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tv   Bloomberg Daybreak Americas  Bloomberg  August 29, 2019 7:00am-9:00am EDT

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congressionally mandated goals we've been given. when i approach my job, those are the things i'm thinking about. alix: san francisco fed president mary daly focus on inflation and employment. china steps down. the country says it won't retaliate at the united states' latest round of tariffs. and u.s. treasury secretary steve mnuchin looks at the positives of long-term borrowing, and says the government has looked at ways to counter dollar strength. david: welcome to "bloomberg daybreak" on this thursday come august when he not. we have some best buy -- thursday, august 29. we have some best buy news just out. alix: it looks pretty good. full-year adjusted earnings now on the high-end of $5.75 per share. david: it beat on second quarter earnings-per-share. alix: i guess the downside is that, if you took a look at comp sales on the enterprise level,
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they were a little lighter than estimates, but still up by about 1.6%. this is on the heels of dollar general, that really crushed it. here's a negative. they might see earnings on the higher end for the full year. they do not see revenue on the higher end for the full year. they see $43.6 billion. they had seen $43.9 billion. that could be a marginal weakness. david: stock is up in the premarket a little less than 1%. you mentioned dollar general, which has a strong showing. alix: blew outcome a really. raised their guidance, they see full-year sales forecasts rising. they did point out there are a large number of sales in their lower margin products, so margins will be an interesting story for them, but i think it always is for the dollar stores. david: absolutely. the beat on earnings-per-share for the second quarter, and comp sales were up 4%. you can see they are up about
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6.5% in the premarket. alix: this will add some early optimism in the markets. s&p futures up by a solid 1%, over 2900. euros dollar is weaker for multiple days now. you are looking at around the lowest level we've seen since 2017. it is a broadly stronger dollar story. we will get into the input cushions of that as we head through the program. you're seeing a rebound in commodities and the equity market. the exception is italy. did you know they sold 10 year bond yields today at below 1%? below 1%. david: i did notice that. pretty extraordinary. alix: time now for global exchange to bring you today's market moving news from around the world. joining us from hong kong is enda curran, in rome is gerald holton, from london, emma washington, from peggy collins.
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commercese ministry of spokesperson said that china has means for retaliation, but the questions now should be about removing new tariffs to prevent escalation of the trade war. enda curran has the latest. the importance of what the commerce ministry said was that they would not retaliate against america's retaliation against china's retaliation of last week. it's a little bit head spinning, but that is where we are. they request that the existing tariffs be rolled back, and that sounds like something of a tall order given the trajectory of these trade negotiations in recent weeks. he did leave on the table the option that china can retaliate. he just didn't give any specifics around when they might do that. he said also those talks may still go ahead and september. he didn't confirm that they
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would come about said there's still some background work going on in terms of keeping that on track. think one end, you could of that as a conciliatory message, but on the other hand, he was making clear china still does have the option to strike back if they want to. david: thanks so much for being with us. now we go to rome. just at the content is set to -- just a piquant day -- just set conte is set to return as prime minister. reporter: it is really quite a striking turn of events here. conte was given up is dead politically a week or so, 2.0,ow we are seeing conte with the prime minister accepting a mandate from the president to form a government. he has about a week to put
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together a program to name potential ministers and iron out a few of the difficulties between the two parties that are going to back this coalition, particularly the role for luigi dimaio and the five-star movement, who is still holding out on his desire to remain deputy premier, which may be a dealbreaker for the other side of the coalition, the democrats. alix: investors loving it. yields are down under 100 basis points. colten fromjerrold rome, thank you. now we want to get the latest from emma chandra. adding to a weaker economic picture we are seeing emerge for germany abid concerns about a global economic slowdown and the trade war between the u.s. and china, both of those things really impacting the german economy as it is export oriented. he had a number of data points
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that have suggested we could be seeing the engine of the european economy had into recession. second quarter german gdp declining. the german bund is bank expecting that ash the german bund is bank -- the german bundesbank expecting that to happen again. what does this all mean? it puts pressure on the german government to introduce some fiscal stimulus after years of running a budget surplus. chancellor angela merkel's government did indicate they aboutbe willing to set up 50 billion euros, worth $55 billion. david: thanks so much. now let's go to washington and peggy collins. there was some news made by treasuryuchin of the about ultra long bonds. it sounds like they may be back again.
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he floated this a while ago. peggy: that's right. our colleague got an exclusive interview with the treasury secretary, and he said they are seriously considering these ultra long bonds. these would be bonds in the 50 year or 100 year length of time. that is really interesting, as you said, because this issue came up in the markets in 2017, and the markets gave it somewhat of a cool reception. when the market came rolling back earlier this month, we were surprised. the markets didn't really seem to gravitate to this idea, but given the low rates we are seeing out there and the fact that the u.s. is still in positive territory when you look at the environment for negative yields out there, they could be possibly thinking that there could be an appetite for this from pension funds or maybe even sovereign wealth funds. alix: he also spoke of the dollar. he said that "right now we are not contemplating intervention. " did we get any sense of when he
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actually might be considering an intervention? this has you said, been swirling in the markets about whether or not the trump administration would take the would take the very unusual step to intervene in the currency market. what we got from the interview was that he was saying not at this time, but that does still leave the question out there of not they ever would. we did also get information from the interview that they are really looking, if they were going to do it, to do it in coordination with the fed and potentially other countries. the question there is whether they would get any support for that, and that is a big? -- a big question mark. alix: thank you very much. i should point out that paul romer, and why you professor of economics and nobel laureate, will be with us coming up -- n professory of
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economics andu. androfessor of economics nobel laureate will be with us coming up. david: we have steven mnuchin saying we are going to talk, and china saying we are not going to retaliate for this latest round of increases. vincent: when you put it all in a nutshell, they haven't said anything. they haven't even agreed on talks coming up in september. we've agreed to not retaliate on the retaliations of the previous retaliation. it does get your head spinning. we really don't have anything to hold onto just yet alix: -- just yet. why: explain to me, then, markets move on this. >> one thing i think the market missed when trump did his tariff retaliation friday, notice that he didn't aim to increase them
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in september. he targeted october. to me, what that allows, it gives us a month to try and get the back to the table. that's why the market, to me, is starting to express optimism, and rightly so. now witht a point brexit and with trade where summer is over, this needs to be resolved. the market is asking for a isacle, but what you need populism to start playing pragmatically and get to a resolution, and i think it may happen. david: let's assume it goes beautifully. what you get by october 1? paul: what you get is a significantly higher stock market. but what do they do in the trade talks? paul: first of all, they are going to shake hands. they need to be able to leave a september meeting but what do tn the trade with a clear trend for the fact that you can get a resolution by the end of the year.
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or at least maybe three to five months, but no longer. they are at a point now where they mustor at prove to the mars that they are very serious and that they are closer than what they are. i think realistically, you're going back to where you are at the beginning of summer, when that all blew up. if we get this deal back on the table, and what china wants is they are saying if we are going to do this, we want tariffs off now. that was there sticking point. lighthizer is saying they want to keep them in play. that is what trump would have to give on, and in return he might get ip. vincent: the trump says that xi says we want all tariffs off. this is the one they say they can't fly on because congress won't allow it. there's absolutely no motivation for schumer and pelosi to assist the president in getting this deal done prior to be november 2020 elections, so this is still a little bit of a hope.
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we hope they will go to the table. they may agree on something, but the idea that the democrats will back the president on this is zero. so we are still going to drag on to november 2020. we will see a lot of stock between now and then. this is an upside, but i think this is just a good day for the market. alix: which also brings me to tie-in the conversation of markets in the last three days, which is how politics and central bankers interact. the latest is mary daly, symphysis go fed, spoke to -- mary daly, san francisco fed, spoke to bloomberg. here's what she had to say. considerot political issues. i only consider the mandate we've been given, and when i approach my job, those are the things i'm thinking about. alix: she wants to look at just the economic data, but then you get some kind of trade deal. bond yields are going to jump. what is going to happen to the dollar? how do you see the interaction to the downside? paul: i think the biggest risk
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to a trade deal, if it happens, and i know i am in a minority in my view here, i think the biggest risk is that the move for interest rates in august could reverse on a dime and the lelyet could be who caught the wrong way. i don't think we have a currency war. have a trade war. what we seen from the fed is 100% right. this is not a situation where they will react to politics. they are reacting to what the economic impact of these politics are, and i think that's correct. vincent: totally correct. david: the difference between those two, though. alix: it's a sentiment thing right now. what politics is doing is impairing business decision-making, which is slowing growth. if you look at capex, the
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three-month moving averages down next to zero. that is likely to slow the economy going into next year. the idea of putting trade tariffs, delaying them until december, is more than likely going to bring growth from 2020 into 2019, so we do stand to see slower growth in 2020. so will be fed proactively react to that? it's a reasonable possibility. whether we get any sort of possibility things are going to happen, that would put the fed on hold. it's going to slow them down because the insurance isn't necessary anymore. alix: dennis also brings me to the conversation -- then this also brings me to the conversation bloomberg had with stephen mnuchin and long bonds. right, heditions are will look to take advantage of long-term borrowing and execute on that. you take advantage of long-term borrowing, and then the government has more money, the fed buys more bonds, and you get more immediate fiscal stimulus.
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paul: i think it is a smart move. alix: would you buy a 100 year u.s. treasury? paul: i wouldn't. [laughter] paul: but mnuchin by background is a trader, and he's more than willing to sell it. i do believe the white house is looking more at the long end of the yield curve than it is at the dollar intervention right now. ithink they are looking at and saying this could be a one-off opportunity for many years. 100 years, who knows? but it also might be signaling that if we think the economy might be doing better next year, this could be the time. it is a view that i think there's a clear signal coming. david: and it is a fair question when you buy a 100 year u.s. bond. people are buying 100 year australian bonds. the money is out there. alix: argentina? that hasn't worked out so well. david: but if people want to buy it, why wouldn't you sell it? vincent: perfectly correct.
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as a trader, i would be selling these with both hands. but they are trying to match assets and liabilities, and they haven't been able to find something that really matches. we've not seen the unintended consequent is of interest rates at this level spill into the municipal bond market. as pensions suffered to keep up with matching liabilities, eventually that weighs on cities theirates trying to match pensions and liabilities. at least what it appears in the short term, if you can borrow 100 your money at this level, i would personally be all over it, but i am not in a position of the u.s. treasury. alix: i mean, i'm excited a 30 year mortgage i got a couple of years ago. david: what about a 100 year mortgage? that would be interesting. vince cignarella, thanks for being with us. paul richards of medley global
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advisors will be staying with us. british prime minister boris -- movedas moved to sen to suspend parliament as part of his deal to deliver brexit deal or no deal. westminsterow from john mcdonnell, u.k.'s shadow chancellor. thank you for joining us. give us a sense of what happens in this shortened parliamentary session? as i understand it, they will convene september 3. they have until september 10. can you get legislation through that would stop a no deal brexit in that time? guest: potentially, yes, but it is going to be tough. don't underestimate the difficulty of getting legislation through in that short time. that is exactly why boris johnson has exercised his dictatorial power of trying to prevent parliament from meeting long enough. so what is happening at the moment is the opposition parties brought themselves together, set
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up a group working through the detail of how we can achieve it next week. we are working now with senior conservative mps. inisters come out aboutpress their outrage boris johnson's behavior. right, the time is incredibly tight, so there's lots of opportunities that boris johnson could take to try to prevent it happening, but there's actually been a popular reaction against his behavior now, not just over his traditional opponents and other political parties, but popular reaction on the streets. we saw a demonstration yesterday announced within hours of his behavior being made public. hundreds of thousands of people coming out in city after city in the country. david: your leader jeremy corbyn
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said yesterday he thought it was time for a no-confidence vote. if you do not have the time to get through legislation to stop a no deal brexit, do you have time for a new confidence vote? do you think the votes are there now, the way they weren't with theresa may? guest: there could be time, but again, it's going to be tight. we know how tough it is, both in terms of a legislative move and for a no-confidence vote as well. you struck on it straightaway, how things moved in parliament, particularly amongst conservative party members, in a way that they would support either a legislative move or no-confidence motion. by boris johnson's behavior, he seems to be welding together on alliance against him, even within his own political party. i'm increasingly confident that we could have a majority of the legislative move, and maybe a
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majority on a no-confidence motion. alix: if parliament is suspended, are there contingency parliament sit elsewhere during that time? guest: well, there's a whole range of really creative ideas that have come forward about sitting elsewhere. we've even had the archbishop of canterbury come forward with the idea of setting up a citizens assembly. again, this is all about trying to reassert the rights, the democratic rights of the people of our country. as you know, we don't have a written constitution, but we do have constitutional practices that go back centuries. what boris johnson is doing his dictatorial he -- is dictatorially trying to rush over them. david: we've been talking about the tide deadline, the october 31 deadline. if there were a no-confidence vote that had to go to a general
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election, could it be conducted in time for a new government to be brought in and time to beat that deadline -- to be brought in in time to beat that deadline? guest: again, it would be tight, but there still could be. leaders, ourn european partners, have expressed the view that if there was to be some significant parliamentary move or a general election or a new referendum, they would look at an extension of that deadline. there's a whole range of opportunities that are open to us now. the key thing, you struck the week.n the head, is next whether we can get legislation or other measures through parliament itself. if we fail, we fail. if it is as a result of what boris johnson's dictatorial overriding of our traditional democratic practices, i think that will bode well for the
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future and he will not have the marvel authority -- the moral -- the moral authority of a prime minister in this country. alix: thank you very much for joining us. we appreciate your time this morning. we do have some breaking news for you. bennett goodmans from blackstone is going to quit the board, and senior -- the board and senior direction manager post at the end of the year. this is a huge shift. he's been on the board since 2015. he's definitely a staple when you thick about blackstone, and he will be doing his own family business now. david: jso dissolving, basically. a big shift. alix: i wonder what the longer-term implications are. we will discuss. we will talk to bennett goodman on bloomberg tv. this is bloomberg. ♪
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viviana: this is "bloomberg daybreak."
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sony agrees to sell its 5% stake in the health care devices company for $760 million, one move dan loeb suggested the japanese technology giant make in june. he disclosed a $1.5 billion stake in sony and encouraged the company to spin off the semiconductor division and focus on its main entertainment business. south korea's highest court ordering the retrial of samsung vice-chairman on bribery charges. the supreme court voiced an decision to suspend the sentence and send the case back to the lower courts. the company has also struggled with falling profit from a memory chip downturn and sluggish smartphone demand. -- wants to delay repayments to the international monetary fund. the government will also postpone $7 billion in payments on short-term notes.
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that is also seeking voluntary reproach and a $50 billion of longer-term debt. that is your bloomberg business flash. alix: i found this really interesting because, as you pointed out, this happens. this is a very typical latin american restructuring kind of thing. but is it going to wind up being enough, especially into the elections? on one hand, you have the institutional investors and retail investors have a mandate that they have to take longer term debt. for investors don't. -- foreign investors don't. the countdown is like six weeks until the actual election. coming up, oil rallying for the third day. we will be joined by gary ross, black gold investors ceo. this is bloomberg. ♪ ♪
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alix: this is "bloomberg daybreak." the no'm calling the no retaliation rally -- and calling
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the no retaliation rally. china won't retaliate against the latest round of u.s. tariffs. in the bond market, you are seeing a little bit of selling, but some big buying when it comes to italy. could investors be more excited about another conte government? the country was able to sell 10 years of debt for less than one percentage point. the curve a little bit flatter, although got steeper yesterday. david, we have some more earnings. are killingtores it. david: dollar tree .76, sos-per-share was $0 i think that might have been a mess. alix: full-year net sales in the high-end coming in at $23.78
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billion. they do see stronger earnings for the full year. david: second quarter sales were were $5.4 billion. but their stock is up in the premarket a little over 3%. for more on the other dollar stores and retail results this morning, let's turn to bloomberg's emma chandra and london. emma: thanks very much. it looks very much like investors like the dollar stores this morning. we also heard from dollar general today, is the second quarter was pretty great for them. they beat on earnings-per-share, sales margin, and comps. the ceo citing disciplined cost control. they also adjusted their guidance for sales and profit full year, so no surprise we are seeing that stock rise about 7% in premarket. should also mention those boosted full-year guidance does include the impact of expected tariffs.
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a different story from ali's bug in market -- from bargain market. they are about 1/4 the size of the likes of dollar general. a toughdid call it comparison. outlet -- olli e's bargain market is opened some 20 new stores. a bit of a narrowing of guidance for the full year. they also missed on comp sales. i see them falling around 6% so far in the premarket, really putting the pressure on the new .eo
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he was seen as a bit of a turnaround expert. the real test will come as we get to the holiday quarter. the last two years they've done really well, but this tariff could be another headwind to best buy. david: thanks so much. let's turn back now to paul richards of medley global. we want to talk about retail and the consumer, but one thing i think ties it all together i get, dollar tree implement and actions to mitigate recent era hike because there is so much -- recent tariff hike because there is so much for the consumer. paul: the retail consumer has put a much cap the economy alive. it's why the stock market is up. however, i think trump in the market are realizing there are real risks ahead. if this trade war is to really explode here, then in the absence of capex, the retail investor could really upset the market. something needs to get done.
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i think he knows it and the market is telling you that. david: exactly right. paul richards of medley global advisors will be sticking with us. in the meantime, let's find out what is going on outside the business world. viviana hurtado is here with the first word news. it hellion prime minister giuseppe conte will start coalition talks between the populist five-star party and the centerleft democrats. won'tindicating it immediately retaliate against the latest u.s. tariff increase finance to buy president donald trump last week. beijing saying it is more important to talk about removing the tariff after u.s. treasury secretary steve mnuchin told bloomberg to get an exclusive interview. chinese negotiators will visit washington, but he wouldn't say when. china's decision not to push .ack gave oil a boost
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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. i'm viviana hurtado. this is bloomberg. alix: thank you so much. sisco earlierent this week, who said china buying iranian oil is a very scary proposition. >> one of the key risks we highlighted in our research is that the chinese at some point in the trade war escalate the situation enough to say, you know what? we are not going to follow through with sanctions. we are going to start buying iranian barrels. a scary scenario, very deflationary, and would bring a whole set of dynamic and's -- set of dimensions to the equation.
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joining us now is gary ross, black gold investors ceo, and former of s&p global. good to see you. do you think that would be china goes and buys iranian oil -- would be possible? china goes and buys iranian oil? no, they are not. no industrial company is going to touch iranian oil because of u.s. sanctions. alix: that's because of the geopolitical backdrop that doesn't seem to have mattered for oil. supply andyear's demand. gary: last year at this time, oil was $70.
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everyone is so bearish 2020 because of the macroenvironment. you're seeing this slew of new hedging, and that is overwhelming and putting downward pressure on the price. alix: we have a chart to show the seasonality of oil inventories. the green line is where oil inventories were last. the blue line is where we are now. we actually look tighter than we were last year. how much of that do you see as underlying demand? how much of that is just moving oil in different locations and exporting more? gary: i think it is mostly supply. the fact that iranian exports are down more than 2 million per , so the supply side of the market is relatively tight, .espite u.s. protection we haven't seen any demand growth year on year the past three quarters outside of china, which is amazing, but if you
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think about 25 central banks resolutione kind of comes to the trade conflict and the possibility of demand improving is there. i think a lot of this bearishness of 2020 could turn out to be wrong. think about it. -- $15are $15 but where below where they should be based on fund metals. -- based on fundamentals. thisct, we may not see surplus that everyone was worrying about in david: 2020, in 2020.es david: -- david: but it does raise the question of how much of that is driven by trade concerns, and therefore global growth? gary: a lot of it. it is driving everything, the macro view of the world. with the 10 year and the 30 year where it is, that is why oil is so weak.
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$70 print. they have an ipo next year. they need to get the price up. they've been under the supply of their customers, and they will continue. substantial pretty stock draws on average in the fourth quarter, which should be very supportive, but again, the function of the macroenvironment in the s&p, you can't ignore that. alix: to pick up on opec for that, they still seem optimistic about next year. we had the recent committee where they monitor to what is going on, and said it underscores the importance of , which, along with ongoing healthy oil demand, has arrested global oil inventory growth and should lead to significant draws in the second half of the year. i feel like they are putting a lot of hope on demand coming in stronger than a lot of the oil producers and agencies think. gary: i think we are going to get a demand pickup in the fourth quarter. last year the comparison would be very easily.
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it was flat year on year. the running of a lot more crude oil to make diesel fuel and low sulfur fuel. so there's no doubt you see a diesel pickup in the fourth quarter. the macro of iron meant is not expecting us -- the macroenvironment is not expecting it. price down $15 below where it was. think about all the geopolitical subtext with israel and iran. the last week, israel has attacked iranian proxies in iraq, syria, and lebanon. possibility of a war between iran and israel certainly has grown over the past week. there's a lot of stuff to worry about, but no one cares about because of the overwhelming trade frictions in the macroenvironment. david: given what we've been
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talking about with gary, what is the chance that the market's mispricing oil right now? you believe those trade negotiations may ease. paul: it is similar to what i was saying about fixed income earlier. , to metrade deal is done that would put oil back to $70 very quickly. to me, that would put a 10 year back above 2%, so the market is pricing pessimism. given everything they are deal with, i can understand that. but you may now be at a point trump'sf they misread intentions to get things done, they might be looking the wrong way. i think markets are overly bearish, and i think we shifted in august into being way more bearish as well. if you come back out to labor day and you see some green shoots in terms of trade talks, suddenly you have a fixed income market that says we might be wrong, so i would be very
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careful next week. alix: but doesn't matter? you mentioned paper. if you have a rise in oil prices, you will have the producers hedge to cover the backend. it's a very good point. the typical hedging has been about 33% of production, but i think to get a heads like 50% reduction, that's an extra 400 million barrels of paper selling, which is putting pressure on the market. today's prices higher than tomorrow to discourage people from hedging, so they will continue to keep it tight. but if the macroenvironment were that may slow down the rate of hedging in the fourth quarter, and pull prices .ack up to $70 quite easily so it is the macroenvironment which is the overwhelming key, getting everyone so nervous that. the producersthat
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say i have to hedge. alix: like a self fulfilling prophecy. richards, great to see you both. coming up, the end of an era for blackstone. bennett goodman is leaving. we will break that down more in today's wall street beat. if you have a bloomberg terminal, check us out at tv . interact with us directly. just go to tv on your terminal. this is bloomberg. ♪
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viviana: this is "bloomberg daybreak." coming up in the next hour, paul romer, nobel laureate and in white you -- and nyu professor.
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here's your bloomberg business flash. short" burry of "the big says he sees money and passive investing. he says smaller value stocks are being neglected. he says "there is all this opportunity, but so few active managers looking to take advantage." today, two of the biggest names share the stage at the world ai conference in shanghai. hardlineaking a against the likes of tesla ceo elon musk. >> we need heroes like you, but
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we need more heroes like ours, working hard on the air, improving things everyday. that's what i want. viviana: on the subject of muskicial intelligence, fears doomsday is coming. that is your bloomberg business flash. alix: i mean, ok. you go to mars, you just stay there? you can't get back. david: so what's the point? alix: all i have to say is listen to that conversation. if you have read or watched "the expanse," it is a really interesting conversation. we cover now three things wall street is buzzing about. first off, ubs hires a star banker from a rival in a radical overhaul of the top ranks. bank of america builds a private capital team, chasing a $10 trillion pool driving the deal. and blackstone's goodman is going to leave.
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bennett goodman, one of the cofounders of the credit business, is set to exit at the end of the year. david: here to take us through it all is sonali basak, bloomberg investment banking reporter. ubs is fascinating here. how much is push and how much is pull? annmarie: what's exciting --sonali: what's exciting here is we have a lot of people leaving as well. we have the former ceo of theerzbank leaving, and leader of asset management. you have a lot of changes at the top here, which signals a significant secession plan. it is a little bit of push-pull. what helps is there is some time to take over at the top. david: there was a time when it was thought that martin might be a candidate. sonali: there were others considered. they were in talks with christian meisner.
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this is your favorite game on wall street, "hunger games." [laughter] alix: it does show there is a hunger game and how you capture all that business out there and win at that game. sonali: there's been a lot of volatility in that business, and as markets get more shaky, there's even more volatility. i also wanted to point something else out really exciting that was a little under covered. woman very much on the rise, is leaving asset management there to join citigroup. alix: good point. let's go to the second-story, which is bank of america talking about trying to capitalize. they are hiring a bunch of people to manage private capital. sonali: that's right, and they are doing it in the investment bank. this is something we seen ubs in recent weeks also do this. for bank of america, they have a
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huge high network division also. this could create a way for them to capitalize on that. havee way, we already goldman sachs, morgan stanley, jp morgan that have been thinking about this for a while. they are ahead of them in this game now. david: do they have any advantage besides trying to hire a lot of people? sonali: it's getting really competitive, but a good thing for bank of america and everybody else is that lets companies are going public, more people want to deal in the private sector, and private equity has record amounts of money right now. if i was bank of america, i'd be a little more worried about goldman sachs right now, which has gone full steam to not only capture private equity deals, but smaller equity firms all across america. david: third story, big news out of blackstone today. bennett goodman not quite leaving, but essentially leaving come of the last of the gs out so team.the g
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sonali: you got to wonder if they are going to change the name. news broke this morning. two are forming their own funds. it is a pretty hot space in private credit. blackstone is actually behind apollo, which just did a deal this morning to do more in private credit, so it is really competitive space. alix: is there anyone that can fill his shoes there? sonali: dwight scott is the person they have leading the business there, but blackstone apollo in aber 22 space -- still number two to apollo right now in a space that is very hot. if more are crowding in, you got to wonder what the next 10 years of return looks like, and whether they can do more.
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they are all forming their own firms right now, too. wasik,bloomberg's sonali thank you so much -- sonali basak, thank you so much for being with us. multiyear the investigation into the united auto workers takes a new turn, with the fbi rating the home of the union president. more next on what i'm watching. alix: if you are jumping in your car, tune into bloomberg radio across the u.s. on sirius xm channel 119 and on the bloomberg business happen. -- the bloomberg business app. this is bloomberg. ♪
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david: the fbi and the uaw. united auto workers just started their big round of negotiation with automakers. turns out the fbi went to the home of gary jones, the president of uaw, to execute a search warrant, and also his predecessor.
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this is part of a longtime investigation that seems to be ramping up, basically saying uaw officials were taking money from some of the carmakers to come as the prosecutors alleged, make them "fat, dumb and happy" when it came to negotiations. jewelry and trips and things like that. why don't we send you on a fishing trip? that's the allegation. alix: to get better deals for the carmakers, not for the actual worker. david: that's right. if you have these allegations and you are about to go negotiations, you're going to say, do i trust these guys? fbi,are criticizing the saying they didn't need to execute a search warrant, but they are taking it very seriously at a really important time for them. that is gary jones shaking hands with mary barro there. alix: that's interesting.
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journalists have very strict rules on compliance type things. david: they had joint training facilities where the auto companies funded for uaw workers , and they use that allegedly to funnel various gifts. alix: jules. 10 -- jewels. what a weird thing. here's a jewel. [laughter] david: we will discuss later the trade deal with japan. alix: and coming up in the next economics romer, nyu professor. beautiful day in new york here. this is bloomberg. ♪ from the couldn't be prouders
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daybreak" on this thursday, august 29. alix: here's everything you need to know this morning. italy's prime minister giuseppe conte is forming a new coalition government. he says the uncertainty needs to end asap. exit thed to uncertainty that we find ourselves in, caused by the political crisis. we are at a difficult economic conjuncture that presents local economies, especially in europe, slowing down. also because of tensions in trade wars, particularly between the united states and china. david: china says it won't immediately retaliate against the latest round of u.s. tariff increases, saying it is more important to talk about removing the tariffs. treasury secretary steven mnuchin says that chinese negotiators will visit washington, but doesn't say when.
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alix: florida is bracing for hurricane dorian. and two of the biggest names in the technology world's bar today on subjects ranging from the dangers of artificial intelligence to the exploration of mars. musk share then stage in shanghai. >> i'm not a fan of mars because i think it is easy to go to mars when you go on top of the hills , just one step you will go to mars, but you will never be able to come back. that's my view. >> that's not how it works, though. >> we need heroes like you, but we need more heroes like us working hard on earth, improving things everyday. that's what i want. david: on the subject of artificial intelligence, ma is succeedng humans will
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over machines, while muska predicts armageddon. alix: a lot of ego on that stage. euro-dollar weaker, at the lowest level since 2017. in the fx market, risk on. in the bond market, risk on. only mild selling, but yields up one basis point. i still feel like the bond market is telling us something different than the equity market. joining us is liz young, bny mellon investment management director of market strategy. liz: are any of them real rallies at this point? we are always teetering on the precipice of joy and pain. i think this piece is really the removal of a negative rather than the addition of a positive. we came into this year rallying on the hopes of a trade deal, easier fed policy, a strong
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consumer and labor market. we still have the strong consumer and labor market, but those first two pieces continue to be question marks. just theeresting, even word volatility, usually we use that as a mask for negative. we say things are volatile, but really that just means things are down. right now they really are volatile. we are up one day, down the next day, and back-and-forth. i don't necessarily trust any big move in one direction. i think we need some definitive deal --on if we need a if we get a deal and what is going to happen with tariffs. david: that is a lot to ask for. change this week is changing markets in just a tweet or offhand remark. you see it in the u.k. right now with boris johnson, but certainly president trump can change at any moment. liz: we are hypersensitive, too.
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if you look at fundamentals that can drive a market, we haven't been reacting to fundamentals as much as much as i would prefer. if you look at earnings, we've had uninspiring at best earnings growth this year, and the markets still up. last year we had the highest earnings growth, maybe ever, and the market was down 4%. so we are not really looking at fundamentals the way we should be. we are looking at macro headlines, risks, rhetoric. alix: so do you like bonds? liz: i still do like duration, and i know that sums crazy. alix: where? liz: in the u.s. that can be investment grade corporate's or treasuries. when you look at where we are trading yield wise, we are still above the rest of the world. that appetite for risk avoidance isn't going anywhere anytime soon. if you are an investor that still needs a safe haven, still need something to offset beta, you're still going to buy traditional duration. alix: would you buy 100 year or
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50 year? liz: i don't know that we need to buy that yet. i think the intention of that is to create a more positive yielding security. if we look at yields for other economies around the globe, we are still ok. david: liz young of bny investment millage meant -- of bny mellon investment management is staying with us. we welcome now paul romer, andomic professor at nyu, by the way, a nobel laureate. how much of this is really driving markets and economies right now? paul: let me emphasize, the concern about the trade relationship between the u.s. and china is generally shared by both republicans and democrats in washington. what i think has really happened is we've entered a new phase
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post-2008. if the prior phase was the global boom, when we had this rapid expansion in trade, i think we are in a new phase where there's going to be real contention, and therefore no rapid growth in trade, may no growth in trade at all. maybe just at the same rate of gdp. the fear is this might be some thing that lasts for 10 years or more. there's a really profound misunderstanding about the wto system and the agreements in our trade system. we haven't paid any attention to that. we are going to have to deal with it. this period of slow trade expansion is going to be with us for a while, so countries have to think more about internal demand and bracing for that. alix: i love that you brought up the wto because in our daily trade report on bloomberg, it's at the china-u.s. trade war is getting all the headlines, but what's even more important is
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that president trump is not satisfied with the wto, so he's looking to block nominations. so what is there? paul: the u.s. perception, probably the chinese perception, too, is that somehow they are not getting a fair deal from the wto. i think we need to recognize that there is a profound misunderstanding here. the u.s. side, the western perception was that all economies were going to converge to one like the united states, were you had no subsidies, no state owned firms. the chinese government has decided that they don't want to pursue that model. they want to have state owned firms. they want to have subsidies. and we don't have a trading saysm with has rules that this is the way you want to run your economy, this is the way you run yours, let's still figure out a way to trade with each other. david: in that world you describe, is it still possible to get trade growth, other than from globalization?
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let's go back to the 50 and 100 year bonds from the u.s. treasury. ine have indicated investing .ong, low yield rates paul: i think it is possible, even if there is no rapid growth in the movement of physical objects, we can still have sharing of knowledge across borders. if someone discovers a new pharmaceutical, it doesn't really matter if the pills get put on the container, but whether that formula is used to produce medication that can treat everybody in the world. so we can sustain growth. it's unfortunate that there may be this stricken on flows of goods, but we should still take it as a given that this is what we will face for political reasons, and do better. alix: if you wind up having physical good traits falling off , financials falling off, but service is picking up, is that
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enough to sustain the global growth we are used to, or do we have to rethink the longer run potential? paul: if you think back, we had very little trade with the rest of the world, but we could still grow. there was internal demand and the ability to supply that demand. trade can boost growth, but you can still have growth with restrictions on trade. if you get more trade in services, that is probably a good way to encourage this flow of ideas. even if that is restricted, i think we can still look for ways for each side to discover that new pharmaceutical that treats some disease. david: but at that time, despite the fact there wasn't much trade, how fast was the population growing compared to now? what about the demographics of it? paul: that is a new development. the slowing population growth is changing the world economy, changing domestic economies. there's also this concern about secular stagnation.
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there's a concern that our domestic economy may not generate as much demand as is required to keep everybody fully employed. but that means we need to find a way to increase the domestic demand. we face that problem whether or not we have trade because if somehow we get the other side to give us domestic demand come away are they going to get a substitute for demand? liz: paul romer will be sticking with us. coming up, monetary policy as a political tool. central bankers reject former new york fed president bill dudley's suggestion that it should use monetary policy to play politics. this is bloomberg. ♪
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viviana: this is "bloomberg
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daybreak." blackstone group is losing the last of the cofounders of its $139 billion private business gso capital partners. bennett goodman remains the chair of the business develop and company and becomes a senior advisor to blackstone when he steps down at the end of the year. he will forfeit more than $100 million in on invested stock. td bank began controlling spending, but it wasn't enough to help meet analyst expectations. earnings missed estimates by a penny. helpedin td ameritrade earnings in the retail segment. the trump administration is giving careful thought to issuing ultra long debt. u.s. treasury secretary steven mnuchin says offering bonds with maturities of 50 to 100 years is under very serious consideration. record low interest rates make this an opportune time for the treasury to revisit a proposal.
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this idea has been repeatedly met with a cool reception on wall street. that is your bloomberg business flash. david: thanks so much. former new york fed president bill dudley added a new level of heat to the discussion about the role of the fed when he wrote in a bloomberg opinion piece that it shouldn't be supporting president trump's trade actions through monetary policy, a view that many took issue with. >> i have no idea what bill dudley's goal is, and frankly i don't care. >> it is not normal. >> i think it was foolish. >> it feeds conspiracy theories, and it was totally irresponsible to talk that that way. >> the independence of the central bank is only there in they can do that better than the alternative. >> i consider only the congressionally mandated goals that we've been given. the fed can't
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stay out of it. david: the fed can't stay out of it. david: still with us are paul romer of nyu and liz young of bny mellon. so what is the fed to do? you have politics really affecting the economy. how can it ignore that? paul: i haven't spoken to bill, but i think he was trying to say something that is different than what people are interpreting. i think the fed is constrained by the law. congress passed the law that says you have to make independent decisions about monetary policy. i think what he was trying to send was a signal that there is a game of chicken which is unfolding here, and if the two sides don't understand each other, there is a risk of a really serious collision. alix: but it also goes to the sort of long bond conversation, to the blackrock paper from the other week about the coordination between fiscal and monetary. that is nothing necessarily new, but it feels like there are more people calling for immediate connection between the two. that would be a huge
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intersection between politics and the fed. what you think about that? paul: i think it's important to remember --liz: i think it's important to romer that the fed -- i think it's important to remarry that the fed should stay in dependent -- i think it's important to remember that the fed should stay independent, but they still watch financial conditions, and they can't pretend they are not. if we had a force like trade affecting financial conditions, whether that be market returns, liquidity, whatever it may be, the fed does have to pay attention to that. so it is not that they are going to come in and fix the problem created by trade, but they do have to watch how it is affecting the rest of the world, how it is affecting financial conditions here, and affecting markets. david: the fed mandated by statute is employment and inflation. how does it fit with the trade dispute? paul: they have to be thinking
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about the long run, not just what happens the next six months or the next year. what are things going to be like in five years? and it got to watch both employment and prices. i think one of the things they will be watching right now is what extent these tariffs are feeding through into the higher rate of inflation, and do they have to act in advance before that becomes a problem. alix: there's a fascinating chart that circulated yesterday that took a look at yields in italy and the fed funds rate here in the u.s. it showed that for the first time ever, the yield in italy moved below the fed funds future rate. our bond investors insane, or is the fed behind the curve now that we have the highest yield in the developed world? paul: the point i would try and make is to distinguish what is the right setting for monetary policy right now versus who makes that decision. reasonable people can differ about what would be the right
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way to set policy, but we need to have an agreement about here is the process. congress passed a law that gave the fed responsibility for that. if congress wanted to pass the law and say we are going to abolish the fed and give that possibility to the president, i don't think the fed would object at all. that's the way our system works. but until the congress changes the law, the people the fed -- the people of the fed are going to follow the law. with this kind of language now about the chairman of the fed being an enemy of the u.s. riske, i think there's a of a real collision in this game of chicken because i don't think the people and the -- the people in the fed are going to back down and break the law. david: we have a question coming in from a viewer which is interesting. if you believe, as some people speculate, that the president has taken steps in part to force the fed to raise rates, how does the fed react to that?
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liz: i think paul made a really good point here that the question isn't whether the fed should be responsible for monetary policy or the president should be. i agree that we are not really sure which one is driving it more than the other. what the question is not is whether the market should be responsible for monetary policy. we can't react to simply the fed funds futures or what the market expects the fed to do as far as rate cuts go through the rest of the year. at some point, the fed is going to have to take the market on and say there's no more data that supports further cuts, so we can't do much about that. whether or not the fed should or should not react to something that the president does on trade, again, they have to if it is going to tighten financial conditions to a we can't reverse. if trade takes us to a point where we can't reverse damage that's done, the fed has to react to that and support the economy. we are trying to support economic growth on a path that
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is sustainable. if trade policy affects that path and the sustainability of that path, they do have to react. alix: so should the fed cut rates? paul: that's a discussion about what is the right setting of monetary. honestly, i think the answer right now is we need other ways to stimulate demand. it's getting to a very dangerous position where we get down and hit the zero bound on interest rates, and the dollar has a special position in the world economy as the global reserve currency. i think there's real concern that as interest rates get too low, the risk of a financial crisis starts to become more of a concern. so i think everybody right now should be thinking about if we really need some offsetting stimulus to demand, how could we get this from another mechanism beside cuts and interest rates -- cuts in interest rates? alix: paul romer and liz young
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will be sticking with us. store up, the dollar surging in premarket after posting positive second-quarter results. more on that in today's bottom line. this is bloomberg. ♪
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david: it's time now to take a look at three companies worth watching this morning. first of all, ubs had a big announcement in the management structure. the former head of credit suisse might be in line for succession. he replaces martin blessing. alix: and the whole banking sector. best buy stock really getting crushed in premarket. a lot of this has to do with trade. the company is saying there is general uncertainty related to customer buying behavior in the back half of the year. about 35% of best buy's cost of goods sold is subject to the tariffs that begin this weekend,
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so they had to lower their guidance for full-year revenue. the direct impact is on a consumer level. david: the third set of companies today, still staying in the retail area, dollar tree and dollar general. for more, we are joined by brooke sutherland. brooke: they are actually doing well. their shares really spiked this morning on strong results from both dollar general and dollar tree. dollar tree has had all of those issues with its family dollar acquisition. it looks like they are taking steps to put that behind them. pretty strong same-store sales out of the family dollar branch in this quarter. both come in their guidance for the full year. david: concerns about tariffs and trade? brooke: dollar general says all of the tariffs are factored into their guidance so far for the year, but that also assumes they are going to be able to mitigate and offset the impact of the tariffs, which raises the question about price increases. when you start raising prices, how does the consumer ultimately
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respond? they raised their same-store sales guidance for the year, but looking at a range that would imply a slowdown in the back have of the year in the third and first quarters -- the third and fourth quarters. alix: how lean are these guys if they wanted to offset in different ways than cost cuts? brooke: they don't have a lot of cushion because most of what they sell is lower margin consumables. food, groceries, basic household goods that don't give you a lot of profit margin to begin with. dollar general has been pushing more into home goods and party goods to try and bolster their margin, so you could see some price increases their, but they are trying to launch this and draw in the consumer to buy more of those products from dollar general, so it is not really a great time to be raising prices if you are trying to get customers in the door. david: did we see much pressure on the margins for either company? brooke: not so much in this quarter. they did raise earnings guidance. dollar tree had taken down guidance in the first quarter,
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and now they are raising it up a bit. they see a tony $6 million increase -- they see a $26 million cost increase from tariffs. you did see numbers from ollie's yesterday, another bargain outlet that really struggled, but it looked like a lot of that was self-inflicted. alix: wonderful analysis. thank you so much for that, brooks sutherland of bloomberg opinion. we are moments away from the latest read on u.s. economic growth. the narrative has been how good the consumer is. will it continue to hold up, especially if you have tariffs starting to feedthrough on the retail level? this is bloomberg. ♪
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there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. alix: this is "bloomberg daybreak." i am alix steel. the moments away from second read of second-quarter gdp. the interesting part will be the consumer as well as inflation.
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a nice relief rally on a no retaliation mandate on china on tariffs from the u.s.. euro-dollar going nowhere. selling inds up and the margin elsewhere in europe as well as in the u.s. as the curb continues to flatten. drop.mbers second-quarter gdp at 2%. a touch lighter than the first read but in-line with expectations. ,ersonal consumption crushes it 4.7% higher than estimated. on a quarterly basis, core pce coming in lighter. still closer to 2% than 1%. inventories up .2%. no doubt that will be distorted going forward because of any kind of buying ahead of tariffs, particularly ahead of the holiday season.
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retail inventories up and the advanced goods trade balance not as wide as expected, coming in only at -$72 billion. not as wide as we would have thought. of a strongirmation consumer, inflation treading water, and that is where we are at. david: people are buying more but paying less for it. personal consumption is up and core pce is off. alix: if you look at fixed investments like nonresidential spending on equipment or ip, that did fall .6%. it did rise 4.4% in the prior quarter. whether that is a giveback or ceo confidence and how that filters out remains to be seen. ofll with us is paul romer nyu and liz young. update on thee an second quarter. the original numbers were pretty
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good. we had the light before -- we had them right before. of necessarily an indication what happens as we look forward. that is the divide. consumers may be looking at wage growth, employment, looking back and saying this is pretty good. on the other hand, when you start to look forward, you have all of this talk about the inversion of the yield curve and a lot of angst about whether things are getting worse. there is a tension between the backward looking in the forward-looking perspective. david: you also have manufacturing pmi's rolling over. capex trailing off. a lot of things indicate that may end up with the consumer. -- can thentinue consumer continue and for how long? liz: some of the day you just mentioned, the average consumer does not know about that yet. it will take more time for that
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to bake through and affect whether or not they will spend. one of the things was we came into this year, the rally was built on the predication we would have a strong labor market and the labor market would persist. that continues to be the case. if i am a consumer and we have a strong labor market i feel like i will keep my job and get a raise or i have the opportunity to get another job, i will continue to spend. until it breaks down, consumer sentiment stays ok barring headline risk. we saw earlier that a government shutdown affects negatively good -- negatively. david: we are getting some mixed signals. university of michigan numbers had trailed off. i will put a chart up because stephen stanley wrote an interesting note, saying when there's a diversions between the consumer on those indicators, it is not necessarily a good thing.
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the purple line is the difference in the yellow line is the 2-10 spread. some correlation. university of michigan ip ahead of the conference board. should that give us a call for concern that the consumer is getting softer? paul: the measures of consumer confidence may pick up more of the backward looking perspective or the forward-looking perspective. the consumers will not directly experience the yield curve inversion, but they will pick up noise about it. that may already be giving concern. we go back to the exchange of doubly. -- of dudley. one of the reasons he is sending the signal they fight between the president in the fed could be damaging, that fight will be something that consumers will notice. alix: what is the reaction function/lag of corporations.
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nonresidential fixed investment down .6% in the first quarter. maybe it will be noisy. at some point you have corporate profits, and if they get squeezed what is the timeline for them laying off workers? investment,rts are which can be pretty responsive, especially to increases in uncertainty. you always want to wait before you make a big commitment if you are not sure how things will turn out. in the labor market, that will be driven by supply and demand. when firms are having trouble getting new workers, when workers are leaving to take other jobs, they will have to start offering more. that will be response to what is going on in the labor market. changes in the labor market does happen with a lag. if there is a shot, i would look for a response first in
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investment. david: we have to be mindful that tariffs yet to go into effect are overwhelmingly on consumer goods. should that give us pause about what we are looking forward to in the second half of the year and 2020? liz: it gives pause to corporations more than consumers. what a consumer has seen over this year is we get threats of tariffs, and they get walked back quickly. right now the consumer still expects the tariffs to get lowered were not enforced as we expected. i want to go back to the corporation side of it. corporations will react when things they cannot control started get hit. that would be the revenue line. when we are looking at a revenue line that starts to come down and domestic demand that starts to come down, they do not have as much wiggle room and that is why the leg comes in they would have to start reacting and laying workers off. i think we have time.
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paul: you were talking earlier about the responsiveness. the extreme responsiveness we are seeing to new information. that is another indication of this environment where everyone is so much less certain about what is happening. each signal is having a bigger effect because the background is one where we are what -- we are much less certain about what will happen. absolutely. alix: absolutely. alix: when would you expect things to get more clear? what would you need to seek to say ok, the old paradigm, we can look at that again? we can look at the yield curve and what to expect, we can look at bonds and know what to expect. paul: i think we are in a new world and it could take a wild for things to settle down. what could reassure people is if there were a clear plan from the administration about continuing what it is doing with its trade policy, offsetting that with
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fiscal stimulus, that would reassure people. this disagreement between the fed and the executive branch settles down, that will settle -- that will reassure people. the environment is low, even negative interest rates. this is unexplored territory for us. i do not think any of us -- we do not know for sure why it is happening. demographics are part of it. say withthink we can any assurance when this will go away. young, thank you for being with us. paul will stay with us. now we get an update on first word news with viviana hurtado. viviana: china is indicating it will not immediately retaliate against the latest round of u.s. tariffs. beijing says it is more important to focus on -- steven
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mnuchin told bloomberg chinese negotiators will visit washington but he would not say when. hong kong police say they banned saturday protesters by the organizer of previous historic mass marches, citing safety concerns. police say they believe some protesters could turn violent. it is a plant 13th straight weekend of pro-democracy rallies. the u.s. environmental protection agency wants to ease restrictions on methane gas. the move could impact a million existing wells. under the proposal, parts of the oil and gas industry would be considered separate segments. that would allow each part to have higher emissions and still meet standards. how does a 12 hour workweek sound? not a 12 hour day, a 12 hour week. a billionaire says artificial intelligence could make that a reality. the alibaba chairman says people
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could work as little as three days a week with the help of technology advances and a reform in the education system. he says it would give people more time to enjoy being human beings. 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. this is bloomberg. david: paul romer of nyu is still with us. tells about this 12 hour workweek. what does that do to labor and people who do not have a job anymore? paul: i am skeptical. alix: i would hope so. paul: the thing i keep saying is everyone can contribute something, everyone should contribute something. i think the biggest concern we have is the people who feel disconnected from work to feel productive, to feel the dignity from work. everyone wants to worry about the problem we might happen 20 years, i say let's worry about
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right now if we can solve the problem now we will be able to solve the problem in the future. alix: as you see a shifted industry in the u.s. and walk us forward to ai, we do not have job retraining. in essence, that is what has created this inequality hole we are left with in politics and economics, you name it. paul: you touched on an important point. people learned not just in school but on the job. there are a lot more people in jobs than in school. employment as -- is an important potential source of new skills and capabilities. just as schools can be good or not good, jobs can be good at not good -- good or not good. we should be aiming to make sure everybody is in some kind of jobs and aim for jobs which are good at taking people to take on new responsibilities. alix: david, you and i cannot work a 12 hour workweek.
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we would be physically incapable. david: you work a 12 hour workday. alix: so do you good david: it is not a good thing. paul: if you get to the point where people do not want more income -- i've never met anyone who feels that. if we get to that point, people work in other ways. they will make robots or build things or volunteer. i think it is a innate human tendency to want to keep producing and keep contributing. david: paul romer, nyu professor of economics. thanks for being with us today. it is the end of august, which means the start of the u.s. open on long island. solomon,alk with ken tennis channel president. alix: you can interact with all of the charts throughout the program on gtv . this is bloomberg. ♪
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viviana: this is "bloomberg daybreak." i'm viviana hurtado in the hewlett-packard enterprise greenroom. , an exclusiver interview with the uber ceo. this is bloomberg daybreak. here is your bloomberg business flash. asked by slower than expected -- best buy delivered slower than expected quarterly sales. it was a rough start for the new ceo who took the reins in june. comparable store sales in the u.s. rose 1.9% but missed analyst projections. the retailer also lowered its full-year sales forecast. elon musk says he has never seen
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anything built as fast as teslas new electric car factory near shanghai. was alongside the alibaba chairman. the tesla china team has done an amazing job. isounded by how good the job and how much progress has been made. i think china is the future. very impressive. viviana: elon musk was at the conference despite the demand that american companies find alternatives to doing business in china. the u.s. tennis association of new york city owes hundreds of dollars in back taxes and the organization has underreported revenues from its queen center by at least $31 million. the association hosts the u.s. open and pays the city $400,000 a year in rent plus 1% of its
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revenue. i am viviana hurtado and that is your bloomberg business flash. david: time for follow the lead, a deep dive into stories making headlines and moving markets with insights trump industry veterans and insiders. today is that all -- with insights from industry veterans and insiders. here for introduction to the u.s. open is ken solomon, tennis channel president. let's talk about the open. last year did very well. very controversial finals. what are you going to do this year? are you going to keep that up? ken: we do not have to decide. every year there is something. that is the beauty of having 128 men and 128 women trying to get to number one. david: you will be covering a lot. how does it work for you? has beenis
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extraordinarily expanding around the world. david: has it been gaining viewership? ken: we are up almost 70% in young adults. most networks are flat or down. that is around the world. even what you used to think of as secondary event. we call the u.s. open week 37, because we have been doing this since december. david: what about the united states and the rest of the world balance? we do not have as many u.s. players as we did at one point. you see u.s. viewers trailing off and pick up in eastern europe? ken: we have a lot. just not on the men's side. coco on thison, side. we also have the toughest double-teamed. we also have a great american immigrant family story.
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query -- the people who watch our air see these guys every week. tennis doing well in changing media environment. how does it fit in all this talk you here with disney and fox? how does it fit into that universe. ken: if you have the right brand , it has the chance to bust through no matter what. in a world where everybody is fighting streaming, that is the model that will work if you are a tv series, news and live sports are the most important. because we have the only single wetination, we are the -- have 97% of the live tennis in the world on our air. we finally got to the point with 65 million subscribers, people know where to go and do not have to guess where the tennis will be. david: today come straight to you or you have to be part of a
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larger organization? you see amazon a disney putting together huge bodies of content. do you need to be part of a larger entity? ken: we partner the with them. marketing,t part of and the good news is you say tennis channel and once you emblazoned that into people's minds and you know where to go, whatever channel happens to be. we just launched digital. added our 11th year -- we have been at it -- this is our 11th year. i think we could be part of any company. sinclair has been a spectacular partner that took us over a couple years ago and has helped us grow and realize the vision. david: sinclair is going into regional sports. how does that fit with what the tennis channel does? ken: is only good news. this deal just got announced last week, but it has been a
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company involved in local sports with many hundreds of television stations. i cannot keep track. david: 198. ken: understanding the local market is what is most important , local news and local sports. with these regional sports networks, we have 21 from the fox-disney transaction, plus marquis in chicago with the cubs. what it allows is -- these are the biggest numbers in the market by far when these local teams are playing. it is a perfect confluence for tennis, which is national, local, and international. david: tennis channel, you're doing well. a long time you are at this, it was not always pretty. you stuck with this and got it done. what is the next opportunity for the tennis channel? ken: that is the fun. once you establish that brand, you can take off. we made the link to digital
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antennas needed it. you can watch all of the other matches. now tennis channel plus. we just launched our podcast network so we have eight podcasts and it is a platform. great podcasts on tennis and we will make it a place where to find it. instructional channel, tennis channel academy, so many good tournaments. we cannot fit it all in one channel. 70% of our audience plays the game and we want more to play. we are launching a 24-hour channel, and international. we will do it soon. david: instructional is one i could use. that would be helpful. ken solomon of the tennis channel, thanks so much. alix: lying. he is a good tennis player and place in 100 degrees heat. it was not best buy's best quarter. the company misses on comp sales
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and takes down its guidance. if you're jumping in your car, you can tune into bloomberg radio on sirius xm channel 119 on the bloomberg business app. this is bloomberg. ♪
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alix: what i am watching is best buy. shares taking it on the chin, off the lows of the session that. the company detailing impacts tariffs could have. the company gets 30% of its stuff from what would be tariff on december 1. -- on september 1. an earlier round of levies impacted 7% of best buy's import cost, now to be more than half. they are warning about that kind of uncertainty good david: i think we will see more and more of this as this becomes a reality. more and more situations like this. the cfo was saying things like
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you see short-term volatility from the chinese tariffs. he does a benders or migrating manufacturing out of china. we heard that from google. he was reporting pixar could do that. david: but it takes time and is expensive. alix: it is expensive and are there quality control issues? a good stopwatch. we will have more on bloomberg -- a good stock to watch. we willodities edge" talk about oil and tariffs. coming up on "the open" with jonathan ferro, priya misra. it is risk on in the markets, but somewhat did not tell the fx and the bond markets. this is bloomberg. ♪
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[no audio] jonathan: futures with a nice bid, up 26 on the s&p and further .9%. very little confirmation of the optimism the bond market. the 30 year yield lower in the morning. the 10-year unchanged. let's begin with the big issue. a softer approach to the u.s.-china trade war. >> the market is starting to express optimism, and rightly so. there -- >> there could be an upside to the price if th

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