Moving news from all around the world from frankfurt, to london, taiwan, our bloomberg two iowa, our bloomberg voices are on the ground. Commodities leading the charge for the quarter. Here for more is bloombergs sonali basak. Income net interest coming in above analyst expectations is a great thing for bank of america because it shows the bank is doing what a bank should do. That is loan growing, deposits growing. Investment banking mergers and acquisition fell short than expectations, but we are seeing that across the board. We want to see confidence among corporate clients now that we know consumers are holding steady. Alix what were some of the worries through the quarter . Sonali the expenses were up, but bank of america was a costcutting story. Something we are hearing from all of the banks is the propensity to keep investing because the cycle is getting competitive at this moment. Alix thank you very much. Now i want to go to the latest on trade. President trump is ready to sign a trade deal with china that leaves tariffs in place until novembers president ial election. Steven mnuchin denies reports the u. S. Would only consider more tariff relief of china signs of phase does go deal. Deal. Of phase two consideresident will releasing tariffs as part of phase two. If not, that will not be any tariff relief. It has nothing to do with the election. Donnan,ining me a shawn bloomberg trade reporter. The traden we get report, what are the details you will be digging into . Shawn we will be looking at any intellectual property agreements. That is the key in terms of Structural Reforms and why the Trump Administration says it launched this in the first place. To try to stop chinese theft of intellectual property. We need to see exactly what the chinese have committed to and how that matches up with things they have done already. We need to remember that the chinese have said they do not steal American Intellectual property. At the same time, u. S. Companies in the u. S. Government have mounted a number of cases as a problem in china. That is a key element to look at. One of the things were not going to see in these 86 pages is any real detail on the purchase commitment. The chinese are said to have agreed to 200 billion in additional purchases over the next two years. Secretary mnuchin and Robert Lighthizer yesterday made the point again that the details of those commitments are contained in a secret annex. It is secret because they do not want the market playing games with the commodities involved. The next thing we are looking for today is when does phase two start . That is, as Steven Mnuchin said last night, a key point for anyone who wants to see tariffs reduced. It is also a key point because there are big elements that are not included in phase one, such as china subsidies review. Alix thanks to bloombergs shawn donnan. And stay with bloomberg this morning. We will have coverage of the signing ceremony. That is expected at 11 30 a. M. In washington. I want to go to europe, where germanys economy eat out a slight recovery. Eked out a slight recovery. For more from frankfurt is the Bloomberg Economy reporter. Give me more of the details. Slowed toman economy its weakest pace in six years last year. There is a silver lining. The economy recovered slightly in the Fourth Quarter. Obviously there is no doubt the German Economy had a horrific year last year. It is heavily dependent on exports, especially manufacturing, especially cars. That is where it got hit hardest. Obviously the trade war had a big impact on the economy. Also the switch to electric cars. It is all having a massive impact on the manufacturing base. Slightlyave grown only. On the other hand, we are still seeing robust demand domestically. Both private and government consumption has grown. We are also seeing construction growing. It all speaks about the domestic economy still going strong. Means weid that, that are not in a crisis as such. That also means the German Government is not going to feel stronger pressure. Obviously, if it had to, it still has a lot of firepower because germany had the sixth year of Budget Surplus last year. There is a lot of money to spend. Alix great points. Thank you. Now we had to london where u. K. Inflation data unexpectedly slowed. That cleared the path for a potential bank of england Interest Rate cuts. Joining me with more is david goodman, bloomberg boe and u. K. Economy reporter. What about the dovish bias . David i would say we have seen developments in the last 24 hours. Inflation came in at 1. 3 , one below analyst forecast, and also well below the boe 2 target. That reinforces we may get an Interest Rate cut at the boe as soon as the end of this month. Pricing and almost 60 chance of that happening. Just today we heard from the boe who is leading the charge for lower rates at the boe and he now the bank needs stimulus to cut off the risk of there being consistently low inflation. Mark carney and others have had the same idea that there could be a rate cut. Alix thank you to bloombergs david goodman. Target shares are falling premarket after posting holiday sales below its own expectations. It also slashed its fourthquarter sales outlook. Joining me on the phone is Brooke Sutherland. Not a good day. What do we know . Brooke not a good day at all and a surprise because target has been one of the few retailers putting up a string of successes when it comes up to sales results. This does raise a lot of questions. We got disappointment from a lot of the department stores. The thinking has been the share has gone to Companies Like target. For target to be posting such weak Sales Numbers raises the question of how strong the consumer was. They called out specific weakness in electronics, toys, and also key parts of homes. It is unclear tariffs may have played a role, or weaker than expected traffic. On the bright side, they did sell more of highermargin products than they were expecting. That did allow them to maintain their earnings back for the Fourth Quarter. I do not think they are looking on the bright side, with shares of target down more than 7 . Birds alix room bloombergs Brooke Sutherland joining us. We end on u. S. Politics. The Democratic Candidates argued for reduced u. S. Role in the middle east. It was the tension between Elizabeth Warren and Bernie Sanders who clashed over whether a woman could with the white house. Can a woman beat donald trump . The man on this stage have collectively lost 10 elections. The only people on this day to have one every single election they have been in are the women. Amy and me. Alix joining me on the phone is tyler pager, Bloomberg National political reporter. A drop the mic moment. What was your other takeaway . Tyler that moment between Elizabeth Warren and bernie it did not move the dynamic of the race in iowa. Itsults of the caucus steered her momentum and cheapen the barrier heading into the primary calendar. It is still a junkball between itp candidates in iowa was not as hotly contested or divisive on the debate stage as many were anticipating, giving way to this four way tie where multiple candidates could wind up winning the caucus on february 3. Alix bloombergs tyler page. Thank you. One more story i am watching. Look at how about look at how bad the air is over melbourne, australia. Imagine playing tennis. The matches were suspended over these conditions. One player had to quit her match. Some say the tournament should be put off until the air gets better. The Prime Ministers commenting money will not be a concern when it comes to recovery from the fire. We will use as much as it takes. I have said we will make the payments when we need to make the payments. This is a necessary level of support for families. Alix economists estimate the wildfires could cut australian gdp growth by as much as half a percent. Coming up, we have more on your morning trade analysis and all the news you need in the days first take. This is bloomberg. Alix time for bloomberg first take. We will give you all the news to get the trade analysis. Cignarellais vincent and gina martin adams, Bloomberg Intelligence chief equity strategist. Also sarah hunt, alpine woods portfolio manager. I feel like the odds are stacked against us. Markets are not moving, there is news but no real news. What you care about . Vincent we are supposed to be looking for the details of the trait but from what i understand we will not get as many details as we would like. A lot of it is going to be not what the markets are looking to see. It will not be as transparent as we had hoped. The end result is we will still need phase two. The trade deal needs to be enforced. We will wait to see if china will do what they say they will do. Then we will have the enforcement mechanism. And go forward to where this becomes an issue again before the election. We increase tariffs on china where we say we are not holding up their trade. I do not think we accomplished a lot. We just put everything on the back burner. The wait word. S the stage we are moving into his yes we will have an arrangement. What does that mean for Economic GrowthGoing Forward, and what does that mean for Business InvestmentGoing Forward . The onus is on the industrials companies and the Tech Companies to tell us, does this have a meaningful impact on your forward outlook . Are you now going to spend money. Vincent i do not see how they will do that. There is no impetus for them to do that because they do not have answers. If im sitting in the ceo chair, there is no big plans for expansion. What i am going to look to do is the supply chain. Gina unless you raise chickens. Pork, cows, that is kind of it. Sarah, what do you think . I sarah i absolutely agree. Once you take we are not getting a deal off the table, you have to see what that turns into. The supply chain was shifting and it is going to shift anyway. In terms of investment it is not like we have unleashed a wind of it. What you may have is i will put something here and definitely put something there. The s p is looking for growth in earnings and i am thinking where is it coming from . It is not like any economies are doing much better this year than last year. It will be interesting how we get through this year and i think earnings season will be important. Vincent we like to talk about Industry Holding back, but what ive seen in the last six months is the Consumer Holding back. Salest auto sales, retail , target today is a huge number. This is generally a time when the consumer takes a hold of their finances anyway. We spent all of the money over the holidays. Hopefully the tax return will bail me out. Between january and april 15 theres is not a huge amount of Consumer Spending. We have not seen it when we expected to see it. Sarah when you have seen some of the loans go out for long periods of time you have to believe some of that is brought forward and there is some payback for that. All of a sudden you were taking loans out, five years, six years, much longer than we used to. At some point that has to slow down on its own. Alix we say earnings will matter at some point but then we get bank of america, super solid numbers and you wind up having equities go nowhere. I wonder how much is it that the fundamentals dont matter or are we worried whatever good news we get in the Fourth Quarter will not sustain . Gina it is a combination of both. The quiddity is a huge part of the market story that we do not talk about enough liquidity is a huge part of the market story that we do not talk about enough. As long as the fed is continually reinflating the Balance Sheet that will support equities to a great degree. You do have to provide some degree of Economic Growth and Earnings Growth. That is what the Fourth Quarter season will be about. With respect to bank of america, i would say it is one company, it is financials, that is not the entire index. When we look at the earnings season, it is all about tech. It is not about the consumer companies. We have already started to price out expectations of better consumer growth. Where we are starting to price into better growth forecast is in the tech sector and the industrial space and the beaten down Earnings Group of last year should recover this year. That is where you should watch for Market Reaction and brought implications. Sarah some of the places we are looking for Earnings Growth are exactly those places. Metals and mining, oils and gas, the companies that have problems with lower commodity price. On the metal side on the energy side it is not that much better. Are we just lowering your spending and cutting our cost . Is that the kind of Earnings Growth that is supposed to drive further gains . Something like bank of america, you better keep running the hamster wheel because all of the stocks have had nice moves. Alix hamster wheel. [laughter] vincent the fed provides liquidity for 2019, and you can argue that is what is driving equity. I do not think that can drive equity prices for the next year or 10 years. If the credit does not flow down to the consumer level, equities would inflate initially on a fed cut or a fed ease, but at some point, back to your chickens coming home to roost, if it does not reach the consumer and the consumer does not spend, equities do not hold up. The chickens are an unrelated story. Legsder how much frog taste like french fries. The binaries of culinary taste on the break. I want to bring up this chart, which is the boe cot. This is the boe cut. There is 100 basis points the market is looking for for Global Central Bank cuts. The liquidity is there. Will that be enough if we do not get another rate cut from the fed . Vincent traders are not pricing in the bank of england doing anything soon. Cable is at 130. This is a sixmonth position. Perhaps brought forward if things deteriorate further. I think that is a real possibility for the u. K. Economy to deteriorate further, but it is not front and center. Gina i think with respect to the u. K. , the boe has to cut because we have to see the pound deteriorate relative to the dollar for u. K. Stocks to work. If you look a year ago, the pound has gone nowhere. There was a lot of action in the interim. The fact that the pound has been appreciating on supposed to deteriorating brexit risks over the course of the last few months has held back u. K. Equities relative to u. S. Equities. This has been the case for most global developed markets across the world. They tend to trade closely with their currencies relative to the dollar. We need to see other Central Banks follow in the footsteps of the fed and appreciate their currency in order to see greater participation from other developed markets in the Global Equity landscape. Alix we have to leave it there. Gina martin adams and vincent cignarella, thank you very much. Sarah hunt is sticking with me. You like chicken feet and frogs legs . Sarah i like frogs legs. I will not see anything i will not say anything about chicken feet. Lix check out gtv browse the features and charts. This is bloomberg. Alix Goldman Sachs out with their earnings. Earnings coming in for the Fourth Quarter at 4. 69. If we look at what we were expecting, it was six . 04. The estimate was 4. 49. It looks like a solid miss from goldman on the earnings front. Fixed trading and sales up 63 year on year. That came in at 1. 77 billion. A big jump from last year. We also were looking at the equity sales in trading revenue, also up 12 year on year, coming in 1 billion. 1. 7 billion for equities, both of them up double digits year on year. The trading revenue is a similar story. 3. 14 billion, up 33 . Investment banking revenue down 6 , coming in at 2 billion. The Investment Banking revenue numbers now adding loans to corporate clients. That is down 5. 9 year on year. That stopped down 1. 4 in premarket. The earnings numbers, that is an unpleasant miss. Williams with us and also sarah hunt of alpine woods. I have not seen it yet, but all the trends i see look good. As you said, Investment Banking was down, but the biggest is m a. They are in significantly more than the next closest competitor. M a as a business had lower fees this quarter. Fixed. , a big jump in very strong equities. Keep in mind goldman change the reporting, so you cannot look at the line by line. Overall you can still look at revenue. The way they report has changed enough that if you compare it to estimates, i would look to the theat they were able thick line is up 83 versus one year ago. That is similar to goldman. We had a week year ago quarter, but we are also seeing strength doubling down. Alix where is all the strength coming from and kennett last or is that trading activity a one last orthing can it is that trading activity a one quarter thing . Higher primary activity translates to good secondary activity. That has been a strong story all year. That is one area where we think there could be less of a tailwind. Our credit strategist has said that he expects u. S. Issuance to be lower next year. We have a lot of strength in the Fourth Quarter. That is part of it. , anotherest rate story thing that jp morgan cited, we are comparing to a year ago, you cannot read much into the 83 . I think the beats are because issuers came out stronger, and with Interest Rates and what has been going on with the fed, i think there is been opportunity for some of the u. S. Banks. We will see what happens. Alix cinelli bostick of bloomberg also joining us. Basak of bloomberg also joining us. Sonali the eps also fell well short of expectations. This is a tough quarter for comparisons because of the way they are reporting their earnings different light. Alix hang tight on this. You are saying you mightve found the number on litigation . Allison litigation provision looks like it one of been looks like it mightve been about 1 billion. Estimates from our legal analyst elliott stein, we should be close. This is the majority accrual. More to comeali is a big question here. We have already seen what their settlements might look like with the doj, with malaysia. It has been coming up short of expectations, so now we are looking for repercussions at the federal reserve. There could be volatility into the year but we will want them to explain some of these performance segments. It looks like Wealth Management was down. That is the big shiny star in the consumer and wealth division. Alix as an investor, when you , are you likeer glass is halffull or halfempty . Sarah if you look at what was going on last year and we were worried about the inversion of the yield curve, the fact that we got a steeper one is good news. The Fourth Quarter last year was so bad because the market was in such dire shape. Comparable quarters is not the issues. If people feel like they have a handle for goldman, they will say now i know what this the fact Investment Banking was down and c. N. I. Loans coming in is an economy issue. Judy baar topinka the banks arent so expensive and not a bad place. I want to put color in the Investment Banking revenues. Debt operating another 37 . En though Financial Advisors was down 29 , goldman ended the year last year with 30 of the Global Market share in global deals. So the color they can give is the progress theyre making in the steady banking businesses in the middle market. Their Investment Banking franchise abroad and whether these advisory and underwriting numbers will hold up. One thing i want to clarify, overall, six is up 53 and i think the results are a little more comparable now. One of the issues looking at their numbers versus competitors in the past is they have the financing piece in their investment lending and competitors really just focused more competitors combine those and its more of a comparable number and up 63 , pretty strong results on the vix. Alix do we know where markets are housed in this and where that arm is and what we know . To that consumer end wealth business were talking about well want to hear how that will shape up over time. A lot of these efforts are new. David solomon was on linkedin talking about this big marcus rollout which came out with a lot less fanfare than the apple cart had. But with this said it has the opportunity to be a massive digital save for the bank. Lets see what the projections are like that which we wont hear about potentially until the end of january at their investor day. Alix do you like this, sarah . The bigger banks have been taking share. There was an interesting segment you had on a couple days ago and finally the bigger banks are more profitable and doing all the things that scale was supposed to afford them. I think youll probably see more consolidation on the smaller end so i think theres possibility there on the m a side but these are companies learning to live on a narrower band on Interest Rates than they used to and theyre moving on to fee income and other types of income have become more sustainable businesses not as net dependent on interest margin the way they used to be. If were thinking about longer term rates on the whole term structure that will be important for the businesses Going Forward. Alix if youre looking at a steeper yield curve, and i know you cant talk about steep yield curves in europe because theyre already a negative but relatively would you have more upside than european banks if you had the bund yield at 18 basis points instead . I think thats a really good point because theres also a discussion now draghi is not head of the e. C. B. Theyll change that because banks are complaining but theyre in a tougher spot than the u. S. Banks are. I wanted to point out another interesting part of goldmans new reporting line now, they really highlight here some of the gains theyve made in their Equity Investments. Remember, that was a little volatile last quarter but its a nice jump this quarter and theyre starting to try to provide more clarity into the private Equity Investments and the Merchant Bank will be a big aspect of their investor day ahead and the turnaround here is a nice story not to mention they had real successes after the Quarter Ended and were investor in plaid and we had a report they only had a 70 million initial investment cashing out at 600 million and well want more color around that Merchant Bank. Alix is it more nervous or how much more risk do we have a read theyre taking on . Could be volatile but in that Merchant Bank, its a very big diversified business. They do have equities but a lot of debt exposure, infrastructure, so its pretty broadbased and so that might even that out a little bit. I would point out these investments have been made over the very long term and i think if you look sort of over that long term theyve really diversified that portfolio out over time. The investing and lending segment we just discussed used to really just be equities and over time it was more of a mix of private equities, public equities and lending and as the lending pieces have gotten bigger, theyre divvying that up and putting the loans where they belong and Equity Investments as i pointed out in their Asset Management, and doubling year over year is what youd expect seeing record prices and can be volatile but they already have wins in the first quarter. The other thing ill point to is the Investment Banking background signaling we can get more strength in that business in the first quarter. Something interesting here as well is that theyre going to be raising more money from that business, also, and its going to end up being a bigger and bigger part of their business. The trading revenue is 36 of their overall business. Goldman has a big share of their trading revenue that a lot of these other things can tend to stabilize the business overall. The investment stocks tend to lag the consumer businesses last year and theres a great hope by bringing in these new businesses goldman overall will be this bigger, more stable ship moving forward. And i think well hear more about that at investor day in terms of they have this expertise and theyll run a leverage on expertise to raise outside capital as we look broadly across the Asset Management business, theres one area that that investors are pouring money to and thats private capital. To the sense goldman can make a case to their investors, they look at the track record and what thief done for ourselves, bringing in client money and doing that for the clients could be a Good Business for them. We saw management on the other fees rise and black rock earnings was out as well and assets rising and people forget how big of an Asset Management division goldman has as well rivaling black rock. Its wild. Theres a lot of zero fee compression in the Asset Management businesses and this private equity, part of that business allows all those banks to keep the fees up. The other point is that goldman is a very strong fixed income manager and we really saw strength in bond close throughout the year and acceleration in 4q and havent gone over the black rock numbers, over 7 trillion and bond sides on the passive side is where theyre benefiting. Goldman, their flows are a bit flat and well want to look at the mix but given the fact they are a big fixed income manager may be benefiting from that. Alix what i find interesting, theyre talking about the Equity Investment and how theyre managing it and taking on risk and brings us to the question of liquidity and its a liquidity driven rally, one, doesnt matter what the eco is, and the other is youll have some kind of push. Maybe the markets are more hawkish because the fed will always be that . Ive been thinking the last couple years you cant just keep driving the market on what the fed is doing and Everything Else. In fact you can, youve done it since define and every time i think there will be a event this wont work, a drop in earnings or something going on in the economics, it doesnt matter because it is something everyone rushes to buy. At some point do you think the train will stop moving so quickly . I think so they have to eventually. But whats going on in the reapo market is something people ares grabbing to understand and a huge amount of liquidity since the beginning of the year and now supposed to drop off. Alix 5 billion. So far it hasnt happened and well see how it goes but theres been the same problem Interest Rates are low and negative across europe and you have to put money somewhere. Theres also money that has to go somewhere. I dont know what the answer is but tend to think without an eventual backdrop where things are doing fairly well you have to see a correction in equities and some of these investments that dont work so well. But some of these valuations remind me of valuations in areas that didnt work out quite so well ago. Alix then you compare it to bonds and its a different story. Final thoughts on goldman. Whats your biggest question on the call . I love this one. This is one for wall street, significantly higher com pen station in benefit expenses. Goldman is following jp morgan and investing in people. Everyone was worried about bonuses being lower across the board and im sure in a lot of places they will be but goldman a investing in talent. Alix its tech, though, not the head of m a. Theyre hiring competitively in the middle market which is not something you see bankers being a bit up. On my final takeaway, one of the things we wanted to see is goldman holding their own. Within the trading and banking businesses and the numbers show they are. Alix great analysis, guys. Thanks a lot. Sarah of alpine woods and these guys could go on for hours. Youll be sticking with me. I want a quick check on the broader markets. We have goldman coming out that stock now is up. 1 and was a miss on earnings and a lot of that is litigation cost but in terms of Investment Banking revenue for the most part, and revenue up 60 and none of it is having an impact on the market and neither is target. Switching the board, the weakest growth in germany in six years. And youre not seeing a lot of movement. Where you are seeing money go into is the bond market and here on the long end in the u. S. And mostly over on europe you saw the italians third year option was up nicely and the 10year yield is down by four basis points. We want to give you an update on whats making headlines outside the Business World and heres viviana. Vinay viviana a beautiful monster of a trade deal is how President Trump is describing the agreement with china. For the first time china could be punished on violations of currency, intellectual property and the trade balance. U. S. Tariffs on almost 2 3 of chinese imports where theyll stay in place until the election. If the two countries sign a more extensive deal, more tariff relief would be cored. The house voted to send impeachment argument against President Trump to the senate that would lead to a trial expected to start early next week. The president has yet to settle on his Defense Strategy and the lawyers that will represent him. The majority of Republican Senate was almost certain to acquit him. And President Trumps former National Security advisor, Michael Flynn now wants to withdraw his guilty pleas. Two weeks before hes sentenced in the russian inquiries. He was charged with lying to investigators. He said prosecutors acted in bad faith. After pleading built more than two years ago, mr. Flynn cooperated with authorities. Global news 24 hours away. Powered by more than 2,700 journalists and analysts in more than 120 countries. Im viviana. This is bloomberg. Alix the opec monthly report is out. I want to give you the highlights. Youre not seeing crude move that much. Overall opec lifted the Oil Demand Growth estimate by this year by 140,000 barrel of oil these days. Weve seen agencies file down their bond growth but this is a positive, growing from rivals but beyond u. S. Shale, the companies are producing and will be the rival of the saudis and thats shifting to brazil and gianna and will become the competitor to opec and revised the total up as a supply from their rivals at 180,000 barrel as day to 2. 35 million which is how does opec get out of their production cutting agreement and when do people start cheating if the the guys taking their oil share. And coming up next, Morgan Stanley promotes the fewest managing directors since 2002. More on how wall street is keeping its links. Catch tvgo and if you missed something you can scroll through and check it out. This is bloomberg. Viffaun aa viviana we begin with investors, they once cheered on alcoas Restructuring Plan and now theyre looking for results of the biggest u. S. Aluminum producer has been cutting cost of noncore assets and wall street will see what it means for the bottom line. Alcoa reports earnings after the bell. In u. K. , amazon providing a lifeline for delivery startup. Bloomberg has learned deliveru ran the risk of running low on capital and no word how big the loan is. The british regulators ok the deal that could be converted to equity. Eternal email for boeing employees could prove expense sniff court and could strengthen the case for families suing boeing over the two fatal crashes of the 737 max. At one point the email lawsuits claiming boeing compromised safety to sell jets. All that could pressure the company to settling the suit. Im Viviana Hurtado and thats your Bloomberg Business flash. Alix we turn to wall street b and what theyre buzzing about. Black rock total assets hit record highs again, the Worlds Largest asset manager saw them rise to 7. 43 trillion in the Fourth Quarter and Morgan Stanleys elite ranks the bank promoted 130 executives to managing director making it the smallest wave of proceed mopingses to the firms top rank since 2002. Jp morgan seeks control of a china fund. Jp morgan looking into getting fullonership of the Fund Management to a joint venture in china. Lets kick it off with black rock. We kissed on it in the last segment. What have you learned from earnings . With assets rising to that much of a record, the big question moving forward is what happens when the markets get choppier . Last year we had a good run in s p and a lot of the black rock assets are equity products and they saw pretty great flow this is quarter into both fixed income and equity products. A question i think people will look forward to is how are they doing in some of their other initiatives like private markets. That is something thats an opportunity for black rock but not a proven bet yet. Alix it dovetails to yesterday in the annual letter of sustainability and black rock at the end of the day cant be superactive and make a ton of changes but if youre an investorened call up and say we have these funds and wont mention straight up the S P Index Fund but with Asset Management can make a difference. The eyes are on larry fink because when youre managing that many in assets and control that much of a market, remember the former business week cover with an article inside, its a concentration risk between black rock and garden state street. If youre owning that much of corporate america, how do you use that power when so many investors want more from you than just turning around good results. Alix or less and dont want you to mess it up. I agree. Good writeup actually. Lets go to the second story, Morgan Stanley promoting few people. What do you make of it . One, its interesting Morgan Stanley and goldman are keeping their ranks as elite as humanly possible. Thats the goal to get there one day. As they do this, how do they retain talent . Because if youre making it harder for people to get to the very, very top, you already have a situation where a lot of the younger people, also, have been turning over at a high rate and people have been moving to hedge funds and technology so how then do they rise up to the very head levels. Oich on the flip side if you go he alix on the flip side if you go back to where everyone was promoted at the same time and no exclusivity and at some point it tapped out. Theres that argument on the flip side. The Gold Standard to be a partner at one of these firms. Alix theres a million of them and all your buddies do it, whats the point . Something interesting, too, the numbers they have behind this and how many strides theyre making in diversity. In the u. S. , only 17 of the class are asian and 44 are black and hispanic. A higher number of women being promoted but 20 of the promotions at this time. Obviously Morgan Stanley and every bank on wall street would like better numbers there. Alix especially when it comes to the overall comp. The third one is j. P. Morgan trying to get ahold of their china fund venture. What do you think . Not surprising. The amount of assets at this venture is 22 billion. People forget jp morgan along with Goldman Sachs are the two big banks that have more than 1 trillion Asset Management union. Whats the opportunity here . In china theres a lot of Institutional Investors ready to put money to work in big ways as these Assets Managers and a lot of firms like black rock and the Singapore Firm trying to move in the market brass in management in china. Alix i have to also think how much local talent or competition is there for jp morgan in this . Theres a lot of local competition. One thing that benefits jp morgan is how long theyve been there. Theyve been there, its not a very new effort but what they want that is new is they want 100 control along with a local partner they have over 24 Asset Management venture and thats the benefit. Theyre making a bigger push and want more control and doing it alongside other people. Alix thank you very much. I really appreciate it p. In todays off the beaten street experts say Climate Change is now killing Alpine Skiing as we know it. Some believe lower altitude resorts may be left almost bare by the end of the century. Theres so little snow in a renowned german ski town the site of the 1936 Winter Olympics and theres a concern whether upcoming ski races can continue and theyre turning to artificial snow and others are turning to tourism as a source of income, hosting summer concerts, etc. All those people has to be a scary proposition. Well look at the health of 2020 and what hinges on credit. Tune into Bloomberg Radio across the u. S. On channel 119 and the Bloomberg Business app. This is bloomberg. Alix time for traders to take. Listen to vincent on the bloomberg i thought youd bring me the u. N. But youre going eco. Im in the most elite classes of Investment Bankers because i turned lloyd down in 1988. Alix that will be in the obituaries you were remembered for. Trader friends remind me why im still working because of that. We talked about this earlier whats going on in the latter half of the year really since september of 2017 when you look at it, youre seeing a decline in retail sales and decline in auto sales and a decline in real average earnings. All of this is really being fueled by the consumers. We talked about it yesterday, something id love for people to put on their radar for 2020 is not the napn but the National Association of credit managers and measures where cred sit flowing into the scurem. You have average earnings flowing and credit does not increase or at least hold up and is really difficult to see how Consumer Spending in the auto sector and retail circle holds up. We saw it in target early this morning. Its the canary in the coal mine and i lost my good feel for 2020, not calling for a collapse of the stock market but dont see how we have positive returns for u. S. Equities if all of it doesnt start to flow. Alix housing, feel good vincent i think housing is flat and i had this conversation with someone the other day talking about stepping up. I dont think we can see Mortgage Rates fall low enough from the current levels to lift the housing market. All relative to who we are. And shifty basis points wont change the metric. Alix bloombergs vincent joining us. I have a witty remark about lloyd. Ill have to think about it. Well be joined by a chief Market Strategist next hour. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your local xfinity store today. Investors realize perhaps phase i may not have the relief some investors have been hoping for. To be clear, is there some kind of mechanism where you could still lower tariffs for the rest of 20 20, or are we stuck in these rates . The markets are at an alltime high. If the market moves up 50 points, or down 50 points on somebody sneezing, it is not exactly a big deal. I think we were clear yesterday in that there is no side agreements. Would we do phase two, part of theretwo like i said will be tariff reductions as part of that. That is an incentive for them to do additional faces. Whether that is before the election or after, we are in different. There will be tariff reductions. [indiscernible] absolutely. This is an in or miss win. This is the first time we have ever had an agreement. This is an encompassing agreement. There were Technology Issues, issues,ural, structural financial services, purchases purchased over 200 billion in other things paired we are dropping the trade deficit which would lead to growth. This is an in numerous win. We could not be more excited with usmca passing the senate this week. These are big Economic Issues for 2020. [indiscernible] i do not think that the tariffs will have any Significant Impact on any one individual. Sohave managed these tariffs that mostly all the consumers are not impacted. I think the average consumer will see a stronger economy in 2 020 as the result of this deal and usmca. [indiscernible] of inside a bit baseball it im not going to get to the specifics of that. We are having discussions obviously with a lot of countries. [indiscernible] on the first part, yes. There are opportunities for many to be 100 owned. This is a great outcome for u. S. Companies and u. S. Workers. Technologyignificant issues in this. There are some remaining Technology Issues and cybersecurity issues that will be dealt with in phase two. [indiscernible] has there been any effort in the midst in the administration to make a personal plea to unlock the shooters phone. I have not had any conversations with that. I do not know what conversations the attorney general has had or the president has had. Again, i know apple has cooperated in the past on Law Enforcement issues. I expect they will continue to cooperate. I do not know the specifics. Thank you everybody. Listening toe been Steve Mnuchin outside the white house talking about phase one a phase two trade deal. Lcome to bloomberg daybreak heres Everything Else you need to know. Pres. Trump we will soon be replacing the nafta catastrophe. One of the worst traded deals in history of the role. Alix President Trump touts a new trade deal with canada and mexico on the eve of a trade deal with china. The first thing we are going to be looking hard at is intellectual property could been fence. That is the core intellectual property commitments. That is the core in terms of Structural Reforms but it alix we do existing tariff schedule back . Will stay inffs place until there is a phase two. If the president gets a phase two, we will see releasing tariffs as part of a phase two. Stephen drew should reports the tariffs will stay in place until after the election. Can a woman be donald trump . It is in, it is incomprehensible that i would think a woman cannot be president. The only people on this stage are have one every single election are the women. Alix senators warren and sanders clash last night in the final debate before the iowa caucuses. If an accounts on a 2018 private meeting. [indiscernible] alix the exchange set the stage of the debate that had no clear winner. It shows that the bank is doing what i bank should do in the face of low Interest Rates. X tiktok line alix well short offell expectations. That is something goldman is going to have to spend time explaining. This was a really tough quarter for comparisons because of the way they are reporting their earnings differently. Qualification delayed as wildfires swept the nation. Have top of that, we followed the independent line of the medical experts. Of the as the advice environmental specialists. The pr as the advice of of meteorology. Open brought into hundred Million Dollars last year. Unbelievable. At is not alooking lot of movement. We are getting numbers out. Some supporting like target. Some coming in strong like Goldman Sachs. Equity markets go nowhere. What is priced in when it comes to a trade deal . I want to highlight weaker data in europe. You also had germany growth the lowest in six years, yet the your a is up. We are seeing money flow into the bond market in the u. S. And europe as well. Here, the yield is about two basis points. Joining me now, art hogan. Happy new year. I have not seen you since last year. Alix the number one thing you are most concerned about . The tone around u. S. China trade got better. We had a significant ramp up. Now that we have this in front of us, we know things are not going to escalate. How much of that has been priced in . You get nervous because there is going to be a lag time between removing uncertainty and a pickup. I think that will be mildly disappointing in the first quarter. I think it takes a while because there has been so much uncertainty for so long for companies to say i feel better about the environment. Alix i can feel that in the overall index, even individual numbers. Lets stay with that idea. You have got the macro and the micro, bank of america joining wall street trading. 13 in the Third Quarter, that was lower. Netar as consumer units, Interest Income has declined. Joining me on the phone, david george. He has a neutral on bank of america at 834 price target. What is your reaction . Place for having me. Dfas numbers are pretty good. They showed consistent strength throughout its traditional banking operations in the consumer commercial area, but also the Capital Market share. Overall, very broad base and good quarter. Alix why do you feel the tone is more negative . Are you worried about the consumer that in 2020 they might not be able to hold up . No. We are talking about the numbers. We are talking about the numbers and the stock. The numbers were good but the stock has had a huge move, up 40 in 2019. It is going to be more difficult slog for bank stocks in 2020. Eight is not a reflection on the fund mental performance of bfa were the u. S. Macro. It is good, it is just a function of risk and reward as it relates to stock. I do not think there is meaningful upside here. We kicked off the Third Quarter with banks surprising the upside, it seems the reaction is opposite. Does this have to do with where we are evaluation wise . That is exactly what has happened. If you recall, back in the fall the consensus was that we were going to have negative rates. We had an inverted yield curve. There was a general apathy toward bank stop stocks. A 180 asompletely done it relates to investor expectations. Bfa is over one and a half. The group is well over 1. 5 tangible book. The fundamentals have not changed in the past six month speed what has changed is perception. Perception has changed a lot. Talk a little bit about consumer demand for products. It felt like that would be upside on the third, did that dissipate in the Fourth Quarter . No, consumer has been from a loan Growth Perspective really the bright spot for the banks we have seen so far here in the Fourth Quarter. Loan growth out of the consumer on average has been around 6 . Headwindhave seen the has actually been in the commercial area. Commercial loan demand has slowed quite a bit. It is something that has gone unnoticed and unreported by many, but it is something that has become a headwind for a number of companies. Consumer alix alix demand is quite robust. What is the prediction alix what is the prediction you have for there should be questions for cecil, a new Bank Regulatory framework where banks account for credit losses. Think really it is your typical forward look expectation questions like loan demand credit. These are banks so it is basically loans, Capital Markets and i think all of the questions will cover all of those areas. Alix thanks. I appreciate the analysis. David george. Joining us is walter todd, he is a bank of america shareholder and is the second jp morgan is the second Largest Holding in his portfolio. I feel like the big question is why are we so convinced of that earning estimates are going to continue to rise and deliver this year . Points have been made already about the fact of how far we have come from early october. They are valid. These are solid quarters. It looks like the consumer is holding in very well. I think jp morgan framed it best when asked about what happened in the Fourth Quarter, she said bank stock is getting worse. When you combine that with a 400 billion expansion in the fed Balance Sheet, you get a move in the market. As we look to 2020, your point about earnings continue. As long as the job market remains healthy, the consumers going to hold in. What we need to see is an improvement in confidence and Capital Spending. As your prior guest mentioned, corporate loans are soft. The reason is because of trade uncertainty. That seems to be resolving. Does that manifest itself Going Forward and increase Capital Spending echo . That should help support the consumer as well. At one point you look at jp morgan and say it has had an incredible run. Has it gotten ahead of itself . Theyou comfortable with evaluation it has in 2020 that it did not have an 2019 . Yeah. That is true for the whole market, but jp morgan specifically has done well. I think it trades at a premium for a reason because they are the most consistent operator in that space. It would not be a nameplate would be adding money to. It is a large holding for us, but in terms of incrementally adding to that sector, i think you would want to look at names that are less expensive. You can look at regional banks that are definitely less expensive than jp morgan. If you want to take more risk, you can look overseas. Some of the european banks which are opposite on the spectrum from jp morgan and very cheap we are comfortable with the premium it trades at put recognized may be upside from here is certainly less. You made a good point about commercial lending and the uncertainty about u. S. China trade. With some of that uncertainty dissipating, how much of a lifetime do you think there will be between that getting behind us and commercial loan demand picking up . You would think it would probably maybe a quarter or two at most. I think you should start to see that in the numbers as we head into the second quarter. Again, we do not know what is in this phase i deal. Whether Business Leaders went through that confidence will pick up moving forward. We will see. I think you are starting to see that relatively quickly within 36 months. Alix i had a similar question in that if you take a look at the percentage of the s p, how do you view that . What is priced in . That is where we start to get concerned. We have this parabolic but it kicked off in october. We get to this point where we said what is the biggest headwind we have in the market . Clearly it is trade. That has been true for a while. Then you have to rationalize how quickly we got to where we are. When we think about the s p 500 and where our targets are for the end of 2020, i think there is going to be a period of time where we have a biddable we have a bit of a pullback. Deal removese uncertainty, but it does not create activity in the second or Third Quarter. Alix what illustrates this is the s p with the 14 day rsi to show about 15 but still we have definitely seen a good move. Where do youote, want to get defensive to protect against that as we are waiting for the data to come through . Maintaining a broadly diversified portfolio is a challenge 20 is a paid shortterm. To anticipate the shortterm. With new money coming in, we would be fortunate enough to have new money coming in, you have opportunities to put that at work at better prices. It is a combination of the diversified portfolio having exposure to the more defensive areas like health care, Consumer Staples perhaps, and maybe utilities, to round out a more cyclically biased portfolio. And then holding cash on the sidelines with new money. What you think . I agree with the last thing walter said. What i get concerned about i think everyone thinks about what is the best way to be defensive. I am just afraid utilities and staples have continued to trade at such a high evaluation as everyone is seeking a yield. I would rather see investors at this time with trepidation take their time putting new money to work, or raising cash levels versus chasing some of the multiple staples. Coming up, betting on expectations. A building for the boe to ease policy. How much of the rally how muc is due to liquidity . Alix what is driving the rally in equities . It is that global liquidity or actually fundamentals . Right now, markets are pricing to be live rate cuts. In spite of what banks are saying. They are taking 100 basis points over the globe. Alter, your take on is this liquidity driven rally . Or, is it more fundamental . I think it started with the expansion of the fed announced 400 billion from the lows in september. It deftly has been liquidity driven to start. Anticipating an improvement in fundamentals, t the discussion has been ahead of itself. The statement in december was powerful in terms of saying he needs to see a significant and persistent increase in inflation before raising rates. I think given the perception that there is a foot out there in the market from the fed. The point you bring up i think are so important. It is not just the Balance Sheet expansion, but it is the tone around the fed. Every time he gets a chance to speak they speak about his inflation target being symmetric. If your psyche is trying to tell us we have let inflation run hot and the hurdle rate to raise rates is higher. Not that we are thinking theyre going to cut rates this year. What is your expectation this year . Ready think we are going to be in the monochrome of a spreadsheet . Or, do you think we have another cut coming . We do not anticipate another cut. We think the fed is going to be on hold for the entire year. One of the factors is the election. Even though they wouldnt admit it. I do not think they would want to take any action ahead of the july meeting as we head into the election season. I think that is in the back of their mind perhaps. I do nothing theyre going to do anything. I think the repo situation and of the Balance Sheet expansion, the fed is trying to act like kevin bacon in animal house and state remain calm and dollars well. I do not know that it is. It is concerning to me. No one has been able to explain why they have to put 50 billionone hundred billion dollars a day to maintain the repo market and the rates there. I am concerned and would like a better explanation in the future. Question, didthe the fed miscalculate what the Balance Sheet size should be to begin with . Did that miscalculation forced them to get into the overnight lending market jacket is there something structurally it could be a combination of the two. The first point you made is spot on. I think they underestimated where they need to keep the Balance Sheet. Quarter agoa alluded to this saying all we can do at this point, we have to step back because of regulations. The fed had to come in and fill that void. They have somewhat admitted that if you read the minutes of the recent meetings. That is the concern, i guess. Alix im going to leave it there for a second. Art hogan sticking with me. Much more coming up. This is bluebird. Alix surprising with a stumble for target. The Discount Chain posting holiday sales that were below its own expectations. Target cutting its fourthquarter sales outlook. Adding to the gloom is premarket sector and trading shares as targets are tumbling. Bloomberg reported two companies are negotiating a longterm contract. A deal would prevent tesla from a squeeze on a battery metal after a tough loss for cobalt business, it would be a win. Alix thanks viviana. Speaking of tesla, elon musk is closing in on the first level of its nothing more moonshot pay package. Teslas market value was just 96 billion. If it reaches 100 billion and hold that value in six months, it would unlock the first of several sharebased payments. Under 350 hold just Million Dollars. That is a fraction of its potential reward. It could potentially grow to more than that. Muskost to profit could cash in paired he could earn 15 million by 2028. An unbelievable move there. Price pressures on factory and producers. Septembers ppi numbers are coming up next. We will break it down with a city global economist. We also talked about who wins bank and who loses when there is a trade deal signed with the china and the u. S. This is bluebird. Bloomberg alix this is bloomberg daybreak. I am alix steel. In the markets, it is quiet with the exception of what is happening in the bond market. Equities go nowhere despite mixed earnings from banks and target with disappointing holiday sales. In the bond market you are seeing a money flow in, particularly in europe. Here in the u. S. , also a similar story. 22 basis points a spread between the two and the 10. Cpi data coming out for december. If you backout food and energy, coming in light. 1. 1 . Light versus estimates and sequentially light. On a month by month basis, same story, just up. 1 . Sequentially better but still not great. Final demand coming in light at. 1 . Joining me to break it down is globalterson, citi chief economist. Art hogan is still with me and walter todd as well. Dana, what you make of the lighter cpi numbers in light of the lighter ppi numbers we saw yesterday . Dana inflation is an issue for the fed and we are just not seeing it. Good ly that is who ultimately that is good for the consumer meeting real incomes are strong. At what point are you concerned it is stemming from a demand issue . Where do we get concerned and say the reason we cannot not see any inflation is because there is not enough demand. Dana if we start seeing Consumer Spending falter. So far we have seen strong retail sales. Employment data has been outstanding. We had a soft reading, but that is to be expected. We are expecting 10 year gains will probably get to 125,000 by the end of the year. You need to see consumer pullback before worrying about moderate inflation. The consumer in a better place this year than last year in terms of the Balance Sheet and their access to credit. Structurally, and i think the fed is trying to deal with this, are we measuring inflation correctly . The fed uses pce and we also look at cpi. Are we missing where the real inflation is coming from, health care costs, education costs, housing, is the basket wrong . Dana i think that is a perennial question. Are we addressing the right things . I think the bls is doing the best it can in terms of trying to capture the different types of inflation and progression over the years. Alix ive a question for you, walter. We talk about the potential peak margins. We have seen a slowing in cpi. If we are seeing ppi relief, does that help along the margin extension . Walter certainly it could. It is surprising we have not seen any of the impacts of the basis. On a ppi i want to look at the measure of inflation. There are multiple measures of inflation. 2 , wellall above above 2 in some cases. The only one that matters is the pc the fed looks at. The fed looks at. I think inflation is hotter than the headline numbers tell you. Art that is a good point. The fed has been locked into pce forever. The fed has been through a lot of structural changes in the way they run monetary policy. It feels like if not now, when should they change what they address inflation. Is this the year they say pce is outdated . What are the chances of ever seeing them change . Walter it is like turning an aircraft carrier. It is very slow. They are opening the books to looking at changes of monetary policy. It could happen. That would be disconcerting to the market given the focus on the pce to drive their decisionmaking. It is something that could evolve over the next couple of years as jay powell is looking to shake things up. Bar for thea high fed to switch to using some different measure. They have given this a lot of thought. For some time they have believed this poor measure, pce, does capture things. The pce may be better than the cpi, because the cpi has large weighting for housing whereas the pce weight is probably more realistic. Difficult to see a different measure adopted. This, the Macro Economic backdrop for trade. Steven mnuchin spoke outside the white house about half an hour ago. Heres what he had to say about the trade deal. When we do phase two, as part of phase two, there will be tariff reductions as part of that. That is an incentive for them to do additional phases. Whether that is before the election or after the election, we are in different. Alix if what we are seeing is a demand issue, does this help fix the demand issue . We need to sell more stuff and produce more stuff in the u. S. How do you look at it . Dana i do not know if we have a demand problem, but if you want to look at the business side, Business Investment has been light. That is the consequence of the manufacturing slow down globally but also due to the tariffs. If you want to induce greater demand, you have to look at the business sector. If we do have a trade deal, however many phases, and we have lightning of the tariffs, that will be positive for demand. The gap between Business Confidence and Consumer Confidence has never been water. I am assuming the gap should close. How long does it take for business to rebuild confidence now that we have cleared up some of the uncertainty around u. S. China . Dana it is six months before ecb action to the actual increase in sentiment before you see reaction to the increase in sentiment. We have seen elevation in sentiment addressing the nontradable areas of the economy. The areas of the economy that are impacted by trade such as manufacturing, we are seeing a weak expectations. We do not see a full resolution, meaning lifting tariffs, until after the election. We are talking a long time for weakness. You had a great note that talked about where china could be buying more. You broke down will we have to produce more of those things or do we just not send it somewhere else . Can you break down the findings of that report . Dana it will be a combination of a number of things. You can shift out of your inventory. You can force it out of some other country and export if the country of origin is not an issue. You can also increase production or you can just stop exporting some of your third party products. We said it wouldve we looked at a Shopping List of things china says it is going to buy from the u. S. We also looked at it in terms of what if there is no Shopping List, what if we just looked at shares . In both cases we see that canada and mexico theoretically suffer less trait with the u. S. Ramification the of that . Dana those economies will probably have to find other sources of goods because the u. S. Would nerd to the u. S. We need to satisfy the terms of the trade with china. We have also seen other economies would be potentially damaged in the sense of receiving fewer exports from the u. S. Because the u. S. Must satisfy the terms of the trade deal. Art we are on the threshold of a phase i trade deal with china and ratifying nafta 2. 0. Those things might bump up against each other if theres something were going to said to china first ahead of our north american trade partners. Make sense of this for me. Why would it make sense to be thinking about sending something thousands of miles away instead of to our borders to the north and south . Dana these trade agreements have been moving on different tracks. I do not think there has been a central planner thinking about the negative interaction of the two. The u. S. Has to meet agreements with the usmca partners at the same time with china. It does not mix. You have to see greater. Eduction somewhere alix is there a trade trade you would be looking at . List . Walter industrials would be a logical candidate. You have a lot of companies in that sector that do business with china and would benefit from increased production and purchases. Materials would be another area, particularly in the chemical space. That sector would be another area to look at. Alix walter, good to see you. Walter todd of greenwood capital and Dana Peterson of citigroup. Art hogan will be sticking with me. On Bloomberg Markets we will have an exclusive interview with dallas fed president robert kaplan. 10 30 eastern time. Now we want to give you an update on what is making headlines outside the Business World. Viviana hurtado is here. Viviana a beautiful monster of a trade deal. That is how donald trump described the agreement with china. Today he is set to sign it. It is phase one of the agreement. Fora could be punished violations on currency, intellectual property, and the trade tariffs. U. S. Tariffs on chinese imports will stay in place until at least the election. If the countries signed a more extensive deal, more tariff relief would be considered. Today the houseboats to send impeachment articles against President Trump to the u. S. Senate. That would lead to a trial early next week. The president has yet to settle on his Defense Strategy and the lawyers that would represented him. The Republican Senate is almost certain to acquit him. President trump former National Security advisor Michael Flynn now wants to drop his guilt to his guilty plea, just as joe weeks before he was sentenced in the pressure inquiry. Wasust two weeks before he second before he was sentenced in the russia inquiry. He cooperated with authorities. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Alix the bank of america call just lapped up just wrapped up. Executives are speaking with analysts. Bloombergs sonali basak is following up. Sonali what we have learned is that Interest Rates, while there at the forefront, we have bank of america trying to shake it off and saying this is only 50 of our revenue stream, we make money in other ways. The question is how will they boost the fee income at bank of america. On the analyst call, you just heard Brian Moynihan give a shout out to his Investment Bankers. He believes they are gaining share. A slight dip in the advisory revenue, but wondering if that will be a turnaround as we see confidence picking up and some of the geopolitical tensions wearing away. Art we always talk about the consumer business because it is a large segment, do they have anything important to say about their Capital Markets . Sonali it is interesting you ask. At first blush people were happy they had beat on the fixed income trading. When you look at them in light of their peers, the fixed income trading had jumped a lot lower than a lot of their other peers. J. P. Morgan blew it out of the water. Goldman sachs is behind. That is a great question. What kind of strides are they going to be making . , iigroup in the equity space have questions how they will gain share. , morgan like jp Morgan Stanley are becoming much more competitive in that space and the dispersion seems to be rising. Do they have to offer their clients different products to matter . Alix interesting analysis. Thank you very much. Coming up, pg e versus activists. Shares up after bloomberg reports the utility is nearing a deal with pimco and elliott. Bloomberg users, interact with the charts throughout the show. Gtv on your terminal. Check them out. This is bloomberg. Viviana this is bloomberg daybreak. Im Viviana Hurtado with your Bloomberg Business flash. We begin with breaking news in russia. The Prime Minister has resigned. He says Vladimir Putin will choose a new government. Coming just hours after the leader call for a series of constitutional changes in his annual address. Now onto business news. Investors cheering alcoas Restructuring Plan. The biggest u. S. Aluminum producer has been cutting costs. Wall street will see what that means for the bottom line. Alcoa reports earnings after the bell. Earnings from boeing could prove expensive in court. Could strengthen the cases for families suing the boeing compromised safety to sell jets. All of that could pressure the lawsuit. I am Viviana Hurtado and that is your Bloomberg Business flash. Alix time for bottom line. We are looking at three companies. I am watching tesla. The news they will try to store some cobalt at glencore to use in their chinese factory in shanghai. It is the fact that the stock is trading at 532 in premarket. There revenue per car is still falling. Amazing they were able to get that plant in china open as quickly as they could. Alix and get subsidies to do that. Paying for is are the hope in the dream five or 10 years down the road. The market cap is amazing it is approaching that level to get the big payday for elon musk. To what they are doing right is the production. Their manufacturing production. They are manufacturing production. Alix their fault is everyone was worried they cannot do cars. If they have the ability to raise the money, that is a different story. Talking about money, looking at pg e. You think we will get a deal . Art if pimco and elliott are able to take the restructuring before the bankruptcy, this could be ongoing. The conundrum is people in california need power. Is balance between how much appropriate to pay and to keep this an ongoing entity. Pimco and elliott are willing to do it. Alix even if they accept it, it will still be a total mess. Lets talk about our third company. Brooke sutherland joins us on target. Mass, speaking of total targets Stock Performance today is a total mess, trading down as much as 10 . This was a big surprise. Target has been a winner among retail, which has been a terrible spot among the last couple years with all of the problems in the push toward online. It didfared well until not. They are talking about part of that is because they had such a Strong Performance last year. Last year they saw 6 growth on the same basis. Investors are looking for them to be strong. They were taking shares from some of the struggling retailers , particularly the department stores. Do not see that translate into significant sales growth makes you wonder what retailers can do to stay relevant and stay growing. Art electronics was one of the key issues. It also feels like theyre trying to hold onto the margins. It does not feel like they were as promotional as him of the people there were competing against. They also had the tricky comp. Does target still have the right game plan . Brooke on the margins it is because they saw weakness versus highermargin apparel which tends to do well. That is how they end up meeting their earnings estimates. They also saw strong growth in digital. That is about 19 . A little off the pace of years past. It is hard to quibble with 19 growth. What we are realizing is even for retailers like target, it does come down to what is happening in the store. How do you get the layout right . How to get the promotions and the offerings right to get people to spend their money . I do not think we can say target has that figured out yet. Alix especially when you look at private label brands and remodeling the stores. They can do that, but it also comes at a cost. You need that, you need the footprint. Art who went to target during this Holiday Shopping season . Alix i have a fiveyearold. That is our jam. Saturday we have nothing to do, it is like lets go to target. Brooke you should have bought more toys. Toy sales are flat. More my little pony stores. Alix i go to target and there is no good inventory. It is frustrating. Brooke i wonder if that is part of the problem. Enough . Not have alix each store selection is a limited that did not help. That is disappointing. Brooke there are issues with the algorithms where it does not match you with the store you think is most convenient. I have found that living in new york. It is better with my mom living in kansas. Stores are figuring that out. It is a complex algorithm to match people up and have them get the products quickly. Art the good news in the pickup and store driving foot traffic and then you have the purchase you make you are not planning. The problem i have with target is the same problem i have with , ife, if i 1 with lowes i have one product, i leave with more. Alix Brooke Sutherland of bloomberg opinion, and art hogan, you make it so easy. Art hogan National Securities was my guest . Coming up we will take a look at the banks that reported. If youre headed out and jumping in your car, tune into Bloomberg Radio heard across the u. S. On sirius xm channel 119 on the Bloomberg Business app. This is bloomberg. Alix time for technically speaking. Bill maloney joins me to set you up for some trade. Listen to bill on the bloomberg. Go. In squa < lets start with blackrock. Bill looking at numbers for the banks and the brokers, eps Beat Estimates for blackrock. It has been an uptrend since october. Support is probably 500. Look for resistant around 531. The stock is below the 2018 peak. Alix look at the extension we have had. Look at some of the other Banks Like Bank of america. Solid numbers overall. Equities trading, etc. Maybe the consumer unit has some questions. Will we see more upside . Bill stocks fitting in the premarket great it was up, now it is fading. Eps did Beat Estimates but the trend is higher since october. Some resistance around 3850. Supported the uptrend on the fate, may be down around 34. The uptrend is still intact. Alix the last stop we want to look at his Goldman Sachs. They delivered solid numbers. They did miss on revenue and earnings. Bill they missed estimates. Shares are now down in the premarket. The trend is higher from 2018 lowes. Got extended. Resistance around 246. Support around 238. Alix does that mean all of the good news is already priced in . Bill the way the stocks are acting, the good news may be built in. Alix bloombergs bill maloney joining us for your trades. That does it for me. Coming up, Morgan Stanleys head of fixed Income Research will be joining him in the market. Will bet seeing joining jonathan ferro. In the market, equities not seeing a lot of movement. Down. 2 . This is bloomberg. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan coming up, china and the United States gearing up to sign the phase one deal. Democratic president ial hopeful sanders and warren clashing in iweb. After jp morgan raised clashing in iowa. Good morning. Here is your wednesday morning price action. Equities down eight points. , the yourncing advancing. Advancing. Lets begin with the big issue. Looking to put a phase one trade deal on the books. Phase one will be a true spirit will be a truce. The optimism for the trade yield to be finished is priced in. There will not be a fundamental trade deal. Nothing has been resolved. Details matter