2019. So the future, thats still a question but for right now this quarterback and the quarter and the next quarter, were still optimistic here. David mike, i want to be clear about the 2 to 3 g. D. P. Growth is one thing. 2 to 3 growth in earnings is something quite different. What the stock market has been experiencing has been way outperforming. How is the market comes down to the lull of g. D. P. Growth . Michael we recovered most of the multiple expansion loss at the end of last year. Thats been the gains in the market this year. So yeah, we would like to see the ease start to take care of some of its heavy lifting here. If the economy starts to slow dramatically. Well see Second Quarter advance at the end of this week. If you see it approach one, stock market will tremble for a little bit but you got to remember there is somebody that casts a really long shadow and that is the u. S. Federal reserve. And having them on our side means a lot. So that is a big, big shadow that can kind of offset some of this growth concerns. David now you tell me. Its ail up to feds. I wish we talked to you earlier. [laughter] hes out this morning. Fed, get with me. Cut more. Its to worst performer on the s p in the past 12 months and it has lost about half of its value more on halliburtons outlook next year next on todays bottom line. Live from new york, this is bloomberg. David time for the bottom line. We look at three Companies Worth watching this morning. Im watching tmobile and sprint. Theres report from fox Business News over the weekend saying that the authorities are close to approving that deal which weve been waiting for including a spinoff that would create a third company. Sprint is up to 2 and as i checked the tmobile is up as well. Alix is it really going to happen this time . David if they sell enough stuff, yes. Alix selling a lot of stuff, unicredit is concerned with job cuts about 10,000 jobs and some of that will be in italy. The hope is cost cutting and organic sales and a lot of job cuts coming. Lets go for it. Its not as bad as Deutsche Bank. David the trick is to make sure you dont hurt the revenue as you cant help the cost. Not sure thats the standard if youre a c. E. O. Alix i agree. [laughter] david increase my bonus. Alix sure. David halliburton. Halliburton off to a pretty good morning. Up about 2 in the premarket. And if you want to point out the start, halliburton was the worst performer on the s p 500 over the past 12 months. So it was also a matter of things could not really get much worse you talk about setting a low bar with Deutsche Bank, the bar was pretty low at halliburton as well. They are beating expectations on Second Quarter adjusted earnings so far this morning. Revenue came in about in line. Echoing the comments we heard from schlumberger that International Growth will be good over the course of this year, up single digits. North america continuing to struggle but seeing more green on that front. It is going to be interesting once we get into the call to hear what their outlook is this year. Capital one pointing out that the earnings beat was driven by better margins. So that suggests that maybe theyre getting more Pricing Power or concessions werent quite as bad as feared. What is really interesting because the efficiencies for shale players are moving from drilling, not of fracking. So its moving from top hold to down hold and if they can get really rgins, that is good if it is sustainable. And so some of the argument is the Oil Services Providers have been consolidated and maybe thats helping out their Pricing Power. Theyve made efforts to cut down on spending and maybe they can keep cut with the pace. To be determined whether or not that holds. David but a shift from u. S. Shale to overseas. Is that right . Thats what its going because cost came down so much. Its now a lot cheaper to drill and say the gulf of mexico or other deep water areas tan it was like even five years ago. Its gone down so far. Like 30 a barrel or Something Like that. So you can do it now. David margin pressure on companies now. Alix deans on where you are, yes. Thank you very much for joining us, brooks. Big week for tech. All reporting earnings will break that all down especially microsoft. This is bloomberg. Alix this is bloomberg daybreak. I am alix steel. You come in and you want a boost in the equity market, what you do, you tweet about the fed. This is what President Trump did. S p futures at the highs of the session. The dax outperforming in your current in europe. Space definitely better than where we work. Then where we were. The cable rate off. 2 . Potentially a new government in the u. K. Tomorrow. The question of who will be in the cabinet is different. One resignation, two threatened resignations. And then you have oil up 1 . David the dispute is over whether we crash out without an agreement, which i thought was impossible. It has become a possibility. Lets make headlines with what is making headlines outside the Business World. Viviana another sign of the tension between iran and the west. Iran says it arrested 17 people accused of being part of the cia trained spy network. A number have been sentenced to death. The announcement coming three days after Iranian Forces seized a british tanker. The iranian government is meeting to figure out its next the British Government is meeting to figure out its next move. The indiad spacecraft is due to reach the moon in 48 days. A lunar rover will operate for at least two weeks on the surface. It will be looking for signs of water and helium. To china, where trading frenzy gripped the opening of the countrys nasdaq style Stock Exchange. The First Companies that make their debut rising average of 140 . Market is chinas attempt to avoid losing the next alibaba to exchanges in new york or hong kong. 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. Hurtado. Na this is bloomberg. David the star market is something. It is what happens with the government says we like those a lot. 140 average. 410 was the leading guy. It came off. Alix you have to wonder that if tech rolls over, and in the u. S. It has been hit or miss. It, you have asian markets and u. S. Markets make up so much of the tech names that what does it wind up meeting if the overall industry gets hit . Rolls over, doesnt it rollover equally in the west in china . They have alibaba and tencent. Part of the reason they are doing this is because they say you should be listing here. Alix similar in the u. S. You have the big names leave the indices higher. Is that a good thing for the future or will wind up hurting them . David increasingly concentrated big names. Alix we do have heavy hitters like facebook, amazon, alphabet, twitter all reporting. Still with this is Michael Antonelli of baird. James, is this a netflix thing or microsoft thing . Saw what happened with netflix and all of these stocks have run backup to where they were and in some cases higher. From a risk award standpoint you do have facebook on the Positive Side because there should not be any anomalies in the optionality. , we sawther hand, apple a big risks given the transition. In the middle, amazon and google. Google still has transparency issues lingering. Amazon, the growth rate should come under scrutiny because we have not unlocked the next day of ecommerce, which is aimed day, same hour. Knew netflix would be soft on subscribers and they have big competitors. Do you have that replicated in the other Big Companies . James from a valuation standpoint, netflix was standing on its own. It was 10 times revenue, which was absurd. At the same time, there were opportunities. The other ones were much fairer. Google and facebook 20 times earnings. Amazon threetime sales. Much more available from that standpoint. The metrics investors are scrutinizing, for facebook, the margin should be ok. Amazon, samestore sales could put pressure as well. Alix take a look at out performers. Is it facebook up 51 . Alphabet up 8 . How do you want to play it . Do you want to change the winners or look for say the googles to have been performed as well . Michael i think fang is a product of a different era. That is the product of a couple years ago. The new term is fam. Facebook amazon apple and microsoft. Faam represents 20 of the gains this year in the stock market. They are driving it. Microsoft did their part. There is a reason why people are hanging out in the stocks. They are great growth stories run by great leaders. It is a low Interest Rate environment and they will naturally be where people hide their money. At this point, these upcoming earnings are important because faam is what is driving the market. In termsomberg spoke of what you do with fang. ,e said facebook, amazon microsoft, apple, and google. Heres what he had to say. If you count up the roster of companies, the faang stocks plus apple plus microsoft. Their aggregate market value exceeds every stock market in the world except japan and the u. S. That is strange. That surmises these companies will be world straddling superpowers in their industries for the foreseeable future and will grow rapidly for the foreseeable future. James what is the truth in that . It does not matter what happens but they will keep growing alix what is the truth in that . It does not matter what happens but they will keep growing . Michael we have the of james we have the ability to keep up with china which is something we have to keep in mind. All of these companies have potential. ,f you are a handicap them amazon has the greatest potential for longevity. The markets are so outside the other companies that there could be emerging technologies that want to take it manage of that. David im curious about including microsoft in what you are looking at. There is one important difference. It is a Cloud Business increasingly. Amazon is the one that has both. Microsoft does that make it different in terms of future growth . Michael it absolutely does. It is well run. The ceo has done a tremendous job. We know the cloud is an evergrowing segment of the market and an evergrowing segment in business. Microsoft is here to stay. They have missed the mobile revolution but they are not missing cloud. The fact that i think they belong in faam and the market is rewarding them. These four stocks had 20 of the gains. The market is rewarding china Tech Companies because they are great stories. These are real companies. David they are great stories. James and michael, thank you both for being with us. Singapores Sovereign Wealth Fund expands its u. S. Holders its u. S. Holdings. We will speak about how trade issues may affect foreign portfolios. This is bloomberg. Viviana im Viviana Hurtado in the hewlettpackard enterprise greenroom. Coming up later today, jason furman. Here is your Bloomberg Business flash. State media in china hitting facetoface trade talks with the u. S. Could happen soon. Over the weekend, a number of goodwill gestures by beijing. Chinese companies asking you is exporters about buying farm products. They also apply for exemptions from chinas retaliatory tariffs. At bridgewaternd associates posting one of its worst performances in two decades. According to the Financial Times , the alpha fund lost 4. 9 . The fund bet on economic macro trends. It has now paired some of its losses. There is a new alltime champion at the box office. Avengers end game has taken in 2. 7 billion worldwide. That knocks off avatar, which was released a decade ago. Avengers is the concluding chapter in the marvel superhero saga from disney. ,avid time for all of the lead a deep dive into the stories making headlines and moving markets with insights from industry veterans and insiders. Today we are looking at private equity as seen through the eyes of Major International fun. Major international fund. We welcome john vaske, the north american head, along with sonali basak. Thank you for being here. Lets talk about the u. S. First. You do all of the americas. Lets start with the u. S. As you look for investments, what sort of things are you looking for. Is it private companies, public companies, what are you looking for . John a little bit of everything you described. We are primarily in equity investor. The u. S. Is less geography weve expanded into. New york in 2014 and San Francisco in 2017. We are chasing trends across the assets, sustainable investing, smarter systems. A connected world. When we talk about the things we wanted to put capital against him you almost have to be in america. By way of mandate, we can do public investing, private investing. Most of what we have done is been direct private investing. Mater said thelma s p upside is cap. What you feel about valuations . John valuations are robust across the sectors. We are underrepresented in certain sectors and trying to balance out that part of our portfolio has been more challenging. We are realistically expecting in a low growth, low rate environment that some generating equity returns is going to be more challenging. We have to be more disciplined. Alix what is your favorite opportunity right now . John right now we are biased toward direct investing, some of the earlier stage things. Those are situations we can see something disruptive to an existing part of our portfolio, and operation to get in early and put capital alongside those. It is all of those Technology Enabled things that i described a moment ago. Sonali airbnb being one of those situations, jordache another one. How faster these companies coming to exit . We have seen a lot of the companys wedding a long time before they go public. Do you think that will speed up . John i do not know if it will speed up. We are not making a call on that, nor do we haves nor do we have to. One of the beauties of my job as we continue to invest in a private context, and if the Company Goes Public we can continue to play that opportunity. Sonali does that mean you are more time in San Francisco . John we have a very capable team there. Im spending some time but we have a capable office and theres a lot to do on this coast. Explain your overall approach to private investment in earlystage companies. When we read about venture capital, it is anecdotal. Put down a lot of bets. We do not know which ones will pay off. Is that your approach . I would say it is little bit more sophisticated. We are looking for attractive markets, not all of them will pan out. What you say is true. We go into it with eyes wide open and we hope most, if not all work. There will be a few that dont. The lessons we can learn along the way as to why it worked we find quite useful. Sonali jordache is one of the companies that have softbank involved. His softbank driving up valuations in the valley . John this is a question i get asked often. A lot of capital in some of the same things. Softbank being one. I do not think it changes the way we think about things. Someone who is an investor across all geographies, we can go to where the opportunity is. We do not have goals and targets by which it has to be a certain percentage by being certain. Alix what is your timeframe . How long are you invested in some kind of asset . John we do not have fixed duration, which gives this advantages when talking to companies that are looking for capital. I would say we are also typically someone elses partner. We are a minority investor by nature. We are somewhat dependent on other peoples time frames. If there is a situation where we can buyout an existing partner or keep the capital deployed, well reunderwrite. We try to have the same discipline traditional private end wehas, but at the keep investing. Sonali there is a headline that Chinese Investment in the u. S. Dropped 90 . How is that changing the way you invest . You thee changes in how u. S. . John no. It has created opportunities in terms of competition, but i expect that to be a temporary thing. We need to stick to our discipline. You invest not just in the United States, but also the americas. Lets talk about emerging markets in latin america. There is a reported in bloomberg that indexes stability and growth. Mexico and brazil both over indexed nicely along with russian and argentina. Alix you want to explain this to me. What does it say . David bond yields and stability and how much they fluctuate. They have done a regression analysis to see which are the most favorable. If youre above that line, it is good thing. Below the line, it is a bad thing. , and argentina are slightly above the line. What is your experience looking at those countries . Mexico, brazil, argentina. We have outfits in brazil and mexico city. There are changes in all three, potentially. For us, we have been there longer. The markets look like a lot of other parts of the world we are investing in. We have good teams on the ground. That is what is required to be successful. Things like currency movements play a bigger part in that investment. That is the only thing we have to be mindful of. Sonali private equity is moving strongly into em in search of returns. You work closely with them. How are they playing these markets, especially in latin america . John selectively. History is mixed on the part of different capital investors. We are playing along the same things the same themes. Themes consistent around the globe are present in those markets. Alix talk about private equity in the u. S. Gunning forrren is private equity. I believe it is called the stop wall street looting act. There is a bill that says private equity would have to take on the debt of the takeout firms. Whether or not it gets passed, that is in the line of fire. How do you deal with that . John for the most part we are direct investors. Our association with private equity, which we are quite proud of, is to invest alongside them and get coInvestment Opportunities. We have some limited capital invested in those gdps. As an investor, we look at those headlines and say is that going to become a reality, and that becomes reality we will reevaluate those investments. Those are important relationships as we extend our network and a source of interesting coinvestment opportunity. We have to be humble about the number of people we have chase opportunities. Insight from other people we trust and have a long relationship with is important. Alix we do have a question from a viewer. It says it seems like pe investing has been more prevalent in nontraditional institutions. Our i do not think discipline has changed in terms of allocation. We want to grow the u. S. Business, not as a portfolio matter, but simply because the opportunity is robust. Cannot be more present here would be a mistake as an investor. Sonali there is Competition Among Family Offices. Are you finding it is cheaper to invest alongside a Family Office . Ohn i would not say cheaper i have this debate with my colleagues about the amount of capital in different forms, but all investing in the private markets. That as to think of opportunities for coinvestment and opportunities for insight. Those i try to redefine the dialogue with every one of those providers, whether it is private equity firms or other sovereigns. As to the Investment Opportunities for a partnership. Alix great to get your perspective. Bloombergs sonali basak and john vaske. Thank you so much. The fed rate cut debate. Our guest joins us with his fed call change. Tune in to Bloomberg Radio across the u. S. On sirius xm channel 119 on the Bloomberg Business app. This is bloomberg. Alix this is bloomberg daybreak. I am alix steel. Here is what i am watching global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more alix countries. Here is what i am watching. You first changed or call of 50 basis point cut after you heard mr. Williams speak. Then you had to change it back to a 25 basis point cut. Was it like to forecast rates . Ebrahim that is very good question. It is great to be on. These are very interesting times. It tells us how sensitive markets and we are. In general, i think the fed has become unpredictable in the sense they have shown their dovish colors and told us they want to make sure they can sustain the expansion. We have believed we will see about 50 basis points of cuts from the fed by september, but last week we had this peculiar episode where we thought williams and rich clarida were messaging to us that they were willing to frontload to 50 basis points in july. That was walked back to some degree, so we walked it back. And the greater scheme of things, it does not change that much. We are still less than a dovish fed. David doesnt it change any react to the next speech . In some ways it is like the boy who cried wolf. Ebrahim it does make interpretation of some of the fed rhetoric more difficult. Whether they misinterpreted how markets received the messaging or if there was some pushback. It does tell us there was a divergence of views among the core of the fed, which we thought was driving the bus, and some of the others. What we are likely to see in july is some sort of measure to broaden the consensus. Alix you have a consensus that all will see a weaker dollar because of that. Can you walk us through your calls . The fed isnsistently one factor that affects where the dollar goes. Theres a consistency and the first fed cup, the dollar tends to be week. We are still constructive on the dollar but tactically bearish and the first cut is the right place to be. The dollar is not our favorite currency in g10 either. Alix thank you so much. Great to get your perspective. That wraps it up for us. Coming up, lori calvasina, Rbc Capital Markets head of u. S. Strategy. This is bloomberg. 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The countdown to the open starts right now. Jonathan coming up, the fed going quiet between now and months in d. The president keeping the and months end. The president keeping the pressure on. China looking to boost buying of Agricultural Products. Looking ahead to a big week. More than a quarter of the s p 500 reporting results. Lets get you monday morning price action. Futures positive. 33 , up eight points on the s p 500. On the bond market, treasury yields lower to 2. 03 . The euro unchanged. Eurodollar 1. 1218. Lets begin with breaking news. Here is abigail doolittle. Abigial breaking news on occidental. Billionaire investor carl i hnnt has slammed carl ica has slam