for francine lacqua. a pause little bit of for thought in the equity markets with a little downside in europe. the stoxx 600 down by .25% after two days of some strength. performing well against and it is, up .3%, heading for a weekly loss. heading for a weekly gain, though, is wti. supply concerns out of libya and venezuela. prices were up .4%, trading at $63.83. and brent holding well above $70, at $71. coming up on bloomberg, we have european commissioner for economic and financial affairs. you can catch that at 5:30 p.m. london time. this is bloomberg. first word news with viviana hurtado. viviana: hi, nejra. look at these $3 billion operating loss last year for uber. poer has a lot riding on the i while the company reaches a $120 billion market value. $7 a month. that is how much walt disney's new streaming service is going to cost. it is set to launch on november 12. disney plus is what it will feature kids friendly programming and material from wars"rvel and "star franchises. your's chief co bob iger josh ceo bob iger. making a platform that is more modern at a price that makes sense, i think that is why we feel confident. facing: theresa may is calls to resign from members of her own party curtis after she originally six-wasn't range of brexit. ministers as she is working on a compromise with the labour party. on a courseet her for an even softer divorce. may says she wants to leave before the 22nd. scheduled touchdown before a sea of tranquility, being first to land a privately financed spacecraft on the moon. the engine sailed a few kilometers above the surface. with nothingu for dissent. -- descent. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. i am viviana hurtado. nejra, back to you in london. "bloomberg surveillance thank you -- nejra: thank you. this is on march new yuan lows coming in at 1.6 trillion yuan, the estimate he in 1.3 trillion -- bal 1.3 trillion. then, that is more than expectation of 8.2%. we had a trade data from china, higher thanng in expected, imports weaker than expected. investors wait for earnings to come from big banks in the u.s. the imf and the bank meetings have been going on in washington. we have been asking global policymakers about this. >> you look at the u.k. it is affected by brexit. it is asat turkey, well. you look at argentina, it is bottoming out now the economic situation where it was. and you look at what happened at 2018 on the monetary authority. all of that has an impact. helpfix will actually growth from 3.32 3.6%. priceetary policy, stability. obviously with some precautions to support economic growth, but they cannot be the full engine of growth in the global economy, so this pose very clearly for .dditional support >> we are continuing to see growth above potential, slightly above potential, but we have got downside risk, so policy uncertainty has been a big insurgency for downside risks for the last several months. joining us for the hour is rob porter, global head of rates research at merrill lynch. let's start with a big question over where we go with the global economy more importantly, can the central banks have the tools in their toolbox is actually deal with a slowdown in global growth? guest: i think you see an interesting symmetry on the question.t of the the rba is one example, the fed is another example. arguably, the fed could grow balance sheets again. considerably more limited. it is interesting because the draghi trying to indicate that it is not all that red, he clearly try to introduce some symmetry around rates, for example. nejra: what does that mean how you take opportunities globally in the race market? if you look at the chart, it is a precipitous drop in global yields. what is the new ones there? ralf: if you look at breakevens, you can generally short-lived in europe. u.s.rgument being that the can do it while the ecb will struggle, and that is one of the things that draghi was highlighting, so he has turned more neutral now on breakevens in europe. we also face the valley and rates somewhat in the u.s. while i think in europe it is still a little bit too early to try to do that. rallying rates in the u.s. that is interesting, because that means you are targeting a deepening of the u.s. curve, it is so, would you be talking 10/30?ore like 2/10 or ralf: for us, we will see a 10/30 story over a 2/10. we think the fed has gone neutral. hs curve is doing nothing at all. it is where you see the risk premium take place first, and you are likely to be able to see much more easily with the 10/30 han the 2/10. 10/30 is still in positive territory. nejra: interesting here you can see i recycle this chart. the u.s. making modest dollar gains with the initial stages of a treasury curve inversion. would you agree? and if so, what is your outlook for the dollar? ralf: we are more bearish the dollar, polish the euro and the -- bullish the euro and the yen. normally occurs because the fed explicitly tightens conditions to the point where the economy starts slowing down. news for willgot before you can argue that financial conditions and monetary conditions for that matter are restricted. so the fact that we see that is also unique because it is a bull classmate rather than a bear classmate. what you see in that cycles is much more difficult than it should be, because the curve moves are so different from what we have seen. preusser from merrill lynch stays with us. coming up later, we speak with the economic commissioner of economic affairs. you can catch that at 5:30 p.m. london time. this is bloomberg. ♪ ndon time. this is bloomberg. ♪ nejra: it is earnings season for big banks. jpmorgan kicks off this morning with net interest income. a key driver that is weaker supporters may have peaked. the group top lining declining from earlier, but against the global revenue trend is critical. the group's trading numbers may hurt the overall revenue picture. improved industry loan growth in the fourth quarter cook, however, the positive for the group. let's go to the bloomberg business flash now. viviana hurtado in new york. viviana? musk fight perceptions about the company's massive debt load. the company pays billions of dollars in yen. efforts have not swayed s&p and movies. boeing says -- and moody's. it still says the bond rating is junk. boeing says the upgraded planes cannot be use as what are referred to as high hotspots. says thean for boeing airport can handle these large plans because -- planes because they have long runways. ipo of the here raising $2.3 billion in its offering on the italian exchange. valuatione company's at $6.4 billion. that is your bloomberg business flash, nejra. nejra: viviana, thank you. the economic slowdown draws frequent parallels with japan. low interest rates, debt, and the aging society are cited by frenchst, but a economist brushes off the comparison, saying europe's regionr growth means the is faring better. still with us is ralf preusser from merrill lynch. ien i look at the five-year, see them going down, down, down, so inflation expectation for me, not so high in the eurozone. ralf: no, clearly not, and i think the ecb is being somewhat disingenuous in the recent comments, because they are trying to do sharper moves with the bargain that it was a change in inflation risk premiums. ismmandby, ity the by breakeven, what is driving the decline in inflation and breakevens. i do think they will have a bit of an issue, if you compare the moving nominal rates between the u.s. and europe, in the u.s., real race face a lot large hedge breaking, and in europe, so you get a lot more bang for your buck in terms of normal rates rally in the u.s. than you do in europe. nejra: is there much reason to be invested in 10-year bunds? as you look at it, and he's a negative yield coming away, that people say hang on a minute, money can be made here. what is your take? ralf: i am german. bunds are always going to be cheap to me. nejra: [laughs] ralf: joking aside, looking at the race is really not helpful at this point. one of the key arguments despite the low level of yields, europe retains one of the steepest curves out there, so from investors' perspectives, you cannot carry, and that is the interesting japanese parallel. if you go the last 20, 30 years, they are longer the market because no one could bring themselves to buy those valuations. as a result, they would consistently lift out of that role you have on the curve. it looks like investors are making the exact same mistake. yes, they do not look cheap, but it is a steep curve, and as a result, as an investor, you can roll down that curve, especially the product that you served fx hedge fund aware of not offering any value at all, because 2%, 2.5%, you end up paying away. nejra: what is your take on if and when we get a clearing amount from the ecb, and if it comes with guidance and lower, prolonged race? -- rates? ralf: i think with the ecb is trying to do at this point is therefore the worst-case scenario. clearly they want to see europe rebound and do away with negative rates for the right reasons, which is dealing with a stronger economy. hardeason why it is such a decision for the take and why they have not taken insofar as because the european banking system is so much more heterogeneous than the swiss banking system or the swedish banking system. it is much more difficult to discuss a policy that is not -- that does not come with complicated questions. for me, it is the last resort for the ecb. it is something that they would really only deploy if they are also willing to acknowledge that rates will not rise for the next couple of years. nejra: all right, so if you think it is the last resort and it will come coupled with forward guidance on lower for longer, does that mean you expect a deposit rate hike for the ecb later this year or early next year? the: economists still have rate hike penciled in for the end of the year -- nejra: the market is not, though. ralf: the market does not care similar to the pessimism around the della reese, because they have -- dollar rates, because they have it based on germany, based on the fact that autos are is, the labor market slow, and i am sure we will come back to china later. recoveryan underlying story that you can tell, and if that comes through, then growth should be back above potential in that scenario. a rate hike is not that far-fetched, given that the ecb, i think, is so desperate to get out of this negative rates wrap. nejra: does that mean we can see a stronger euro by the end of the year? not: that is why they are pushing more aggressively down the road, because that is not what they want to see. nejra: thank you so much. ralf preusser from merrill lynch stays with us. coming up, showdown. disney comes late to the party, but it comes with content and price. we have ceo bob iger. that is next. this is bloomberg. ♪ this is bloomberg. ♪ nejra: economics, finance, politics, this is "bloomberg surveillance." kiam nejra cehic in london. streamingtaking the 50 netflix come unveiling details of its new streaming service. wars"+ will include "star movies and disney and pixar films. chairman and ceo bob iger spoke to bloomberg's emily chang. bob: i think making them available on a new technology platform, a technology platform that is simply more modern and i think growing in popularity at a price that makes sense, a user interface that is beautiful and i think that is why we feel confident that people are going to sign up in droves to have. emily: you say he will likely bundle disney+, espn plus, in hulu when? bob: i think we can bundle disney+ and espn plus fairly soon. i do not have exact date. we are launching disney+ in november. hulu, we still have a minority partner with, and everything we do has to be done with them in bundling might be something we take to hulu management and the board that would require the approval. we think consumers will want all three, and eventually, we want to make it possible for a consumer to buy all three. italy: will you be attempting to buy hulu? -- emily: will you be attempting to buy hulu? bob: we will see. it as early to speculate. emily: you did give up partnerships with netflix to pursue the streaming service. you mentioned roku, sony. you did not mention amazon. why not? bob: well, the app will likely be available through traditional distributors, appleby and one of --m, so i have barely serval apple being one of them, so i am fairly certain that if people want to subscribe to the app, they will be able to do so through apple and the itunes store and also traditional distributors to sell apps. emily: what does this mean for disney overseas, specifically in china, in the broader asia market, where we have a lot of people watching right now? well, i think you need to figure that all of the content that we make for the service will be available internationally in different forms. in sum, we will launch a service as a prescription markle. -- market. that will not be right away, and in china, there are still rules that govern the right to supply services that we will have to comply with, so we're not sure how the overall disney+ service will enter the chinese market, but ultimately, the product is being made for it. if disney+ is not end up there, it will be made available to consumers in another form. nejra: that was disney ceo and share bob iger speaking to bloomberg's emily chang. theer to the midpoint of target range. we bring you more from our interview with the central bank's governor next. it is a fairly quiet friday. european equities were printing a little to the downside earlier. still flat, though, nothing to report for the stoxx 600. u.s. equities of course close flat yesterday, and futures with a signal moving to the upside actually on s&p futures right now. 10-year yield hovering around the 250 handle. big story for oil, a gain. this is bloomberg. ♪ nejra: economics, finance, and politics. we have breaking news on dansk a bank for you. the danish business authority 'ss reported that danske bank auditor in the year 2014, was reported to police. breaking right now. reporting auditor ernst yearng to police in the 2014. ask it to bloomberg first word news. -- let's get to bloomberg first word news. viviana: theresa may agrees to a six-month delay to brexit. the british prime minister is working on a compromise with the labour party. this could set britain on the course for an even softer course . she says she wants to leave the eu before may 22 to avoid the u.k. having to hold european elections. 's nomination of herman cain is in trouble. white house advisers would not be surprised if kane withdraws. -- if cain withdraws. of president alarm trump's frequent bashing of the central bank. jay powell was asked about the president's potential picks for the fed board. the chairman says he does not discuss nominations. president trump's love of wikileaks seems to have faded. you may remember in 2016 he made no secret he appreciated the website and julian assange publishing thousands of hacked emails. many of them damaged hillary clinton. julian assange was arrested yesterday as his asylum was revoked. he could face a criminal indictment in the u.s.. spacex successfully launching its shock and heavy locket -- rocket -- its falcon heavy rocket. set toarrying satellites deliver tv, radio, and internet to customers across the middle east, africa, and europe. elon musk tweeted the falcon has landed. global news, 24 hours a day on air and on to talk on twitter powered by more than 2700 journalists and analysts in more than 120 countries. nejra: let's turn to emerging markets. a surprise investor raised a key rate to 7.65% in november. but the chairman lesetja kganyago says the rate is below neutral. we spoke with him at the world bank spring meeting in d.c.. lesetja: we are very clear. a target that we have been looking at for some time. expectations on the top end of the inflation target. ago, we started communicating that we would like to see inflation expectations come closer. it might be just below the midpoint of 4.5%. what would be more important and more welcome is inflation expectations that have adjusted. they have come lower. for the inflation expectations, they are their lowest in a long time. have lowerto interest rates, we have to have lower inflation. >> but if you look at the banks, a lot of them are growing faster than income. struggling.e construction companies are struggling. would they not benefit from a rate cut? would they benefit from a rate cut? i ask myself, would they benefit from higher inflation? they would not benefit from higher inflation. but we believe that it is belowodated because it is and that is good for us. nejra: that was lesetja kganyago , south african reserve bank governor speaking to francine lacqua. rebounded after the lunar new year holiday, jumping 14.2% in march from a year earlier. of importsinue slide underscore the fragility of the domestic economy, dropping 7.6% in dollar terms. from joining us is ralf merrill lynch. his china exporting inflation or deflation? ralf: that is a tough question. nejra: i have heard different views this week which is why i'm asking. ralf: it probably still has a disinflationary impact. the numbers are still weak. if you average them, that is what you have to do given the timing of the new year. the question is not where we were in the first quarter, because we will know that anding at the european pmi german pmi in particular. if you look at the credit we have now, it is three good credit growth numbers. we finally have the first indication of the policy measures that we would take. and that should give us some ground of hope in europe as well . be on thes pmi would manufacturing site in particular. but we should start to see some .f that i'm not talking imports and exports, but i'm talking about the credit data. nejra: what do you expect in terms of further stimulus? ralf: we look for additional measures to try to prop up the economy. whether that be monetary policy moreres, whether that be supportressure to credit growth as well as more fiscal measures. that it is nothing that stands out as being one big measure that they will do. they will continue to do what they have been doing, to tweak things at the margin. and that is clearly starting to work. nejra: and we have a chart showing the policy easing so far in china. i wonder how this might translate through the emerging markets base. swapgoing to visually these charts now. i have one earlier prepared just underneath your that shows em bonds judging by their spreads not being too expensive by historical standards. markets where you're looking for that yield at the moment? some say that chinese bonds are the great diversifier. we are generally more selective in terms of where we take risk and markets because of positioning. all of these trades are reasonably crowded but some are more difficult to hedge than others. flows into at the investment credit or even high-yield, what we have seen that coupled with is also a demand for valuation. they hedge against the turn of the cycle in the u.s., and the expectation is that if it blows out, the rates would rally and you would be hedged. that is harder to do in emerging markets because what is likely to put emerging markets under reallye is that it's not a hedge. so they are arguing for what the next leg is, a trigger. positioning is gone. that trigger is more likely to .e effects than rates we probably need to see a weaker dollar to be able to keep performing. stays with us. coming up on bloomberg, we have a great line of interviews. we will speak to european commissioner pierre moscovici maire, along iwth visco.with ignazio those are still to come. this is bloomberg. ♪ economics, finance, and politics. this is bloomberg surveillance. viviana is in new york. viviana: new information on news that you broke moments ago. denmark has reported. scatbacks auditor ernst & young to the they failr concerns to report suspicious behavior. says that a unit of the danish business ministry started investigating the firm as the full scale of the laundering scandal became known. walt disney's new streaming service will cost seven dollars a month. the netflix challenger will launch on november 12. it will feature kid friendly programming and materials from marvel and star wars franchises. it isn't expected to break even for about five years. it does not sway the confidence of bob iger. mr. iger: making them available on new technology platforms that is simply more modern and growing in popularity at a price would make sense with a user interface that is beautiful. that is why we feel confident. they are offering to buy back the remaining 25% it mexicot own of their unit. in 2012, the spanish lender floated the stock on the mexican exchange to raise capital. l it seeks to read more profit from the lucrative latin american market. reap moreseeks to profit from the lucrative latin american market. nejra: theresa may is looking for compromise on the way forward costs are stacking up for u.k. industries and companies are spending millions of pounds on contingency measures. says the lagarde extension means continued uncertainty. agarde: it is time to propose something that is acceptable to the europeans and it should not be too long. prolonging the pain is not fixing it. now is city ofus london chair of policy and resources committee. and still with us is ralf from merrill lynch. we're looking at talks from jeremy corbyn and theresa may. looking foren compromise. what kind of deal do they want to see? vital.s absolutely we have seen the service sector shrank last month for the first time. we need to see something that doesn't compromise on services, but most importantly, we need to see progress. nejra: are you confident progress will be made and some sort of deal might get through in the next six months now that we have heard about this extension? catherine: not yet. thesegreat to hear that talks are continuing but we need to see some output coming from that. we can't the on hamster wheels. terms of the city financial services, one of the things that comes up is equivalent. shut -- thepenne panacea? it can be revoked on short notice. we would need to see that built on. this progress is to provide a no build onit and then whatever we can achieve. nejra: what is the most important thing for sterling or for the rates markets right now? ralf: good question. catherine made the point that we ween't seen any progress and are not talking about services. one of the key issues that markets have to contend with is that even if we had found , weesa may's agreement would have no clear future about the trading relationship with the eu. withdrawal that the agreement would somehow lead to a bounce back and economic activity was always built on a false premise. the crucial bit is not in terms of the divorce but the debilitating rights thereafter. the next six months are not going to be in a different than what they would have been anyway. this continued unknown of how we are going to be going with our biggest market in the future. england had built in a bounce back into the forecast. we have changed our view on the bank of england and we no longer expect any rate hikes from them in the for see able future -- in the for seeable future. what we are looking at right now is just the end of the beginning. we have the long-term relationship with the eu to establish. thatt is vital that we do and look at services. and we also have to look at what sort of immigration system we have because we depend so heavily on a global workforce to serve a global marketplace. we will be watching very carefully what the government does to enable recruiting and retaining people. nejra: is the contingency planning in a comfortable place right now? catherine: people are able to go on serving customers. there are some cliff edge issues that they haven't been able to resolve. there is also the question that if customers sign up to the paperwork, i would say that it is a mixed picture. and just because of this extension, it could be longer. but they can focus on the need to support government, whatever the outcome. nejra: you are not expecting a rate hike from the boe in the forseeable future. what is that mean about the yield curve? ralf: if you decompose it into real rates, the breakeven is wrong. the market is pricing this potential inflation overshoot. be trying toght price the jeremy corbyn risk to the bank of england independence. i would say that maybe goes a little bit far. been saving is a slightly more defensive trade. these super long and of the u.k. ingve would favor the steepen curve. there is confidence about how to value it. at the long end of the curve, you will probably need to see bigger discounts. nejra: great to hear from you both. catherine mcguinness and ralph -- ralf pruesser. filesarches on as uber for what could be 2019's biggest ipo. firmide-hailing farm -- says it is about the services. this is bloomberg. ♪ nejra: economics, finance, and politics. this is bloomberg surveillance. 2019's biggest ipo could be uber, seeking to raise $10 billion. its total booking last year totaled just under $50 billion but racked up a $3 billion operating loss. is explaining to investors what the company is using billions of dollars but mature enough to be publicly traded and worth in the range of $100 billion. taylor, great to have you with us in london. get it out of the way, good luck at the paris marathon. metellus what we're looking at. raise 10ooking to billion dollars, worth $100 billion. and we just came off of the lyft ipo. and their valuation based on the last closing price was about $17 billion. let's look at why there is so much attention on uber. they are still losing money. it has looked like they had booked again on 2018. don't let that the seaview. seaview -- deceive you. they are still losing money. it is a big question. they are not unfamiliar to fundraising. is underc company pressure to turn a profit sooner rather than later. nejra: the other question as as well about uber eats as ride-hailing. will investors be excited about uber eats or worried about ride-hailing? i think it will be excited because that is how to differentiate themselves from lyft. i think the issue is that ride-hailing is still a majority of their business. in revenue,illion $9 billion is still from ride-hailing. they had $165 million from lastt eats -- uber eats quarter. but it still makes a small proportion of their revenue. the analyst's excited that there is room to run. it might be a runway where they can grow in the future, perhaps in diversification. nejra: taylor riggs out to run marathon number 10 in five years. let's get a check on this morning's stock movers. plunging this morning, down more than 25%. a $28 millionof loss as client made some good bets. nordic is on the upside, reporting earnings of the top of the hour and lifting their guidance for their audio division. up for the second day in in a r. -- second day in a row. thank you so much. bloomberg surveillance continues in the next hour. tom keene joins francine lacqua out of new york and we have a great lineup of interviews from the imf world bank spring meetings. we will speak to european commissioner, french finance minister, and italian central banker. those are all still to come. u.s. futures gaining some momentum to the upside. this is bloomberg. ♪ francine: looking for a catalyst, markets break at the start of u.s. earnings season which kick off with jpmorgan and wells fargo today. uber files for a sale in what could be one of the biggest listings of all time. imf and world bank meetings in washington, we will talk global growth and deficits with finance ministers from across the globe. it afternoon everyone from -- everyone watching from asia. tom, what did we learn yesterday? we had a number of newsmakers from different regions. and it is amazing. if you're from south africa and dealing with a certain set of problems, we talked about central bank independence. it is different than in the u.s. brainerd, the governor of the federal reserve says this is a fact-based federal reserve. factsody is seeking the between a deeply divided set of guests. those looking for rate increases, those looking for rate cuts. the story is the ambiguity we are seeing. francine: and we had a couple of interviews focusing on negative rates in europe and what it means for the bank, how the ecb can mitigate. we will have plenty more on the spring meetings. but let's get to first word news with viviana. is hopingber potential investors will look past the $3 billion operating loss last year. detailsled a number of in the ipo filing. there is an interconnected web of businesses, one of them is uber's food delivery service. uber eats had $1.5 billion in revenue last year. uber wants to raise $10 billion in the public offering. jerome powell is telling democratic lawmakers the central bank won't give to political pressure. those remarks coming at a democratic richie in virginia. -- retreat in virginia. the european union clearing the way for trade talks with the u.s. they gave the ok to negotiate industrial tariff cuts. -- they areert trying to avert president trump's threats of tariffs. and the ecuador embassy officials say that julian assange was a bad houseguest, hitting the guards at one point. a revoked his diplomatic immunity. global news 24 hours a day and on tictoc on twitter powered by 2700 journalists and analysts in more than 120 countries. thank you so much, viviana. greatly appreciate it. as get to the data check. equity bonds, currencies, commodities. we will see the vix here in a moment. the curve flattening is something i have noticed over the last number of days. 12.49 after what we saw yesterday afternoon. and then they wanted to frame german ten-year positive .02. clearly one of the themes .hrough the morning francine: i am looking at stocks, but we are seeing them be more cautious. they are cautious about more earnings. ,t kicks off a little bit later earnings season. investors are curious about what to be positive about. no selloff, just trading sideways a little bit. is weakening versus most major currencies, particularly against the euro. the pound kind of moving sideways. we are moving from theresa may that there is progress about talking with the jeremy corbyn but we don't have details. tom: it is a real emptiness right now. francine: i feel like we are in recess. i feel like we talk about brexit every single minute of the day. it is a welcome reprieve. get back to negotiating with opposition parties in the u.k. tom: very good. start with kathryn from citigroup. years ago, was the trade deficit sustainable, that is a classic. to the research, thinking about the many dysfunctions of the global economy. wonderful to have you with us today. this idea of a global dysfunction, where is the dysfunction right now? think the pieces of the global economy are not fitting together right now. one very significant aspect of that is the trade issue. there are also pieces in europe that are not fitting will -- fitting well together. strength,e do see this is important to remember, we see strength around the world and domestic labor markets. .nd consumption and the investment associated with tight labor markets. that is a good piece of domestic resilience which a think is not necessarily appreciated by many people. i want to come back to the trade issue and how europe fits in all of this. what is this not translate to real inflation? it took a while, but we are seeing it show up in wages. we are in the u.s. in particular, but also in europe. we are seeing pressures and the producer prices. prices.e producer a lot of that is coming from a lot of demand for the products. it trade services, for example. anything to do with energy is very strong. so why isn't it showing up on the top line? firms have a choice. are they going to eat these ?rice increases or will they raise the prices? we are seeing it in food away from home. they are watching it. tom: if we have the separation of the imf meetings, the good domestic service economies are completely messed up. it is an import export dynamic. what is the position that the trump administration has to make? i think they have to make a good deal on trade. tom: are you optimistic that they can accomplish at? or is it annoyed at 2:00 in the morning? catherine: it matters for equity markets that a deal gets signed. i also see today that there is some movement on industrial tariffs with europe. it is also a very positive sign because it is the significance -- it is aern significant concern in europe about autos. is piece that i worry about the mandated purchases. the shopping list. in the spillover consequences to the rest of the world of china being given an explosive shopping list. that would be not such a good deal. tom: the question -- francine: the question we have to ask ourselves, if donald trump wants to start another trade war with another part of the world, does that affect this space? catherine: this is where a particular offer for industrial startings a very good way of opening the door. if there is a deal with china go ine next direction to the auto sector. it is a very big sector. has alreadyfering with japan.ting this window of opportunity is a win-win. francine: does it play to the president's base? does he just want to play tough until the 2020 presidential election? catherine: that is a long time to play tough. market, if you're going to be tough for that long, the market will not go sideways for that long. talking about microeconomics and the dynamics of the trade deficit, i want you to explain to the president to i'm sure is watching this morning. and his supporters about his certitude of trade deficit micro theory. what does he get wrong and what does he need to understand? so there are a number of aspects. that an overall deficit is a bad indicator of economic performance. worse, being taken advantage of. so that is one issue. that is that in an economy that a strong, it is an economy that is consuming and investing a lot. it is one that not only buys products from investment producers but also buys products from abroad. the economy is one that has a lot of variety, and join different kinds of products. one that has an economy of scale. it is a modest deficit. 6% is too big, but 3% is not. and economy of deficit is an economy where foreign investors are looking at the assets of that economy and saying, these are great. these are great returns. it is not bad from the standpoint of production, consumption, or investment. and we could take that down to the bilateral deficits and make the exact same arguments only even more dramatically. francine: catherine mann stays with us from citibank. tom: there will be a quiz. joinede: and we will be a little bit later on by someone who has a thing or two to say about italy. that is 12:30 p.m. in new york. 5:30 p.m. in london. this is bloomberg. ♪ viviana: this is bloomberg surveillance. let's get the bloomberg business flash. seven dollars a month for the new streaming service is how disney is going to take on netflix. to breaks not expected even for five years. it will feature kid friendly programming from the disney archives. pixar, marvel, star wars, national geographic. these are brands that are beloved and have a long history of serving the consumer for many generations. and i think they are still popular and relevant. santander will buy back the 25% it doesn't already own. santander wants to reap more profit from the lucrative latin american business. the top bosses at uber have a lot riding on the company reaching $120 billion market value. thateo has equity awards won't invest until the company reaches that threshold. that is a crime to the uber registration statement. you guys are sticking with uber. francine: we are. alex joins us to provide more perspective on how uber plans to treat its ipo -- please its ipo case. plead its ipo case. alex: the thing is, they are trying to make this company seem very clear and what the business game is. it is the travel solution for everything. but they have had to unveil a lot of complexity. they have a lot of businesses, none of which make money yet. they will continue to grow at a real tear. tom: none of this was in the cfa institute curriculum. we were community adjusted for i.e acclaimed akzo and now we have contribution profit. that uber'sine is core platform is, surprise, nine cents on the dollar. how do you get this valuation making nine cents on the dollar? alex: you have softbank is your investor. tom: you are dead on. when they were invested last time around, it was around the 70 billion mark. in around thee $90 billion mark. it is appealing to a lot of people because it is really growing. companiese fastest out there. it grew 44% last year. between 2017 and 2018, it is only about 20%. it is really trying to ensure that the businesses like uber is only account for -- uber eats only accounts for 6% of revenue but it is upsetting the slower pace of the ride-hailing business. we have a great story on bloomberg terminal. "platform" appears 700 times in the prospectus. on the losses. but how easy is it to reproduce such a platform? alex: that is one of the big questions for uber. on one hand, they say drivers are a cost. a big chunk of ride-hailing revenue goes to a driver. investors will only want uber to remain just that. they don't want it to be directly offering a service. margins,hefty profit pivoting that way as well. it is actually restaurants that might take that cost of the company. i suggest you listen to janet jackson from march of 2001 while you read the prospectus. the core platform contribution profit. alex webb, thank you so much. much more to talk about. catherine mann is with us. coming up, we will speak to european commissioner pierre , andvici, bruno le maire more. this is bloomberg. good morning. ♪ tom: good morning, everyone. bloomberg surveillance. francine lacqua and tom keene in washington. on television, radio, and important interviews through the morning and afternoon. kathleen hays will look at bloomberg asia as well. toh us right now, we turn africa and we do that with zambia. they're fine -- there finance eir financeces -- th minister faces a lot. i want to get an update that comes up in every discussion. it is a state of contract and n greatern withi africa. it do you see a better and more vigorous fight? >> indeed. it is becoming imperative because the citizenry are putting us, leaders, under a lot of pressure to ensure that are kept for public utility. regulation is becoming more and more stringent. difficult to steal or be corrupt. that put inact place -- that was put in place ,o take to task corruption misapplication, and stealing from public funds. francine: talk a little bit about this peculiar situation where foreign exchange reserves continue to fall. the local currency has depreciated and the government takes on more debt. is there anything you can do to mitigate that? debt we: because of the have contracted over the years, it is debt that has gone into investment. mainly, it is infrastructure development. has 752,000 square kilometers. opportunity is out there. if i don't put a row there, how do i harness the potential that is there? , it is what we believe is an investment for the future. francine: what about foreign-exchange reserves? mitigatinge have actions that will improve the reserves. hadhe end of december, we $1.6 billion. minimum ino be at a cover. we do things like ensuring that we can take advantage of the gold reserves that are there. we have told the bank to stop are deserving -- to stop reserving in gold. zambia linkedeta to gold? is it just that simple? -- is the fate of zambia linked to gold? is it just that simple? togaret: it is not linked gold. it is mining in general. copper has done well in the last few years and the price has been stable. we have talked about latin gold. like uranium has been exported. like manganese is becoming quite interesting now with that array powered motor vehicles. looking at that sector, and we have fantastic forests in zambia. oak, teak, rosewood, and more. so for us, the opportunity is immense. much,ne: thank you so zandi of finance minister. as catherine mann stays with us, we will have 20 more on the emergent -- we will have plenty more on the emerging markets. this is bloomberg murder -- this is bloomberg. ♪ so with xfinity mobile i can customize each line for each family member? yup. and since it comes with your internet, you can switch wireless carriers, and save hundreds of dollars a year. are you pullin' my leg? nope. you sure you're not pullin' my leg? i think it's your dog. oh it's him. good call. get the data options you need and still save hundreds of dollars... do you guys sell other dogs? now that's simple, easy, awesome. customize each line by paying for data by the gig or get unlimited. and now get $100 back when you buy a new lg. click, call, or visit a store today. ♪ look -- when we indiscernible]-[ andoutput cap will close lower growth rates because we expect output is around 1.35. rates byse interest -- 175 basissis points last year. inflation has normalized. there is room for some easing or relaxation. francine: that was some of our exclusive interviews. joining us now friend extended conversation, lupin rahman. still with us, catherine mann. thank you both for coming on. when you look at emerging markets overall, lower for longer, is this a buying opportunity for emerging-market credit? is a constructive opportunity for emerging markets. the fed being on pause and more dealst, u.s.-china trade seeing some resolution or not tipping over, is a positive environment for emerging markets. valuations are very cheap so credit looks attractive. i woulde: in general, agree with your statement, but on the other hand, i think the emerging market opportunities are heterogeneous. some emerging markets will not win in terms of the china deal that looks like it is on the table. not everybody will win out of that, so i think it bears a lot of consideration, which emerging markets are likely to be winners. tom: jim out neil writing on this. can i ask you to prose, how do prosm viviana -- pros, how do you avoid the losers? catherine: the ones we have -- lupin: the ones we have been talking about that are coming to bear now, turkey, huge growth financing needs, not a strong policy framework that is transparent to investors, vulnerable. tom: what are the delicacies of this? how does turkey clear its market on an income basis? you have to clear the market out. how do they constructively do that? catherine: there are a lot of challenges in turkey. tom: the finance is set up in turkish lira and u.s. dollar. which do you approach first? catherine: there are just a lot of challenges in turkey. lupin: i want to talk -- francine: i want to talk about sudan. if you are an autocratic leader, you need to learn lessons of the toppling of the president, avoid a currency crisis. is that a warning shot for mr. maduro? lupin: it is hard to extrapolate because the situations are different. in general, what you need to do when you are facing a population that is facing the kind of challenges that venezuela is approaching itself with, is to take a pragmatic approach. in venezuela, oil production is plummeting well below one million barrels a day. as a government, they have to figure out a way to re-stabilize that as a way to gain dollars. francine: if you look at emerging markets, they are hotspots, and if you look at what happened in 2018, a cycle of idiosyncratic stories, but the overarching theme is one of fed or others? do the benefits from the fed outweigh what we are seeing with trade wars? catherine: i think you have different countries for him the fed pause benefits, but it is clear the trade war will differentiate some countries from others. to the extent that china purchases things from the u.s. rather than purchasing them from other emerging markets, to the extent that the deal unravels supply chains. it is very negative. we can identify which emerging markets are more likely to be affected. the top losers are taiwan, singapore, and korea, and the winners are mexico and canada. we also have to think about trade diversion. on trades a loser supply chains but a winner on trade diversion. lupin: i agree with many of the points. in the near term, both are positive, the fed and china in terms of some rinse it -- reconciliation with the trade war side. in the longer term, i think trade tensions between the u.s. and china are likely to be there for some time, not only because these issues are complex but because there are political motivations on both sides. some emerging markets will benefit and others, less so. our job is to figure out which ones will benefit and proportionately, we are seeing anecdotal evidence that fdi is coming back to mexico even with the government being more left. tom: have you given up on a multilateral world? given up one mann multilateralism? catherine: i have not given up on multilateralism as a principal, but it is clear -- clear ideasut it is have fallen off and globalism has retreated. if we look back 10 years or so, pre-grow both dutch global financial crisis, -- pre-financial crisis, things have started to slow down. not the tpp without the u.s., or maybe the u.s. joining ex post might represent a positive dimension. it could be the case that would have a foundation for a superior strategy. the counter to that is u.s.-china bilateral shopping list. francine: if you look at trade between the southeast asian economies, is that increasing does that mean that region, as long as china stays put or does not fall off a cliff, you see opportunities? lupin: absolutely, and that is one of the key things we are seeing over the last 10 years. intra-em trade has increased and not just a function of what is happening with the global platform with china. i expect that to continue as long as we do not get a bad landing in chinese growth. tom: let's come back and talk with china -- talk about china. with us as lupin rahman and catherine mann. right now in new york city with our first word news, here is viviana hurtado. viviana: president trump said to allege her and kane will have trouble getting confirmed. some of his advisers say they would not be surprised if he withdraws. -- four republican senators will not vote for him. mitch mcconnell admits at his tougher congress to respond to the murder of jamal khashoggi. the reason, the u.s. alliance with saudi arabia. the senate passed a nonbinding resolution putting the responsibility of the death on king salman. space exes is heavy falcon rocket made a successful commercial debut, carrying out its first mission for a paying customer, delivering a saudi satellite into orbit and delivering the rockets back to earth. 21t year, elon musk had launches. is a mannedhe focus flight. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. francine: later today, we will discuss brazil's economic reforms with the economy minister at 11:30 a.m. new york, 4:30 p.m. london. this is bloomberg. ♪ ♪ bythey u.k. is affected brexit. turkey is as well. is coming out of the economic situation where was. you look at what happened at the end of 2018, all of that has an impact. trade tensions, if they are fixed, will actually help go from the 3.3 to 3.6%. >> we are trying to find too many roads to monetary policy. obviously, stability with some -- but they cannot be the fall economic growth in the economy -- full economic growth in the economy. >> we are continuing to see growth above potential, slightly above potential, but we have the outside risks and policy uncertainty has been a big source of downside risks over the last several months. tom: really interesting conversation yesterday with the governor of the federal reserve whale bernard. -- lael brainard. it is a delicate moment, that seems to be the theme. francine: that was the main theme that christine lagarde was talking about, but it was interesting to talk to her about german banks, the fact that maybe they are too big to fail, especially of some of these mergers are pushed for political reasons. we talked about modern monetary theory where christine lagarde said it could not offer that much to the world economy, but it could be useful in fighting lower prices across the world. tom: what is really interesting is the memo i just got -- do not ask catherine mann about deutsche bank or commerzbank. francine: let's talk china. equity markets have traders wondering whether the bulk of this year's rebound is over. exports rebounded in march, providing only a brief boost to stocks. may want tont contain the amount of leverage. mann rahman and catherine are both still with us. when you look at china, experts say it's rebounding nicely after china but a little bit of fragility in imports. do we have a good handle on the health of the chinese economy? lupin: it is a difficult question to address, given the data limitations. we are seeing that the stimulus is quite large, larger than we had expected, and the credit numbers suggest the stimulus will continue. we expect the chinese economy to rebound and continue to rebound relatively more than we had expected a couple months ago. catherine: we also have a good view on the prospects for china growth. the question mark that is out there is how effective the tax cuts will be to support consumption. they know how to do an investment stimulus and promote exports, but what matters for sustainable growth in china is the consumer situation. with that rate, in that regard, this loss and shanghai come of this retreat on shanghai come -- loss in shanghai, this retreat in shanghai, that is an important component of wealth and consumption. that is a bit of a concern. in.i, everybody went everybody went in on the back of that, catalyze the movement. tom: i want to go back to your iple. princu arbitrage for mexico and vietnam. catherine: there are two things happening. an ongoing consideration by companies, do i continue to produce in china certain products or is it too expensive? too expensive by labor or other ways. one thing the tariffs did was accelerate those decisions. when they accelerate those decisions, they decide if i am producing for an asian market, i will go to vietnam. if i am producing for a north american market or western hemisphere market, i should go to mexico. one more thing that will be increasingly important, the increasing cost of transportation, the shipping fuel, and the low sulfur fuel that will be a requirement for shipping, that is also a consideration for long-term investment decisions about where you will put your plan. tom: we go into the pimco morning meeting somebody screams, are we overweight china? are we overweight china? lupin: it is hard to have a strong view of chinese assets given valuations, so our approach is look asset by asset. it looks reasonably fair in terms of valuations, but the risks are for further depreciation. there are selective names within the chinese credit sector which we like, given the fundamentals of those names and the kind of stimulus that we expect from the government. really, we are taking it asset class by asset class and name by name for china. the big question, how will the inclusion of china into the global indices affect inflows? flowsect an increase in from institutional pockets of money, particularly sovereign wealth fund in asia to come into buta, similar to last year, we do not expect a large overweight given where valuations are. us ofupin rahman with pimco, and catherine mann of citigroup, a wonderful conversation. we will try to get this out on podcast. coming up next with j.p. morgan chase, jacob frankel. the spring meanings of the imf and the world bank, this is bloomberg. ♪ ♪ good morning, everyone, bloomberg "surveillance." francine lacqua and tom keene. this has been a fabulous conversation, open ramin and catherine mann, and on we go to various dignitaries. -- lupin rahman and catherine mann, and on we go to various dignitaries. it has been hours since we last saw dr. frenkel. francine: when we look at the end of monetary policy and the fact that it is being extended, what does that mean for global growth? the end of monetary policy deserve some clarification, so you main lengthening -- mean lengthening the period we will have low rates? francine: yes. jacob: though rates by themselves will not create growth. by themselves will not create growth. it has been now 10 years and monetary policy has tried to give the space in the room for those other policy instruments to come up. as long as the other policy instruments do not come in, monetary policy alone will not do it. low interest rates that are exceedingly low create distortions. they direct investors into the financial markets. we want them to invest into growth and services and plans and equipment, so we flew -- inflate the financial market and where is the cpi? tom: this is the heart of the matter, and we could go for hours. the europe fiscal structure is a fiction. is talking frenkel about that europe will japan-ify and move on with 1% gdp? catherine: this is an opportunity for them to consider fiscal -- collective action. that means every country does a little bit and the collective outcome is superior to any one country trying to do a lot. that is one thing that is very clear. it means everybody has to participate and throw a little bit into the pot, and you get an awful lot out. it is a very important moment for europe because it is facing stronger headwinds on the trade side than the united states. collectively it is at large -- as large, but each one is more open to the tradewinds. it does have domestic markets in terms of improving labor markets and rising wages, so it is important for the european fiscal policy authorities to catalyze the situation and get themselves on a more positive growth path. practicesare the best that european leaders have to do to affect a fiscal solution? jacob: to begin with, we need to recognize that especially in europe, the issue is not only fiscal. thatct, we have learned budget deficits do not produce jobs, do not produce sustainable growth. tom: you have not talked to stephen more about this, have you? jacob: we can talk about it. i am looking at my good friend catherine mann who just came from the oecd. the hallmark a structural reform , improve the functioning of your economy, do not just play mickey mouse with spending of this or that. the issue is structural changes, that is the issue. catherine: some of those structural changes cost money. lupin: of course. -- francine: some of those structural changes cost money. jacob: of course. structuralthere fiscal measures and we talked a lot about them at the oecd and you are right, spending is not enough. it is what you spend on and how you change relative prices through taxes, and that is a combination of fiscal and structural. you cannot ignore the fact that some of these structural reforms cost. jacob: of course you cannot ignore it. you should not ignore it. the fact is, if you continue to act together there has been excessive reliance on policy. tom: we are going to continue this in new york and london. we will take a whole hour and blow it out. this is wonderful. jacob frenkel, thank you so much, and catherine mann. weing up in our next our, will drive forward this conversation. adam posen and isabelle mateos y lago joining us. ♪ ♪ tom: this morning, just the facts, and global growth is slowing. there are green bamboo shoots and china. adam posen on euro and american blue -- gloom. the herebrainard says and now -- our guests are deeply divided on a rate cut. detainees from the mexico border to the streets of south -- san francisco. good morning, everyone. this is bloomberg surveillance live from our world headquarters in new york -- excuse me, d.c. francine: we are in d.c. we have so many interviews, it lends into one. -- blendss into 1 into one. tom: the idea of the inquiry within the white house to say, can we take peopledes within the -- people run them to within the border and run them to selective districts? it has riveted washington. francine: and riveted a lot of people who follow politics because everything with this administration is linked. does that impact how he speaks to the base on trade? do we go after the german deficit? you cannot look at one thing in isolation when it comes to politics. more on the imf and world bank more -- meetings. viviana: uber is hoping that potential investors will look past its $3 billion in operating losses. the number -- they revealed a number of details in their ipo finding -- filing. foods, uber eats, had 1.5 billion dollars in revenue. uber wants to raise $10 billion and its public offering. your own powell telling democratic lawmakers -- jerome powell telling democratic lawmakers the fed will not caved to political pressure. the european union clearing the way for trade talks with the u.s. bloc trade cave -- chief gave the ok for cuts. the president of ecuador lashing out at julian assange. he called him a bad mannered guest during his seven years living in ecuador's embassy, saying he hit embassy officials. julian assange was dragged out and arrested on charges. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. tom: it is breaking news, something people have been waiting for. the challenges of the domestic and the international oil business, the big boys will roll up the a's producers. $33 billion as chevron will acquire anadarko. this has not been widely expected, but the idea of in the troubles of oil, the challenges of oil, you think about aramco and all the pricing of oil, down, up, down, this is really beginning. what is so important about this transaction is you wonder how the entire international petroleum business will have to react to chevron taking out anadarko. francine: this is the story of cost synergies. first it says, the strategic fit enhances chevron's portfolio. deliver tot set to billion dollars in cost savings in annual operating costs immediately, so this is taking away the cost base especially in an industry many people think is under invested. tom: we are absolutely thrilled to have with us adam posen of the peterson institute, oil strategist as well. economics world of and imf, here is the perfect example of the dreaded word "scale." how did we get to scale? catherine mann speaks of the tendencies of modern capitalism. our listeners and viewers talk about this big roll up. adam: it is there and it is not there. it varies from industry to industry and is different from 150 years ago with standard oil. invron is not a monopolist the oil market, they are it commodity. what we have to be really concerned about are the companies with barriers to entry. back of the world economic outlook, page 142, is a chart called labor share. the answer is labor is not getting its fair shake. they are going to go in and do synergies on anadarko. labor share is not turning around. adam: that is the point, and there i give catherine mann credit for the work she did when she was in the ocd. that is the big story -- oecd. that is the big story. it used to be at stayed where it was and went up and down with the cycle. period in0 to 15 year the u.s. big mergers these or acquisitions work? we talk and the banking sector about culture. you do not have the culture problem when you look at the oil makers. adam: you are absolutely right. there is a bunch of research that has come out documenting the fact -- i know you have talked about -- that management matters a lot, not necessarily the ceo, the culture and effectiveness of management. part of what happens when you o much scale is it comes hard to manage and they become soft. it is the same arguments we had before you were born 35 years ago, talking about the mergers in the 1980's with the managers sitting on too much cash flow and you had to have some threat to get them to behave. francine: is it different if you are dealing with oil majors? that is more about the positioning. adam: i was going to the general. i completely agree. oil is a different industry. there are industries where you can have straight up scale and it is not necessarily a big thing. there are an incredible a number -- incredible number where they -- conservation tom: some of this is a technological revolution. the reason chevron can go for anadarko is a revolution in technology in patrolling the permian basin, and that goes to every other industry including uber and the ipo. what do economists see on the edge of technology? is it to societal advantage or does it disadvantage us to a decreasing labor share? adam: the decreasing labor share proceeds the consultation -- concentration. it probably makes it worse the rate political channel and there in local labor-- markets, if you have a dominant employer, it is hard to get labor traction. thatcher and reagan busted the unions. there have been years and years of regulatory changes to weaken bargaining powers. you have globalization, which for certain classes of workers makes an incredible threat for them to lose their job. there are things you can do to improve labor share as well as use the tax code to improve people's share without getting into stopping technology. tom: wonderful to have you with us this morning, adam posen of the peterson institute. chevron taking out anadarko, this is a huge, symbolic transaction for american and global oil. taylor riggs is expected to be with us to talk on uber. this is bloomberg. ♪ ♪ focused atxtremely the federal reserve on ensuring that inflation stays anchored at theand so if you look at way that the committee has withnded in recent months a wait and see, the pause on rates, the slack path projected projection,edian that is all recognition that we are committed to achieving and sustaining got 2% core pce inflation goal. of theel brainard federal reserve system of a smattering of monetary economics. we continue the class discussion. with us, adam posen, and we are honored jacob frenkel could continue with us. one of the things we are doing between broad trade talk is first principles. have you ever seen an inflation dynamic like we have now where services and goods are rolling over, all these national inputs into how our inflation is changing, have you ever seen it like this? jacob: we have had so many examples of dislocations, but i think there is one major principal. there is a saying that if you want tomorrow to be different than today, do not do today what you did yesterday. it is for 10 years now that the attempts to achieve 2% inflation target brought about flooding the markets with liquidity and it did not change the inflation enough. why? it is a story of japan, of europe. the answer is the objective of achieving 2%, which most of the central banks have adopted, as a shortcut to a longer statement, we want to see a recovery in the economy. , cpi ort just the price whatever one looks at. one of the consequences of sitting at a low interest rate is that it goes into financial markets. francine: the fed has another problem, and you set it straight. a fed appointment is not a political practice -- prize and if it becomes one, how does it change the central bank? jacob: terrible. we do not need to do the experiment at home in the u.s. you have so many experiments in growth and it is irresponsible not to study the consequences. if you divide the world into two, the countries that have had better performance and those with less good performance, by and large you would find central banking dependent and professionals in the central bank have always been a very important pillow of stability, which lays the foundation for growth. what do we want in growth? we want people to think long term and invest, but if they do not have the long horizon provided by central banks providing price stability, we are not there. as simple as that. capitalern era where markets are so sophisticated and technical, you need professionalism. it is not raising the lower interest rates. it is having the right analysis and confidence. the market needs to be a projection of constant touch confidence. -- confidence. adam: there are very few decisions in the economy that are analogous to central-bank decisions about their forecast. supreme court decisions, generals when they are making battles, so it is always about the society overseas their conduct. the society decides their goals, but you cannot have in the midst of battle politicians mixing in. tom: i want to rip up the script and go to the conversation of the day after our conversation yesterday with stephen moore. the bankr governor of of israel, stephen moore and his kind seem to be oblivious of the balance sheet effects of nations. there income statement dynamics completely ignore the old world theory of what happens with the debt and what happens with the deficit. if we have steven moore at the fed, do we risk and expanded debt and deficit as they ignore the balance sheet? adam: you have an additional thing pushing down on investment. the government debt, if they are in conjunction with the party they like, probably goes up as well. the real issue is you create an environment where nobody wants to invest in kanaan vents -- invest -- can invest elsewhere. of: could you run the bank israel under these pressures? the public, the main industry families support you because they want to see stability. they do not believe in mickey mouse. as a household, can you borrow and borrow without limit? tom: i do not believe so. we are testing it. jacob: debt has to be repaid. it is ridiculous to say interest rates are low so we have to borrow and spend. interest rates have to be repaid and what you are doing, nations should not aspire to do. tom: we will continue. from our studios in washington, this is bloomberg. linda mcmahon, small business administration administrator, coming up. ♪ >> time is needed for them to talk, a great and propose something that hopefully will be acceptable to the europeans. it should not be too long, because prolonging the pain is not fixing it. francine: after securing a brexit delay, theresa may is looking to find a compromise, but with another six months of limbo, costs are stacking up her u.k. industries. companies are spending millions of pounds on contingency measures. joining us is the deputy prime -- thank you for joining us. talk to me a little bit about how worried you are about the u.k. having to go through these european parliamentary elections. if a withdrawing member stays, the e.u. does not know how to deal with that. >> you have to make sure it has no impact on the institutions, european parliament and the others. they need to continue functioning, which means the u.k. needs to participate. they have to be a bit relaxed. this is the principle of democracy. .emocracy, you have elections let's take those elections as a fact. i do think that if those elections are taking place, the fact that it will be a bit of a second referendum, that is the way to look at it. francine: what happens if the people elected our hardline brexiteers? what does that mean for the functioning of brussels? alexander: they are not yet in parliament today. nigel farah joao's and gave us a great show from time to time -- britishr rajiv -- the want to be members. i do not see it as that big of an issue and functioning, but the symbolism of that election, that i can imagine is by some politicians going to be used to mobilize people in the united kingdom and say, can you give your opinion a second time? francine: do you worry about these brexit delays being extension after extension, it is in limbo and we will get another extension? seen isr: what you have the concept of a deadline in brexit is flexible. none of the deadlines have been met. we have to be quite clear. i preferred the uncertainty you have now over the certainty of chaos, because hard brexit is guaranteed chaos. the certainty of guaranteed chaos, i do not that, and the uncertainty we see today -- i do not that, and the uncertainty we see today is the lesser of the evils you could be confronted with. tom: i want to talk about the future of belgium. some people say it has been a mess for years, the cultural problems and where belgium sits. what is your vision on how belgium gets better and prospers? alexander: let me disagree and what you are saying. we are one of the most prosperous countries in the world, peaceful country. we have our tensions, that is correct, but none of them have gone beyond politicians arguing. i think that belgium is at the core, geographically is at the core of europe. politically, belgium and especially brussels, this is one of the top five cities in the world where important decisions are being taken, decisions related to the european union, to nato, to so many international institutions. brussels and belgium has constructed something. do we have our challenges? the fact that the world is changing and the changing world being able to take rapid, effective decisions today is much more important than the sheer size you have, i agree with that. you are not the only country battling with that. tom: we will speak with the chief executive of euro star in the next few days. euro star of rust -- brussels is a beautiful thing. alexander: consequences of brexit could bring some challenges. if you look at brexit, i think that finally though six months may be should be used -- those six months maybe should be used on what are the real choices and the consequences? they have not had proper scheduling. what does it mean? please stay with us, adam posen with us, lots of good conversation as well. major breaking news in america. anadarko taken out by chevron. stay with us. this is bloomberg. ♪ the biggest week in television is back! xfinity watchathon week. now through april 14, enjoy free access to the best shows and movies from hbo, showtime, epix and more. what! so, you can get more into what you're into. whether it's more laughs, oops. epic escapes, or high-flying thrills, get more into what you're into. just say "watchathon" into your x1 voice remote, or download the xfinity stream app. xfinity watchathon week, free. now through april 14. ♪ bloomberg's "surveillance," good morning, everyone. the meetings of the world bank, international monetary fund, traditional news flow. ,p morgan out with earnings coming on the back of seven bankers lined up in washington a few days ago. we have a chevron merger as well, and talk of uber. huge equity news flow. there is no other talk in capitalsn -- not the -- simply a story about immigration in the white house. kevin cirilli gives us a briefing. the story dropped like a bombshell last night. stephen miller and the crew at the white house are not devising a plan, but our thinking kind of about the idea of taking detainees on the border and sending them to nancy pelosi's district. what kind of detainees would you togest they wanted to send san francisco's 12th district? kevin: if you are stephen miller, you are talking about criminals. if you are democrats and some republicans, you are arguing they are using it as a political pawn issue. what you said in the intro, completely accurate. this is the sense of the stephen millers around the world putting pen to paper on controversial ideas that are leaked to the press. they drive a narrative inside conservative and democratic groups. this offers an opportunity for speaker pelosi to look at an increasingly volatile situation along the u.s.-mexico border and say these are the political battered -- battle lines. dhsou are the acting secretary, this is a nightmare. you have to political referee between the president and stephen miller. tom: for those caught in the middle, there is an assumption that judiciary will force the legislative and executive to common sense. others with history would say, where's the legislature? where are the senators and the house to drive this debate to a rational outcome? -- mitte saw met romney romney, so they are there. the cultural battle lines are so different because it is a localized issue. i would note missing from this debate but increasingly active because of the threats to close down the border, the manufacturers, because they are so impact it economically about what goes on. thankne: kevin cirilli, you so much, and adam posen stays with us. anadarkogreeing to buy , the price $33 billion in cash and stock. chevron will sell assets valued up to $20 billion. it seems like this is basically a double play. it gets chevron a lot more of the permian shale basin in western texas and southeast mexico, but a play on lng. does it make sense? >> we have been hearing rumblings and obviously we did not know about the deal ahead of time, but it is not surprising. it is a confirmation of the two strategic moves in big oil. number one is shale, which will become a dominant player in the oil market, and the other is the lng projects they will be acquiring in mozambique, and that is a bet on the transition from oil to clean energy. deal a really important and it raises interesting questions about who might be next. i will not throw out names because that would be irresponsible, but it is clear that many players in big oil have to be looking at their own deals to get into those spaces in a big way. francine: is this just a consolidation in deepwater and shale? because that makes sense, you will see market dollar dacian -- consolidation in that space? stuart: shell obviously made the big bet with british gas and that paid off. everyone is looking into that market, and evolving spot market. some interesting margins to be made. that, you can expect more of, and shale, you have seen crazy numbers being thrown about. that will continue, because there is no sense that the shale story is about to fall off a cliff anytime soon. oil can european big compete with this financial engineering? they have such a cultural imperative of independence. can they compete with the roll up we will see in american hydrocarbons? stuart: absolutely they can. , thationed shell earlier is the companies to focus on. that company took a big bet on gas which many people were skeptical of, and it worked out well. absolutely they have the appetite. tom: i know it is far too early is theour work, but what synergy overlay going to be? between diagram is this shell and anadarko? patch,erms of the shale it is a consolidation of assets across the delaware basin, this one patch of the permian. it makes a lot of sense but they say they will sell assets in the tail end of this deal going through. i have not had time to look at what those are, so i am cautious that there is a synergy, but in the shale play, you can see a connection. francine: thank you so much, stuart wallace, executive editor. we had that prospectus from uber and we have been pouring over what uber can offer. it is definitely not ready for the moment, but they talk about prospectus,, in the the use of the word "platform" 700 times. what does a prospectus tell us? taylor: we have been learning a lot as we have been digging through the financials. they are pulling in $11 billion in revenue last year and $9 billion is coming from the ride-hailing app. they posted a gain last year, but do not let that full you because $5 billion was a one stay on aboutain, 20% of, and some asset sales they made. still overall losing about $3 billion to $4 billion a year. when a company goes public, we always when that pressure starts to turn. right now, it does not look like cashash burn and negative flow is weighing on the valuation. tom: a lot of this comes around phrases that we did not see in the ca -- cfa platform. how do you run a mega tech valuation on nine cents on the dollar? taylor: i think like you heard in the last hour, a lot of it is early investors like softbank and saudi arabia. if you look at enterprise value to forward sales ratio, they are at eight times and that looks fully valued, on par with companies like facebook, alibaba, snapchat. investors seem to be maybe concerned about the cash burn, but now they are excited about the growth. topline revenue was growing at 30% to 40% a year which is how you can justify that valuation. the room to run further and the topline growth is a clear case for the company. they say they have only topped 1% of a $400 billion online mobility market, and there is room to run further. that is where the topline growth comes into play. tom: very good, taylor riggs from london. greatly appreciated. we are moving back and forth, all kinds of different stories including jp morgan out with earnings, there is the story of oil, automobile, and the international monetary fund and world bank meetings. ising us perspective isabelle mateos y lago, and adam posen has been more than patient. capitalism state of at these meetings? isabelle: the state of capitalism is all right. there is the right amount of worry and pessimism on what to do to make it continue to thrive forever after, improve taxation, revenue inequality, et cetera we are going into an earnings season with a level of pessimism we have not seen in years, which means the bar is pretty low for keeping the market happy. actually, we are not expecting any groundbreaking news on the state of capitalism. tom: the capitalism that we are enjoying now, we have the seven bank guideline up, and i look at the operating income move over 10 years. it is extraordinary how they were minting moneys and they are heated about giving it back to society. is this like any other time in our economic history? adam: it is not in the sense that you have rarely had people doing this well while the underlying economy is doing this badly. we have had lots of times where the rich or score -- or corporate's skim off a disproportionate share of -- share of money, but when they are skimming off this much money and there is very little wage growth for expansion -- tom: the idea of where is the real investment. francine: a data item. adam: the short-term valuations question, but the real question which goes back to somers sector stagnation or gordon, we are not seeing investment demand on anything in a deep way. that disjunction -- you go back to the 19th century when you used to see horrible inequalities, and there was at least growth. francine: to go to the role of central banks in this inequality because of qe put in place. what can trump do to influence the fed? can he steer fed policy? adam: they are playing a long game. they have nothing to lose because they are completely irresponsible so they throw up partisan hacks. they figure if one gets shot down, there is no way the republican senate will shoot them both down. once one of them is on the board, that legitimizes the idea they can keep putting up people like that and there is an outside chance that person could be nominated for chairman. it is the same steady erosion they are trying on other institutions. you take a job at the peterson institution and cynicism goes up. francine: does it impact the way people see the fed competency? when youuneasiness speak to central bank governors and politicians, and there is like 300 risks but they are small. the concern is they all come at once. how much is central bank independence one of those? adam: this goes into a broader picture -- isabelle: this goes into a broader picture of uncertainty and concern around erosion of institutions which, until now, were not being questioned. we see this in different forms in different countries. thatmists found out quality of institution matters tremendously for long-term growth. if this has been chipped away, that is a problem. i think it is too early to panic, but that has been a topic and the conversations come about the independence and expect -- conversations, both the independence aspect and conversations. adam: the g20 has been saying for 10 years that monetary policy has run out, and you have to be prepared for that. if we have got the institutional erosion we are talking about, it will be more difficult. tom: i have got to ask about the state of the asset business. you have been fabulous talking to us over the years about capturing fees and the role of chevron and anadarko, the role of the asset management business. do you assume the trend continues? isabelle: the trend we are seeing is that people across the world are not saving enough for their retirement. a lot of households, people who should be investors are afraid of investing and are not taking care of their future because of that. a big focus is how can we bring more people to the market, make it easier and less intimidating for investors at whatever level of sophistication they are to invest in the market? the reality is cash will continue to yield very little for long. interest rates will stay low for long. you see 60% of household assets in cash. this is appalling in terms of building a better financial future. that is a big focus of us. the story on fees, the compression story will continue, but if you can bring our people into the market, that should compensate. francine: we are expecting some jp morgan results to past -- cross the bloomberg terminal shortly. recession or the health of banking customers in second-quarter trends. let's not focus on wall street but on the banks. the ecb is looking at ways to mitigate the possible effects of negative rates. can they do it? does the system work? does it mean we will see deep negative rates? adam: you will not see deep negative rates because as we saw with japan and switzerland, sophisticated high saving countries, the blowback you get is difficult and it is hard to keep banks stable. a few tenths, maybe. ing will not have much of an effect. the effect will be in the tens of the billions for the mega european banks, when the prophet swings are in the hundreds of billions. it is not a good tool. tom: adam posen, thank you so much. isabelle mateos y lago, thank you. the news is extraordinary, not only the analysis of the uber discussion but the bombshell report from washington on detainees at the border and furthermore, a transaction in the oil business. chevron will take over anadarko. the chief executive of chevron will join us in the 11:00 hour. this is bloomberg. ♪ tom: breaking news, the major bank, jp morgan is out with earnings. we are digesting them now. i believe we have a 2.65 statistic, all of this coming within the shocks of october and december as well, and the equity market recovery. on first look, we have a lift to the market. we have seen that over this extraordinary bull market, up 20% on the nasdaq. francine: the first quarter earnings-per-share coming in at $2.65. first quarter a little better than expected. of $29.3 an estimate billion and we had $29.8 billion. beating estimates at 3.7 billion as opposed to 3.6 billion. jp morgan gaining some 1.5%. important, especially when you look at some of the rivals and what they had in that unit. tom: this is the modern distribution of finances. dimon the pdf from james and team in about two seconds. that is extraordinary how we used to wait for the conference call. in the first quarter, we had revenue -- record revenue. he goes on with a general discussion. will continuease to use its capital and expertise to drive great outcomes in our communities, as if he was speaking to chairman waters. francine: we always have to be careful as soon as the numbers ,re out, but at first glance everything seems to be beating estimates. trade revenue and net interest income beating estimates. joining us now, alison williams. when you look at the figures, they are pretty much a beat. what would you focus on? alison: the one number that looked a little bit light, compared to their targets, as loan growth. average per loan growth coming in at 5% year-over-year. we will want to dig into that and see where the growth was, where the growth wasn't, and if there will be any change to their targets. tom: i am going into return on common equity on that. one of the great themes is how well they are doing, the buildout in operating income. are they so pristine they cannot get more pristine? alison: it is two things, the environment and the execution. certainly both have been going the right way for jp morgan over the last several years. we think they will continue to execute, but we think a little bit about the environment and where we are in the cycle. that goes to the loan growth i mentioned, coming in a little bit light. is that because they are keeping high quality underwriting and the cycle, looking out two years to what that will mean for the credit cost? we will look to see continued share gains in the investment bank, and gaining share from competitors. we will not know until all the results are in how much is jp morgan and how much as share gains, but so far so good with the numbers coming in. francine: jamie dimon talked about the leverage loan market maturing rapidly. what does that mean? alison: it is a source of concern for the investment banks, something investors are looking at as well as fixed income investors, looking at that market. there has been rapid growth in financial services. where there is rapid growth, there tends to be problems. for the banks themselves, today versus the last time we had this growth, there is really a reduced risk at the bank in terms of their exposures and what they are holding. tom: alison williams with us and now joining us, david george. with the stock moving sprightly up 2.6% and a nice revenue beat, i want to drill down to maybe the problem child. i want you to weigh in. asset management just isn't happening. it sticks out like a sore thumb. we see this at deutsche bank asset management and fidelity, even challenges that blackrock. david george, is asset management something mr. dimon wants to be in? david: i think so. despite some of the challenges, it is still a high return business. it is a much better return business than traditional banking. despite some of the headwinds the sector is experiencing, i would surmise it is still a 25 to 30% business if not better. francine: just to recap some of the figures we have come of the first quarter adjusted earnings-per-share 2.6 percent, beating estimates. the net charge-off of less than $5.5 billion. talking about the investment bank, up 10% year on year. this is thanks to open capital markets, which is kind of the big driver. adam: it does look like -- alison: it does look like fixed income trading beating estimates, and one thing we have talked about over the last week as if you look at expectations this quarter of the banks, citigroup, j.p. morgan, talking down the numbers. we saw a couple of areas of optimism as we exit the quarter, a little pickup in volatility in key products, and that is what we will want to hear about, is there some followthrough early? will there be a pickup? based on what we have seen so far, obviously it is early. we have heard a lot about the government shutdown and the underwriting in that quarter. if we can get some of that business and the second quarter, can we get help to the secondary or trading volume? tom: is jp morgan and the other big banks, are they constrained in getting bigger, or is it an advantage but they are constrained? david: i do not know they are constrained to getting bigger. they are constrained to some perspectives. three or four banks to make additional banks in a merger are over. theycularly at jp morgan, can go into new markets on a low-cost basis and grow organically. that is what has made some of these companies better, their inability to get deals has made them better internally. underperformeds last year by wide acclaim. when do we see them participate in this bull market? david: the banks have done fairly well, but i think it is less of an issue of the banks not executing and more a function of market participants having more of an interest in growth. if you pull up a chart on the bloomberg terminal, growth versus value, your answer is exactly in the chart. it is nothing the banks are doing or are not doing. they are executing well. it is the function of yield curves but more of an affinity of market participants for growth. francine: david george and alison williams, and thank you to our guest host, adam posen. it is interesting to see pre-market what jp morgan is doing. gaining 2.3% it is and giving a left to european banks -- lift to european banks. tom: we forget the scale, the sheer size of these big banks as we go into bank season. is the word we would use. francine: the technical word. imf spring meetings. at the atrium of the international monetary fund with more. ♪ ♪ alix: big oil m&a. -- chevrons anadarko buys anadarko. plus, jp morgan surging after topping estimates across the board. wells fargo on deck. and the wonderful world of streaming. disney unveils a streaming subscription service for seven dollars as it tries to dominate in a crowded field. david: welcome to "bloomberg daybreak." let's talk about jp morgan . -- welcome to "bloomberg daybreak." let's talk about jp morgan. their outlook also pretty solid. quality and the loan growth was going to be an issue for all banks, so any clarity on that pretty solid. david: this sort of sets the standards, so it will be curious to see more.

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