What that says for investors or you get a nafta deal, and then you have risk on there. Futures up by 17 points. If u. S. , how do i say their vernacular for that . David usmc. At 3. 0he 10 year yield 9 ssl a picks up with yields up three basis points in crude up 2 10 of 1 . It is the best quarterly string since 2008. Oil take that superlative for you. David that is exciting. Time now for the morning brief. We willp this week, hear from no less than nine members of the Federal Reserve today, also today is the first day of the spring term in the court will be short one member as the confirmation fight over judge kavanaugh continues. Coming up friday, jobs day in the United States. We will find out how many jobs were added in the month of september appeared all the long, Theresa Mays Conservative Party will be meeting in birmingham, england with the fate of exit and the Prime Minister herself in the air. Right now you want to turn to first taken were joined by Romaine Bostick. This usmc a, i agree i dont have to say it. The outline of it. More access to dairy. The president is out tweeting already this morning saying it problemsic, all those feared is a historic . Not so. It is a historic rebranding in our headlines on Bloomberg Greek calls it a rebranding of nafta. There are definitely changes that are unofficial to Dairy Farmers in the u. S. , access to the canadian market, but fundamentally this is not a hell of a lot different than nafta. Alix as a market participant, you are seeing the rally in mexican peso as well as the canadian loonie. Do we learn about risk premium and trade through the trade . Absolutely part one thing that was most important to this market going back to february and march was trade. Trade with china and trade with the north american partners. At least the north american site appears to be resolved even if it is not the mentally different than what we had before. If the overhang is removed you will see the market rally. Thats why you are seeing futures up. Youre seeing it and the other Asset Classes as well. That is a big plus Going Forward. David breaking news right now at General Electric that says larry cold has been named ceo and chairman and they are going to fall short on their Free Cash Flow projections. It has just broken right now and i dont know mr. Colts. 90 do i. The stucco stampeded was 4 and it was two and a half percent. Was this expected . David i dont think it was the expected. Alix i wonder what that says about their Business Plan and what they are going to sell off or what is going to be left of ge . G has been in a freefall the last two or three weeks. This is a change of the guard. Was the ceoce colt of data her. The harvardtly at Business School the senior lecturer and he is Senior Advisor to bain capital. The stock, a look at we can maybe get a good read on what he did there. Parent ifetty decent you take a look at the last five years it has been a solid rally. It, a marty mentioned pretty pointed rebuke of John Flannerys plans. Now youre saying so motivated rebuke. He has only been at this a year and he really hadnt convince the market that his plan was going to take ge to the next level other than tricking it. We will have to learn a little more about what culp is going to do. David exactly, marty appeared im not sure what the plan was other than lets sell stuff. He was selling stuff but he wasnt selling it quite fast enough. Marty and there was analyst chatter that there was still more negative news to come on their overhang of liabilities regarding their health care and a pension. David and this is one of the big problems they have is that it has an clear to the street or to meet with the thing at the arms around the numbers. Every time we turned around there was a problem, even at sec investigation going into some of it. Marty i do think it is the uncertainty that rattled the markets and gave no confidence for anybody to be invested in ge if there was still overhang over those issues. Alix in the press relief, a little more detail. 2014 ando from 2000 to now there through disciplined Capital Allocation approach, it had a series of Strategic Focus onons, and a investing for high impact organic growth and Margin Expansion and try to deliver strong Free Cash Flow to drive the longterm shareholder value. It appears a lot of Strategic Acquisitions as well as what his ged is doing. Thats what they need to do. You are seeing a bit of a pop in the stock. Maybe investors will warm to this more than what they were getting hard to this. Alix i feel like it was what, who, change in management . Maybe thats the narrative. David what happened to that company. The problems here have been working for a while, marty. Marty they have. The legacy just keeps lowering in its glow as the years go by. Yes, as jack welsh gets sadder and setter at the end of the day. Here we go. Our other top story has to do with what is happening with the cable rate. A flash crash that happened but the nuts and bolts of this are the bars being thrown between chancellor hammond and Boris Johnson. Did you read the daily mail article . It was brutal. I did. I think the tech that johnson is taking is more popular your politically, but what you are seeing from the mate from the rest of the tories is more market friendly or at least that is the image you are going to see. Thats why you will see the string back and forth back and sterling. I did read the Boris Johnson peace and he just waves a magic wand and makes island makes ireland galway. The eu will go along, it will be no problem. It sounded great, if the eu would go along with it. It all speaks to the weakness of theresa may as leader of her party and the questions over her ability to maintain that leadership here the question has always been who can take over . Its not going to be labor. It just creates uncertainty and the pound is affected by it. Were watching live chancellor hammond alix maybe hes going to make a Boris Johnson accent again. Isid third announcement tesla per big news over the weekend. A settlement between sec and tesla that says mr. Musk, you no longer get to be chairman for three years, two new independent directors and a committee and 40 million fine half tesla, half musk. Will this do it . Victory this is a big for tesla investors are in the stock because of elon musk. The outcome of the investigation is that he is still going to be there. Have a reducedly capacity by not being chairman, but he is still the man controlling the levers. That is what investors are betting on it at least for them, they will be happy with the outcome. David i would say there is a lot of criticism of relation in washington. Is this it example of the sec doing its job . They got in pretty quick, wrapped him on the knuckles. Youre right. Its not only doing her job but its a creative way to implement change that also implements that also protects investors. David Romaine Bostick and marty schenker, thank you. Recapping the news about General Electric. Ceo ofe culp is now the General Electric. Harvard law all right now. He has a reputation of being pretty creative in dispositions, acquisitions and allocating capital. Taking andnouncing noncash impairment charge related to power. They will fall short due to the charge. 23 billionower dollar goodwill. Wonder the board doesnt say that is one surprise to many are too many surprises when it comes to the number. Every time we turn around it is bad news. Trying tothe stock calibrate itself. Down 5 and up 5 . We will update u. S. A day crosses. Its not nafta, more of the trade pact success. I it sounds like a sneeze of the p record to work on that. This is bloomberg. Alix this is bloomberg daybreak. More on the breaking news this morning from General Electric. Struggling conglomerate has named larry culp to be ceo and chairman. He is replacing tech flannery. The power business declines will lead to a shortfall relative to 2018 guidance. Ge will take a noncash charge that will be all of ge powers 23 billion dollars a goodwill. It changes the top of pfizer, the ceo stepping aside at the end of the year. Coo. Ll be replaced by the germany, splitting the company into, managing the Auto Supplies and construction units, and materials will run steel and metals. The spinoff must still be approved by shareholders. That is your business flex. Flash. Alix negotiators secured a lastminute trade deal securing a trilateral pass up between u. S. , mexico, and canada. It will include access to canadas dairy market and provisions and tighter rules for production. The loonie and the peso trading higher off the news. Joining us is david kelly and matthew slaughter. He is coming to us from hanover, new hampshire. Matthew, a star with you. If the Economic Impact going to be something to write home about . Matthew definitely. Its better than writing home about the alternative which is the nafta crashing and falling apart. It wont be a massive impact on the u. S. Economy, the economic games the economic gains is to the order of 50 billion a year. Thats a lot to you and me and a 20 trillion economy, it is relatively modest. The bigger question is what this tradeindicate about u. S. Policy Going Forward. Also, more generally we should keep in mind that the goal is to reduce the overall trade deficit for the United States. This wont do it appeared United States runs a large trade deficit with the rest of the world because National Savings is low relative to national investments. That is a different set of policies. Alix if we take a look at what mexico and Canadian Dollars did, did we learn anything about trade premiums in that market . David i think we do a little bit. That wethere is a fear are going to dig ourselves deeper into a trade tension hold. It is somewhat encouraging. Meets theess than eye. It doesnt fundamentally trade change the trade definition. Weve avoided doing the harm that destroyed nafta would have done. In fact, i think a real sign of just how little has changed is the fact they have to change the name. The fact they have to change the name tells me that is a signal that may be the change the name because there wasnt that much difference in they wanted to show there was difference, but i dont think it changes our trade relations with canada and mexico that much. And for the global economy, that is a good thing. Lastly, it is a somewhat hopeful sign with regard to eventually coming to trade agreements with china. David before we get to china, lets come back to how could a signed it really is. Perhaps one effect of what the president has done is make a three focus on nafta, now u. S. And what it has done for the economy and u. S. Workers are you have studied that subject. Question. Reat i think nafta, now that renamed been a classic example of how globalization benefits the u. S. Economy. Verall . Did nafta create new jobs in the United States . It absolutely did. Did it . Destroy jobs elsewhere in different regions it did that as well. Average races were slightly and it generated an economic benefit for the United States. It was a much larger deal for the mexican economy. When it was first signed in the early 1990s, mexico was more close off to the rest of the world. It had a broader strategic goal as well. I think david was right, the benefit here is not destroying something that has generated some gains to the United States. The broader question is what are we going to do with u. S. And china trade relations which are in much more dire situations at this point. Or broadly, what are we going to do is globalization . Integration or investment. They need addressing as well. David lets take up that question. What does this mean or doesnt mean for u. S. Trying u. S. China relations. Jpmorgan has adapted a new baseline that assumes a u. S. China and game involving 25 u. S. Tariffs on all chinese goods in 2019. Comes part of the equilibrium. Sayhat right or does this to the United States you can be a solid with canada and mexico and turn on china and even being tougher . David k it is a psychological analysis of the investors and where they really trying to get . When i look at what we have agreed to with north korea and was now with napa now with nafta, getting to the deal is more important than the details. My hunch is, and i dont disagree with what john is saying about we could well implement what if i present tariffs, but that will begin to really hurt in the heartland of america. When you actually have to pay more at target and walmart for everything that you are buying, that will cause tremendous pushback and ultimately i think it will lead to a deal. Administration can say wheat one in english and president xi and say we won and chinese and the messages dont do mixed up, thats where we will end up. I think we will actually get to a deal. Alix wheres the asymmetric risk . The asymmetric risk has got to do with the growing nationalism around the world. Alix but the risk that we get deals and things arent as bad as we think and thats what the market needs to be calibrate . David k no. If you talk about asymmetry, getting a deal is just the status quo which is what we have be get a small positive. Not getting a deal, having a fullfledged trade worth it puts turn into recession is asymmetric downside. David so compare and contrast if you will u. S. China trade mexico u. S. A, trade. Agrees thatverybody china has been unfair in various respects to the United States. That is different from the canadian and mexico situation. The president has a better time with his base saying lets beat up on the chinese. How confident are you that we will come to terms and nearterm horizon with china . The deeper issue and u. S. China trade relations involve the Economic Future of china. They have had tremendous Economic Growth over the past few decades at themselves into the global economy. The undertaking a lot of Capital Investment related to exporting to the rest of the world. They perforce growth has ceased and china. If anything, they have been over investing in certain industries, steel being a prominent example. Excess steel capacity and production for china, so the bigger question is the Economic Growth in the future, like most other markets once they grow enough, needs to come through innovation and technological change. The United States and the eu and canada and mexico and many others have rightly pointed out the concerns about state support of intellectual property, and other challenges in china. It is a much deeper issue that underlies that u. S. China trade were at this point. We could get a local resolution resolving the tariffs at some butith a must bigger with a much bigger question is having other countries to have china have a different stance to how they treat intellectual property new ideas. Be stayingwill both with us. We will turn our back to the United Kingdom. Theresa Mays Conservative Party is holding its annual conference this week with the party fighting amongst itself over the the best approach to brexit. Continuing questions arise over the the Prime Ministers leadership. Anna, give us a idea of what is going on. Absolutely. So chancellor hammond is currently speaking. We started the conference with Big Questions over theresa mays leadership knows the price we have seen the governing party and the u. K. Arguing amongst itself still about which strategy to adopt on brexit. Be on theson seems to move. Writing about his plan on what he would do one exit. Calling theresa mays plan preposterous. Now the party is rallying behind theresa may. Hammond has just said we need to rally around theresa may and her vision of brexit. He says that vision would less complexity for supply chains and alternative visions that have been put forth. To couple of ministers who told me they back her and back her plan today than spoke to a couple prominent brexiteers, who even they played down the tension within the party. Chancellor hammonds speaking there and he is also going to try to turn the agenda a little more away from brexit to talk about domestic issues affecting the u. K. Economy right now. I spoke to the british chambers of commerce and the martial there told me even if brexit sucks all of the air out of other conversations in the u. K. It right now, that is the backdrop. Gettinghe update we are at the conservative Party Conference in the u. K. David thanks so much. Im sure we will be hearing from you throughout the week. David kelly, your best case . David k overall, going into Fourth Quarter with a lot of positives. Weve still got a strong growing u. S. Economy. Alix for the u. K. , for brexit. Avid k for the u. K. , it is perfect parable of the problem with populism. The most serious problem is its not serious. If you listen to what boris building as about new bridge between ireland and the United Kingdom or you can have some way of managing this possible. s not but i think Philip Hammond and the majority of the conservative party are trying to do is trying to work out how can they get to almost what we had before brexit paying too much of a penalty to the europeans . Basically its just an own goal and they have to minimize the effect. David how big that the effect be . They come out and do a good agreement, how much economic dislocation for the u. K. , for europe, more broadly . Matthew a lot. I think the question is how large of a font size do you type a lot in. Announced if there was a hard brexit, they likely would have to shut down their production and the u. K. Within hours of when the announcement was made. I think it underscores that for a lot of industries in the u. K. , manufacturing automobiles, finance, the production of those companies and so many of the jobs are so tightly linked to the rest of the eu and the rudder world and the broader world. Both with imports and exports. The would be a large in jargon of economic supplies, supply shock. We only have 180 days to the march 29 deadline. Theres a domestic political issue as david riley plays out. Are making alternative plans in realtime and a reduction of production and what it might do to inflation. For member britain is the worlds original trading nation. Try to so much more important to britain that it is here in the United States so frexit is a disaster. So excited they spend time making fun of their own british accents. Sticking with us. I want to recap the news from ge because that stock is now popping over 10 . John flannery is out and you have Lawrence Culp who was ceo do not how long John Flannery how the ceo job total . Months as ceo, 12 month. 365 days. David one of the things i find interesting is when he was coming onto the board he was in expert and accounting issues and he could figure out what was going on p read just had another accounting problem and they took down their estimates. Goodwill wellion will follow this news throughout the morning as well. Much more coming up on ge. This is bloomberg. Alix this is bloomberg a risk on rally in the u. S. As a new trade deal between mexico, canada, the u. S. Comes to the foreground. European stocks up a touch. Italian banks of severn trent tenths of 1 . Despite the fact that citibank blowing out to 400 basis points. The market takes it all in stride, even selling has stopped a little bit. And to take and what happened with the tory county tory province. You have the cad at a fourmonth high. Pesoonger cad and mexico mean a broad late we can dollar but thats not yet 100 clear in the market. Telephone not long and. Crude not reacting at all china weeks of there will be softness. David weather isnt softness is the General Electric stock. Ge announced a new chairman, new ceo Lawrence Culp. What is happening. Up over 13 right now in the premarket trading at it appears yett in other problem another problem stand to take down earnings because of ge power. Have wiped out have wiped out t ge power and theyre taking Free Cash Flow and earnings productions as well, mess, ge. Alix at least they did something. Compare that with tesla. We agree with must compared we support musk. Until the regulators come in and say not so much. David theres a lot more to report out, but right now there is reaction of the board during its job. This is not the first time weve had a problem. We did make the money we thought we did an the board kerley said enough is enough. We will lead independent director. You take over for the time being. Especially who is going to want to take the chairman job considering elon musk is coming back in three years . David its also why you have strong outside directors. Around, hes a turnaround artist. You turn to them in times when you have a little trouble. Alix we will be talking but the threat to shore. Emma chandra is here and she has first word news. Good morning. Emma President Trump achieve the trade deal he wanted. The u. S. And canada have agreed to scrap the 24yearold nafta and include mexico and a new threeway deal. Among modest changes comic called for u. S. Farmers to have more access to canadas dairy market plus Canadian Auto exports up to a point would not be affected by u. S. Tariffs on foreign cars. President trump has called nafta a disaster. In indonesia, the death toll from an earthquake and tsunami is now over 800. The government has continued to search for survivors from the disaster on the island. Beyond the human cost, indonesia also is likely to take a hit to its budget for reconstruction. The disaster might hurt the allimportant tourism industry. The nobel prize in medicine has gone to James Allison at the university of texas and tasuko their work. Global news, 24 hours a day, on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra, this is bloomberg. David thanks so much. Ge shares are surging as we see the premarket up over 13 . Lawrence culp named ceo. Tell us what we know about Lawrence Culp. Atry culp is one of the best industrials. It will be tremendously positive for General Electric. , he washe was at denver a heavy duty truck manufacturer and turned it into a globally diversified company. Exactly what ge wants to be and when it eventually grows up. David how will a deal with accounting issues . Every time they turn around and restate something. In theknow what, danaher 20 years i covered it never took a charge. They have never done that. At a minimum, maybe he will stop making bad acquisitions at General Electric . Alix flip it. What are the different challenges he will have to face . Going from big to small they have partied on the big asset sales that theyve talked about, whether it is to help the Health Care Business being spun off for the transportation unit being sold or beach ge also being sold out. It taken care of that. At this point, it is felt operational improvement and the power business as much more difficult than he has been in. I think he has the right tools in place. Its the right leader for ge. David for how long it often when you have a situation like this, you have the independent outside director and lead director come in for an inner for an interim period. Is it plausible that he could run ge for some time to come . I believe he is 55 years old, so hopefully 55 is the new 35. David were hoping. The average for a ceo tenure is about 13. 5 years, so it may be a long stay. David the average may have been taken down with mr. Flannery. I didnt do the weighted average after flannery. Alix chairman and ceo for a total of 12 months. So, what Decisive Action does he need to take now to reassure the markets that yes, the confidence is warranted . From now he has to put out a credible plan credible plan for each of the businesses. He is a couple of months to put together, here is where i see the steps going over the next few months. I think he has a little time to digest and look at how he can grow the business obviously, i think the Health Care Business in particular is interesting, had made anher overture for some of those ads and that was a 20 billion purchase. It was not for the full business, just for a few assets. His strongeste of qualifications that hes from the outside . Ge has historically corroded from the inside. Someoneat they need is coming with a clean sheet of paper. I think youre right. The tests aboard versus ge board, i think this is a clear statement come a one year and on with flannery and bringing in s leadershipulp capabilities. Only him or another would be possible. Alix and you see the premarket up 11 . Thank you very much. Ok, back to tesla now. Just referred to it. Elon musk learns it is tough to win a fight with the sec when the agency decides to play hardball. Must agree to be linked with the ball the role of chairman for at least three years and pay twice as much to settle a claim stemming from his august tweet storm. Tesla is up 16 in premarket trading. Crimmins. Me stephen stillatthew slaughter is and Deena Matthew slaughter is still with us. If this par for the course . Where the ceo at tesla that the whole company is built around. Weve seen that before, but this one is even more so because of the point in teslas history that this is all coming out. We think of steve jobs and his important that apple and what it meant to lose him. But, apple was a mature company. They had a great product line and it was stable at that point. Think about that point. Think about tesla, to have muska taken out of the equation at this point in teslas history when they really are a start up and struggling to show profits. To lose muska now, tesla would be a disaster. So it is a oneoff for the sec to deal with. I think this is the sec acting in its finest. The result was really tailored and perfect. They get a gold star for this one. , did theyunge was pull their punches for the regions you just described . Because he is so essential to the couch the company. Once you Million Dollars in elon musk is nothing. The rounding error. Its only to three years. Did they take that into account and say lets not go to far . They didnt want to be the doctor who has to say the operation was a success but the patient died. The protection of investors is really why they exist. Thats what this is all about. Theres a situation they had to deal with that it was immature and irresponsible to come up with that set of tweets without the foundation. But what you do about that . The playbook might have been to say, we will slap him with a judgment, take them out entirely, do a director bar, but what what would it have meant. You handle that. Its not about special treatment or treating a celebrity different, its about protecting the shareholders in making the company grow up and making the ceo grow up. Million ine 20 additional 20 million the tesla will pay that musk will largely stocks. Y buying 40 million for musk is nothing and they sec realizes that. Three about is for yourself, but thats not what its about. Its about putting in place good Corporate Governance and putting in place a Surveillance System to watch as tweets and other public statements. That is the genius of it. David matthew, lets turn you exactly on that subject. Well see. Time will tell, but does pointing to new independent directors and creating will that help move the company to a truly strong governing structure . Matthew it will. It will make tesla more in line with the recommendations of a lot of practice and research. As wasger issue is rightly said, tesla is still a young company. The success tomorrow depends on the leadership and lack there of of elon musk. If you dont want to have some of your savings allocated to the high risk, high potential return opportunity there are a lot of other companies you can invest in. The sec rightly recognizes elon musk is essential, whatever the future might be tomorrow for tesla, it is elon musk who has the vision and potential to bring that together. The contrast between tesla and beingl electric will be able to articulate what General Electric is going to be that might be different from today. Underscoreh of these the value of what leadership does for these publicly traded companies. He can becomek, chairman again at three years. Cant you make the argument that any chairman will be a lame duck chairman . Matthew great question. It will depend on who is appointed to that role and what relationship here she develops with elon musk and the rest of the board. Along the way, will be revealed his three years of performance for the company paired if they are able to resolve some of the manufacturing challenges and make advances and Battery Technology they will be doing well. If not, we will see where we are. David stephen, give us an is on the and it radar screen right now paired. Will there be a heightened level of security . Should they be expect more oversight from the sec Going Forward . Stephen ethics eckley right. The sec will be sticking to tesla like glue for the next three years. It will be watching every public statement. This is all about disclosure controls and procedures. They are going to be watching every word that comes out of musk and out of this company. If you look at the details of the settlement, it actually imposes on the committee of independent directors, a new organization within the board the obligation to surveilled the offices. S of all the they have to pay particular attention to what musk is saying. Its an opportunity for the company to go to school for three years. Theyre a great, Promising Company and musk is a great, promising entrepreneur. We all know that stuff. But he really needs an education on how to be a grownup. This is a threeyear going to School Period that could be very profitable for them and their shareholders. Threeyear chairman. The Corporate Governance and a lot of our ability. That person cannot only teach the company and musk how to run a grownup company, but also give a tremendous credibility in the markets. Its an awesome opportunity for tesla and a lot to be optimistic. Thank you both for being with us today. Coming up, solomon at the helm to we discuss goldmans new leadership as David Solomon embarks on his first day as ceo today. Live from new york, this is bloomberg. Alix this is this is bloomberg daybreak it coming up in the next hour, Guggenheim Partners executive chairman. This is bloomberg. To your Bloomberg Business flash General Electric ceo John Flannery is out after little more than a year at the top of that struggling conglomerate. He will be replaced by larry culp. Problems with the power business could total to 23 goodwill balance. Ge shares have jumped in the premarket. They have fallen more than 50 in the past year. Aston martin has lowered the price range for its ipo in london this week here at the british sports car maker made famous by johnson by james bond has made the list. They were skeptical of reaching its previous goal. California has become the first state in the nation to require women on corporate boards. Governor jerry brown signed a force allwill add ates in the state to least one woman to their boards. Alix think so much. Good job, california. Just want. Give us one. Three things wall street says about this morning. First up, facebooks biggest breach ever at the social network struggles to rebuild trust with users. Eurozone. On joins the moving headquarters to finland for it solomon takes home. Goldman sachs ushers in a new era. David joining us now is jason kelly. So facebook, this is different from cambridge analytical. This is a defect in their code. Jason absolutely pair this was largely ignored on friday amid all the kavanaugh letdown in washington for this is a huge deal. Just the latest ad think that is happening to facebook in terms , butt just his perception its perception on capitol hill to going to be looking heavily into this. Theyre not even sure at this point about the contours of the attack. Alix were people going to pretend to be you, do they still data, that we still dont know. Jason and the idea that people use facebook to look into also its of other things and that gains and access. Alix lets go to too big to fail just got bigger. Nordion bank moved its headquarters from stockholm to finland. It is so big it is a double the entire gdp of finland . Jason thats exactly right. Itsas much about funny, i ran into someone i know over the weekend who works there and he says this is as much about everybody else as it is about nordea. Essay huge loss for sweden, a big gain for finland and it also does remind you that in the era of brexit and breaking up the the eu is a very strong block and it is good for banks and regulators. Said ithe ceo of nordia will get us into the eu and help us compete. The big news. Goldman sachs come a news. Goldman sachs, a new ceo. David solomon. Jason what a day to be a ceo paired what a day to have your first day. Davideft and right and David Solomon is like, here i am that this has been a very orderly transition. Well organized. Jason we are starting to see on the margins, he is putting his own people in place, a lot more bankers, fewer traders at the top so the question will be does he continue to do that or does he make good going back to the storied you referenced about california putting women on board . Good on his promises to make a more diverse Goldman Sachs . Alix based on his schedule the answer would be yesterday is going to california for the most powerful womens conference and meet with Women Leaders and women partners. On the surface, it appears that is a big vote of confidence once he gets done with this meeting. Jason and one of the other questions is going to be, what does Lloyd Blankfein do next . He says he hasnt decided, but hes going to have a lot of people coming at him. David i talked to hank paulson about that. Alix does he have an idea . Is he going to call up gary cohn . [laughter] in the program, we are going to get to talk to alan schwartz, Guggenheim Partners for more on goldmans new leadership. Any thanks to jason kelly. If you want to june into jason every day from 2 00 until 5 00 eastern time. Coming up, General Electric shares are surging in premarket as the Company Names Lawrence Culp as a chairman and ceo. Im watching whatever but elses. This is bloomberg. David this is what im watching. General electric. There shares are searching in the premarket after the company blamed Lawrence Culp to be the ceo. Brooke sutherland come up bloomberg columnist. You surprised . I was. There have long been questions about John Flannery, but i think people thought he had a little more time. I certainly was not expect them to wake up to this announcement today. He is a 30 year veteran of the company appeared when he was brought in, people wondered, did he have what it takes to totally revamp this company that fostered his career where he has all of these friends and colleagues. A loyalty to some of these businesses that he previously ran. He is taken decisive steps. He is undertaken a breakup of ge, spinning off the Health Care Business, winding down the Baker Hughes Energy business. At the end of the day it was not enough. And, ge said they will have a shortfall of Free Cash Flow and guidance for 2018. They are good will power business will be wiped out. What kind of company is culp walking into . Brooke its a big task. The number you pointed out is a very important, because that is something flannery rolled up at november investor day. It was supposed because they coming out party and he has stuck by that guidance ever even as evidence has mounted continued deterioration in the power market. Continued reason to think ge would fall short of the cash flow. Look at analyst estimates, theyve been nowhere new the ge target for months now. David i think it is fair to say it is a turnaround for General Electric here he did a turnaround at danaher. Do we have any sense of how much time he has to come up with a plan . Brooke i dont think has a lot of time. But larry culp is so beloved by everybody in the industrial center. , theye did at danaher appreciate his m a and that is what they were known for. They would buy companies, bring them in, put them on the dan aher Business System and really make these businesses that they acquired better. I dont think ge is necessarily in a place to be buying things anytime soon, but you are managing a type of emma day phenomenon where they are going through all of these different breakups with the health care being invested. Doave wondered, could ge more on the spin off and break up front. They could be getting rid of their plane unit. At the bd doing more . Alix thank you very much paired a pleasure to see you again. Coming up, more on the new nafta deal with carla hill, former u. S. Trade representative. This is bloomberg. Comcast business built the nations largest gigspeed network. Then went beyond. Beyond chasing down network problems. To knowing when and where theres an issue. Beyond network complexity. To a zerotouch, onebox world. Optimizing performance and budget. Beyond having questions. To getting answers. Activecore, hows my network . All sites are green. All of which helps you do more than your customers thought possible. Comcast business. Beyond fast. Alix trumps art of the deal. The u. S. , canada and mexico decide on a lastminute trade deal. Culp is executive chairman of ge. Sec. Must settle with the he says the company is very close to profitability. David welcome to bloomberg daybreak. That ge news is really big news. Talking about what he did. For me, finally a board does something definitive. The contrast with ge and tesla is quite stark. Alix in the markets, it is risk on. Part of that is the renegotiated u. S. Mexicocanada trade deal. The looney is that a fourmonth high. Bleecker storyin for the dollar in g10 states . Not quite sure yet. Reprieve a little bit for the medals and commodity metals and commodities. David time now for the morning brief. Were going to hear from nine members of the Federal Reserve. Today is also the first day of the supreme courts 2018 term. The court will be sure one member as a fight over judge kavanaugh continues. Friday as jobs day when we find out how many jobs were added in the month of september. Maysek long, Theresa Conservative Party will be meeting in birmingham. Right now, we want to turn back to the successor of nasa. The u. S. Can do terms of canada late last night and set up a ramification of the new nafta, which has been renamed. It is the u. S. Mexicocanada agreement. We welcome mike, who is the nafta expert. Tell us about this deal. The president says it is historic. Mike a lot of the focus has been on those nasty problems and the lastminute negotiation snags. Those are some of the least important aspects of this treaty. The agreement modernizes the Free Trade Agreement that came into effect in 1995 by incorporating things that didnt 1985 byen incorporating things that didnt exist then. Duty free up to 100 in both cases. That is a big increase from the 20 allowed earlier. That kind of thing, modernizing the treaty to recognize the new economy that we have today, is the most important aspect. From that standpoint, it is definitely a win for all three countries. David the president went into this saying he is upset about a trade deficit. Thing ratified, what is it going to do to the trade deficit . Michael people have to study the details a little more, but the general impression has been after the u. S. Reached an agreement with mexico, that it wouldnt change the trade deficit all that much. It really doesnt have that much of an impact. Its going to keep products from. Ther countries it probably keep the status quo in place, more than anything else. David thanks so much. Alix joining us now on the a former u. S. , trade representative who is their way nafta was negotiated. What is your take on this deal . Of us inthink all north america are winners that we kept canada in. It would have been adde disaster a disaster to keep them out. We are joined at the hip with our synchronized supply chains. David we kept it together and that is good news. Where there significant improvements made as far as you can tell . Carla there were additions. Summer lifted from the Transpacific Partnership some were lifted from a Transpacific Partnership and modernize and used for this agreement. What im delighted about is that they kept the agreement. Is complicated rules of origin . Perhaps not. What i have had the sunset clause with the 16 years . Perhaps not. But i am very happy that we are keeping the economies together. In fact, there have been some openings. Canada has offered more opening with respect to dairy. We have said that we would not to 32r National Security with respect 232 with respect to autos. Those are good things. David i understand steel and aluminum were left out. Is that surprising . Imagine using the losing theity National Security with respect to our two closest neighbors and allies. With usas been shoulder to shoulder since world war ii. I dont understand how we are using the National Security. Apparently, i have not studied the text. They have not come to a resolution of what to do about the 232 duties on steel and aluminum. Going to be were sitting down with Robert Lighthizer today, what would be questions you would have for him . I think that he is going to have to work pretty hard with our congress to have them why he haswhat and taken some of the pass he has done. There it paths he has done. There is quite a lot of time between the time the three leaders sign the agreement. Have 60 days after it assigned to outline the changes of law. Days whereis a 105 the International Trade commission has to provide a report. Then there is time for developing the implementing legislation. Him to just encourage work very closely with our congress and keep them uptodate on what and why he is doing various things. David just to be clear about the process here, i understand they really need that to be done because the mexican president takes over. What is the risk if there are delays that come into this from congress . Is that once it assigned, then Congress Takes over because congress has authority under our constitution for trade and terrorists tariffs. , thengress turned it down we are back at the beginning. We will have to decide what to do. That is why i would encourage the u. S. Trade representative to consult closely with congress. David as you have been talking, we got word from the white house. Sarah sanders saying President Trump would make remarks and the rose garden at 11 00 this morning about the u. S. Mexico trade agreement. How tough a deal will it be for the president to sell this to congress . The democrats were inclined to want a version of nafta. Republicans were concerned it might break down. While they have pretty willing listeners up there as the president makes his remarks . Carla im interested in what he will have to say. I think he should be congratulated that canada is in. I think the way that we have handled our relationships has not been beneficial. Canada,re said about one of our closest allies, that ought not to have been set. I hope his said. I hope his remarks are soothing and that he works with congress to get this agreement through. North america is the most competitive region in the world. Ofis responsible for a third americas global trade. Canada is our largest export destination. Mexico is our second largest. We have some 14 million hoped to this. Lets not play around hooked to this. Lets not play around with something absolutely vital to all three of us. Thed that is carla hills, architect of nafta. We just heard from Sarah Sanders that President Trump will be addressing the question of this new agreement at 11 00 this morning from the rose garden. We will be taking that when we hear the president has to say about his new agreement. Coming up right here, more on the Market Reaction to the new with the state street head of americas multiasset strategy. This is bloomberg. Emma ge General Electric ceo John Flannery is out. He will be replaced by larry culp. T says it will miss its Profit Guidance. The company says it will miss its Profit Guidance. Ge shares are higher in premarket. There will also be a change at top of industrials an will be split in two. Its not go big or go home when it comes to trade. Apparently small changes can be the winner. Made ares that changes cosmetic. Washington is happy to agree with small modifications. The market taking it as a cue the peso gained strength against the dollar. The narrative of markets risk on an light of the trade agreement, is that the correct interpretation . E certainly for the Canadian Dollar and mexican peso, the benefits are clear. I think what the market is doing is interpreting it as maybe a more conciliatory tone by the u. S. Administration. Maybe that means we get more progress on trade with china. That is the big one everybody is looking at. Market reasons, we have a deal here, maybe the next one is china and we get a deal there. Sure. Dnt be so i think this doesnt really tell us a lot about what is going to happen with the china situation. Alix i was curious to see what nx did. And mixe how much political premium do you think is in the market . Most expected this deal to be done. The Canadian Dollar strengthened around 1 , same for the mexican peso. You might have thought we would get more than that, but i think everybody really expected this deal to get done. It has been well flagged over the last few months. The big surprise will be china. If we got progress there, you would see a bigger reaction, maybe in the em currencies, but certainly in equities. That is where you get the reaction if we get a china deal. The nafta was well flagged. David lets pick up on that china question. You could say this makes it more likely the chinese still a be done because it shows the president is willing to compromise. Will be done because it shows the president is willing to compromise. Adopted a new baseline that assumes a u. S. China and game involving 25 u. S. Tariffs on all chinese goods. A weaker you one becomes part yuan becomes part of the new equilibrium. Lee this deal plays well, canada and mexico our neighbors, the u. S. Has pretty much a balance with canada in terms of trade. It was always beneficial for the u. S. To make this deal. President trump has also said they are going to open bilateral negotiations with japan. We had the eu deal a few months ago. I think it does allow him to focus on china and perhaps play even harder ball with china because he is getting these deals elsewhere. I want to do deals on trade, its just that china doesnt play fair and wont meet me halfway. I think it does given that opportunity to play hardball a little bit more with china. That is a big one if we go to 25 on all of chinas imports to the u. S. , that is 125 billion in tariffs. That is huge and would have significant implications to global trade and the u. S. Economy and markets. Nox i was shocked by that two because it said we have to live with a weaker yuan. Is the world ready to recalibrate for a broadly stronger dollar that is consistent . Ee i think the world isnt ready for it yet. Over the summer, emerging markets suffered. Some thought that was idiosyncratic with individual there was morek systemic backdrops to the market that has to do with the removal of qe. Well all this was going on, we have tightening policy, the fed is shrieking the balance sheet. I think that is a huge impact for markets. If we are calibrating for a stronger dollar against the yen, with start to get into the issues of u. S. Dollars to nominated debt amongst corporate and emerging markets. These numbers have gone up significantly over the last few years. If the dollar was to strengthen further, youre going to start to see trouble in a lot of areas in terms of dollar denominated debt. I think the market isnt right for that. Lee of state street will be staying with us. This morning, President Trump will make remarks on the new canadaact with the u. S. , and mexico. They have a new ceo, the cfo they promoted up and a new chairman of the board. They said we wont cut any of the jobs where we are making stuff. Were going to cut a lot of corporate. Alix again, this brings back the industrial landscape. Huge Industrial Companies that are having to shrink and spin off businesses and get smaller because they cant get the kind of margins they want. I member coming to thyssenkrupp years ago. David you have acquisitions and Big Companies with acquisitions, but it is also quite a contrast with amazon or google getting to enormous user term. The industrials right now seem to be shrinking. Alix the second story we are watching is General Electric. Shares are surging as Lawrence Culp is named ceo. I woke up this morning and was like, wow. People were excited when he was brought on the board. There are more excited now that he is running the company. Flannery ran out of time. In a year, what is ge look like . Karen the scary part of a flannery try to do was he kept power as his biggest business. It has such secular issues. I think we have a clean sheet of paper. I think you may keep some of those good businesses and work on shrinking power so it doesnt cause as much pain. David you think you might not sell some of the things flannery said he was going to sell . I think flannery was going to Sell Health Care because he needed cash and quickly. Theink culp is going to get operating system to work and get cash out as quickly as possible. He will certainly sell businesses as well, but i think its a fresh look. Ry culp alix one of the things david one of the things we have there that danaher was a day and age when that would have applied to ge. Does that still exist . Ge still has an Excellent Training Program for management, etc. , but so much backup built into ge. Gallagher has a Continuous Improvement processes danaher has a Continuous Improvement processes and it works. Alix John Flannery as ceo and chairman has 12 months. How long does larry cup have culp have . Karen i think he has a while. There is good well behind him. Goodwill behind him. There is so much to do, but i think he is up to it. David always good to have you here. For the third story, we are going to talk tesla. Joseph has a sector perform rating on tesla. Here. Ood to have you i daresay that was all before we had the settlement with elon musk stepping away as chair. For three years and paying some fines do you have a rosier view today then you did on friday . Joseph i think this is a good andome for tesla, for elon, for shareholders. Eliminates the worst Case Scenario which would have been a prolonged process that could have impacted the company, potentially access to capital and recruitment of executives, and would have barred musk as ceo on the board. The shares are up in the premarket and we expect the stoxx to recover most, if not all of the gains. David access to capital, how much capital do anticipate they will need over the next 612 months. They say they are getting closer to break even. How much difficulty will they have raising that much capital . Joseph were in the midst of the model three launch. We will get a couple of data points in the coming days. Ae cash flows should improve little bit as the model three continues to ramp. We still think they probably need a couple billion dollars, especially given some of their ambitions over in china. Longerterm, this company has very ambitious targets and we the cash its able to generate organically will not be enough. We think they will eventually have to return to the markets. The amount is dependent on the timing of some of the plans as to how fast this Company Wants to grow. Alix there were so many anecdotes yesterday of people waiting online, people being super excited to drive them. With all of that, as the sec even matter . This is Corporate Governance even matter . If elon musk is saying there is an epic victory and people are driving off the lot, does it even matter . Does. we think it one of the bright spots of the sec coming down on the company is a separation of the ceo and and that they are forced to add two new independent board directors. We think that will add a lot of stability to the company, and certainly is a positive direction to improving Corporate Governance. We think that is important to keeping shareholders involved and potentially attracting new shareholders. David in a short phrase, is this enough or do they need a coo . I think this is a big event in terms of putting the whole tesla for 20 saga to bed. From here, it clearly shifts more toward the operations and cash generation potential of the company. Alix thanks very much. Coming up, oils rally. We will discuss it with francisco of bank of america. Im all about my bed. This mattress is dangerously comfortable. When i get in i literally say, ahh. Meet the leesa mattress. A better place to sleep. This bed hugs my body. Im now a morning person. The leesa mattress is designed to provide strong support, relieve pressure and optimize airflow to keep you cool. Hello bed of my dreams. Order online. Well build it, box it and ship it to your door for you to enjoy. Sleep on it to up to 100 nights and love it or you get a full refund. Returns are free and easy. I love my leesa. Today is gonna be great. Read our reviews, then try the leesa mattress in your own home. Order during our fall mattress sale and save. For a limited time get 150 dollars off and Free Shipping too. Sale prices are available right now. Go to buyleesa. Com today. You need alixx this is bloomberg daybreak. A couple of things going on. You have the renegotiated trade ge. , a leadership change of italian banks a little bit lighter coming down. 1 . The ftse pretty much goes nowhere despite the complete turmoil that is engulfing the tory party over the last 24 hours. Cad. Ersus the cad at a fourmonth high against the dollar. Do we see a weaker dollar story or is this specifically related to the mexican peso and canadian loonie . Break becausea china is closed for the week. We can take a break and not have to look at copper selling off again. David lets get an update on what is making the headlines from outside the business world. We turn to emma. Ma after calling nafta a disaster, President Trump has received the deal he always wanted. Changes, u. S. St fibers have more access to canadian dairy markets. The president will be speaking about the new deal at the white house at 11 00 a. M. Eastern today. Stay with bloomberg. In indonesia, the death toll from an earthquake and tsunami is now over 800. The government is continuing to search for survivors. The on the human cost, indonesia is also likely to take a hit to its budget for reconstruction. The disaster may hurt its tourism industry. Medicine havee in scientists at the university of texas involving the human immune system to attack cancer cells. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. Alix oil extending its rally for the prices getting a boost from north american drilling. President ll from the and the president of saudi arabia. Bank of america currently sees brent reaching 95 by the and of the corridor. What do you think that trump and the king of saudi arabia talked about this weekend . As we enteris that the next six months, iran sanctions are right at the center of discussions between the u. S. And saudi. It really depends on how much Incremental Oil saudi can supply. How hard President Trump can go on iran. That leads us to what kind of deficit we can see in the market. That is the question. Whenar deficit can we go we anticipate 100 oil and that is sustainable . Ago, weo six month were all thinking iran sanctions were going to take half a Million Barrels away from the market. That, what has happened is the Referendum Administration has been stronger, and were looking at zero tolerance in korea, japan, europe, india has been winding down, even china a little bit. Suddenly, we are looking at a much bigger disruption coming from the iran sanctions. Its going to be at least 1 million and maybe 1. 5 million. The one thing President Trump and the king of saudi bite irant to as hard as possible. What can saudi arabia due to make it easier for the u. S. . Francisco historically, the saudis have produced a maximum of 6. 10 Million Barrels a day. Its possible they could go higher, and they claim to have a next her 2 Million Barrels in the capacity. We have never seen it and their of management here because you can damage some of the reservoirs if you hit them too hard. I think the other issue from their perspective is, can they really offset what is effectively the worlds fourthlargest producer . They produce almost 5 Million Barrels of oil a day. Hard to do this over the short window. If you try to do it very quickly, the risk is that you get a spike. You mentioned around 2 day. On barrels of oil a what is striking is the decline which we have seen take hold since 2015. There is also a distinction between a supply surge and real Spare Capacity that can be sustainable. Could there be a supply surge that is not sustainable . Theyre definitely can be and we have seen it in the past. The former Mexican Government of that in the early 2000s. They created a surge in oil but ended up damaging the field. Risk. S the you can get a surge, but engineers will say dont put more pressure because were going to damage it. David to be fair, if we are headed to 100 barrel, what effects will that have on the economy of the u. S. More broadly and on investors . I think it would add up to another drag on the economy. Oil, get 100 a barrel on that is a hit for the consumer. We have got types of said policy. They removed the word accommodative. We have had three hikes this year and we are going to get another one most likely in december. Then, we have the trade tariffs. Already we have 10 on 200 billion going at the start of 2019. Suddenly, the u. S. Consumer has a lot on its plate. Real earnings are going up. If you look at real earnings, they are up. 2 year on year. Lets call that flat. You have a higher oil price, trade tariffs, and higher fed policy. We are already seeing the Housing Market losing some momentum. If you going to 2019, you look at some of these headwinds popping up for the u. S. Consumer. With so much priced in for the fed, that could be a problem for the dollar as well. David what does that tell you as an investor . I think there is every chance they start getting defenses. Im can defensive. Im concerned about the timing from the fed. The ecb are going to have to what they are printing. The fed are not trading 50 billion. The market is not getting liquidity injections we have been used to. If you go back to 2009, the Balance Sheets have gone up. Now, it is zero. We are not getting the liquidity and the market that we are used to. That is one of the main reasons em currencies have suffered this year. Equities outside of the u. S. Have suffered this year. We are ready have that headwind, now you add these and and investors could start getting defensive over q4. Alix it all hinges on what oil price attacks the economy. Think one of biggest shifts is this rotation away and loosel policy Monetary Policy to this new world of tighter monetary and little fiscal looser fiscal. I dont think it will negatively impact developed markets. Seeing almost every country started to live in that direction. The pressure is going to be on the emerging markets. They are fully exposed to this higher Interest Rate situation, higher oil prices, higher tariffs. That is my concern. It will take a little bit of time to build, but within six or 12 months, we could end up having pressure building on those emergingmarket currencies, because so far it has really ,een the argentinian peso indian rupee, and r b. Once against to china, we will have a big problem. We are not there yet. David oil is going up, what happens with the other markets . As it relates to china, china buys about 12 of the worlds oil, but 50 of the worlds copper. The premise has been the oil is experiencing a supply shock. Being affected by the weaker emergingmarket currencies and the softening chinese manufacturing center. Alix what does that mean . Francisco i think it continues for a while and chinese growth will keep accelerating for some time to come. They have a lot of Spare Capacity to clear. The have a lot of debt. Chinese debt to gdp ratios are extremely high. They cant easily keep bumping more debt into the economy at this point. David francisco emily, thank you and lee, they gave very much for being with us. Discuss goldman under solomon. Is next. Arz this is bloomberg. Emma coming up in the next hour, the verizon ceo. This is bloomberg. Now to your Bloomberg Business flash. It looks like there will be a takeover battle in the canadian oil business. Husky is controlled by the family of a hong kong billionaire. Ryanair has become the latest European Airline to lower its outlook. It cut its fouryear Profit Guidance by 12 . It blames labor problems in a higher cost of the fuel. California becomes the first state to require women on the board. Supporters of the measure say could simply expand their boards. Alix we do have breaking news on brexit. There could be some softening on the irish backstop here. Basically, there will be a legal guarantee that says there is a border between Northern Ireland and the Irish Republic that will remain open and free for travel and trade after brexit. They might put forth later this month backing down from the opposition of some new tax on goods moving between the mainland and Northern Ireland. It feels like theyre going to do tax, but not as heavily checks, but not as heavily as the eu wanted them to do. David people thought you could do this in a way that would not be entirely cumbersome. This is a big thing. Alix i wonder how that would even work. A big shift in the irish sea . The idea is that they are giving a little, and they want something from the eu in return. Compromise. Eu to david which is again what Boris Johnson really doesnt want. Alix he can keep complaining. David in the meantime, were going to talk about Goldman Sachs. This is the first day of the solomon era. To give us a peek into what may change and what may stay the same, we welcome alan schwartz, Guggenheim Partners executive chairman. You know David Solomon, give us your sense about what will change and what will say the same under him . Alan i think its going to be a very smooth transition. Its a similar way to when lloyd took over from hank. I think lloyd has been an exceptional ceo. David has been a key member of the team for a long time, has been in a room with all of the key decisions there been making, having a lot of impact into it. As he steps in, there is not a lot of change. The challenge is that each individual is a little bit different. You have to find your own way of doing things. Ishink without boils down to it is a very strong culture and david will want to keep all of the best things that lloyd brought to the culture and keep them there, but want to be able to change and continue to move in the directions the markets dictate. Alix the struggle between the Investment Bank and fake have been widely telegraphed. I want to ask about the other things like markets and prioritizing women partners and women on the board. What about these offshoot initiatives . How committed is David Solomon to those . Alan i think he is extremely committed. I think lloyd was too. Seen,n, from what i have has been a pretty good job of promoting women into senior ranks. You deal with a lot of senior women. Clearly, not enough. This is something everybody is struggling with. As well as minorities, which is actually been a bigger struggle than women. And wall street, in particular. David and i have talking about talked about this. Worklife balance is another important problem. David is very into that as well. David one thing we know will be different is the set of challenges he has. The world changes and this world is changing really fast. In addition to a we just talked about, diversity, what are the other Biggest Challenges will he be facing as ceo that boyd didnt have . Alan if you look at our industry, other industries are going through this morning, but the securities industry has been one where the businesses that were great businesses for the existing franchises a couple of cycles ago become commoditized. I remember when we were doing overthecounter trading and specialist trading on the floor. The business has become commoditized and that is what goldman has to deal with. They were the best in certain areas, but as the returns of those areas go down, you have to move and stay where the puck is going. I think lloyd has been focused on that. David has been a critical player in figuring out where are the next big opportunities for goldman. That is going to be the challenge. Where do we take the golden franchise into areas where we can earn the kind of returns we need to earn. David part of modernization is technology. What are the parts of goldman most susceptible . Algorithms play a big role, but so this just the size and concentration of the owners of assets. Once you get to the point where it used to be that banks were the intermediaries amongst a lot of players, when you get giant players, you cant be the liquidity provider anymore. I think the opportunity, which i have not sat in their boardroom and talked about it with them the opportunity is the commercial banks came in and moved into all of the turf the Investment Banks used to own. I think now, what we are seeing is the Investment Banks can turn around and say, how do we use technology and our franchise to go invade the territory that has been the sole proprietary or sold area of the commercial banks . If you look at where goldman is going, that seems to be the direction. Alix if i go to a job interview, i have to say what my strengths and weaknesses are. If you are to describe David Solomon weaknesses, what would they be . Way youe one describe going this is to say that i have an exceptional strength. I think david is a very wellrounded person. Sayness, i guess i would sometimes david can appear to be somewhat aloof. Even know he is very much a people person. When he is focused on issues, and he is really focused, and he is very demanding, some people can see that as aloof. I dont happen to agree with it. Into thisn he comes job, who to ccf is competitive set . That is changing as well. Alan i think all industries now. If you look at the Way Technology is changing, everybody is not just swimming against the other people in the lanes they have been summing time. T for a long everybody is looking at how Technology Allows people to go into new areas and challenge people that had dominant positions. If you look at who is his main competitors are, it is still the very large wellcapitalized financial institutions. When he mentioned talk of rhythms, if you look at what is algorithms, the market shares are flowing up to the top players because they have the capacity to play in the algorithm game. I think theyre going to look at primarily, and you never know where amazon is going to come or google or anybody else, but if i was looking out at the next five 10 years, alix one of the questions he is going to have to tackle is what is going to happen in 2019. What is the biggest risk . I talked to our cio about this. We talk about it as i am a recovering Research Director myself. On a nearterm basis, everything looks good, but there is a lot of risk on the horizon. The two i worry about on a nearterm basis the most is emerging markets. We have been worried about that for a long time. If you look at the areas where credit has kept flowing in large amounts into credits that dont appear to be that high a quality, to me, the emerging markets have stood out in the. If there is some sort of disruption to the Global Trading process and system, that becomes a potential real problem in currency. The slightly longerterm one on the horizon that bothers us the most is basically u. S. Fiscal policy. Opportunities, after the crisis, everybody said we need fiscal stimulus because we dont want to go into a depression, but lets not take our eye off the ball that we have this huge spending wave coming. 10 years later, everybody seems to have given up on doing anything about the spending wave. When that could come back in, especially if we had another recession, that to me is the biggest risk on the horizon. David at what point does the bond market stand up and say you have gone too far . You have borrowed too much money . Alan one never knows. They dont ring the bell. Said it feelsve like we are in the seventh or eighth inning of a bull market. In the equity market, you could say the same in the bond market. Late. Y gee, it is getting nobody picks up the phone and says there are two outs in the ninth. When the markets decide to change their perspective on something, you cant ever tell that. Alix we have baseball, swimming, there was a hockey thing. If i am a ceo, for the next year, what should i be most worried about . What is going to be the deciding factor on whether or not im going to make an investment . Making an investment, i think the key area is going to be what is going to enable me . Cant play a lot about im going to do this or that in the economic cycle. Think the main thing ceos have to think about right now is where can i be making investments where have an opportunity to maintain longterm competitive advantage . There is a lot of opportunities to do things shortterm, but the Way Technologies are changing, all of the companies out there have to figure out where they are going to fit into the new modalities, and where they have an opportunity to not be commoditized, but actually earn longterm, competitive returns. That is very challenging in todays environment. Look at those, do you worry about how long your supply runs out . There is a difference in to say its time for me to relate he orressive and go out there, maybe i should draw in my supply lines because there might be a turnaround coming . Alan definitely, one has to make sure after nine or 10 years of the recovery, you havent gotten complacent about your balance sheet, about any aspect of your margin. Lets remember, Profit Margins are at alltime highs. Are they sustainable . The question is, where are the things they will be challenge from . Every ceo has to be saying, i have to drive for the long term, but i cant afford to make too big a mistake. Alix such a pleasure. That does it for bloomberg daybreak americas. Coming up is the open. This is bloomberg. Jonathan this is the countdown to the open. Coming up, stocks rallying. Tesla rebounding. Te surging. John flannery is out after a little more than a year. The mood is better this monday morning. We are up 14 on s p futures. Treasuries given up some of last weeks gains. Yields up about a basis point. United states and canada agreed to a new nafta agreement. President trump signing a deal that looks a lot like the one you want called a disaster. It still looks very much like the original nafta deal. I dont think anyone is going to be upgrading their views on tr