tv Bloomberg Markets Bloomberg September 15, 2016 2:00pm-3:01pm EDT
david: we are live in bloomberg's world headquarters in new york for the next hour, covering stories out of san francisco, washington and china. speechtrump delivers a outlining his economic vision saying he will create 25 million new jobs heard how realistic is that plan? reaction from both sides of the political aisle. ismp advisor wilbur ross here. we will also hear from democratic senator elizabeth warren. plus, oracle reports earnings after the bell. can the software giant make more progress in the cloud? markets close in two hours. stocks are hovering around session highs. close to the highs of the day, a pretty big move here. a bit of a risk on rally.
this kind of feels like the mentality that has been behind a lot of the ball moves in the market in the last year or so. that's bull moves. economic numbers this morning were not great by any means, but also not terrible. lets you are convinced things will get worse from here, perhaps you want to be a buyer. the dow jones also up 1%. it is up 100 basis points almost. 1%.aq and s&p 500 above you are also looking at moves and a few of these sectors now participating that one of them is the health care group has done pretty well. you also look at infotech which has done great today. that is being helped by apple, some of the big tech names. if you look at what is happening
with casinos come a pretty big move. wynn resorts in the positive. that is helping that sector. wynn is doing pretty well, up 14% since the start of the week. this has been a referendum on where they started last quarter. the casino companies in the u.s. do have operations outside of china. wellhave been doing compared to the rest of the market in a group. ammodities, this has been commodity rally that has taken part with risk on green across the board. screen bestoss the green across the screen. this has feed it back into stocks as well. energy companies doing pretty good right now. we will check on gold a
little later on, one of the commodities that is not doing as well today. let's get a check on the first word news this afternoon. as mentioned at the top of the broadcast, donald trump unveiled his economic plan today. one that promises to lower taxes, and create jobs. trump told economic club in new york that he will boost america's economy by 3.5%. and create 25 million jobs. he also brought up the wall in mexico. donald trump: yes, we will build the wall. the wall will be built. in case you are worried about who will pay for it, mexico will pay for it. i'm totally serious about that. a pledge that no business should pay more than 15% on income in taxes, a major drop from the rate of 35%.
hillary clinton says she will not comment on e-mail sent by: -- colinsk: powell powell. "i have a great deal of respect for colin powell and i have a lot of sympathy for anyone who's e-mails become public." the e-mails were leaked to a allegedwhich has been to have ties to russian hacker groups. millions emergency funding for flint, michigan comes nearly a year after officials there declared a public health emergency due to let contaminated water. city residents are still using bottled water. the measure comes months too late. frenchmerkel and president francois a lot met in paris today to discuss the agenda for friday's informal
european summit. they plan to propose creating a permanent eu military headquarters that could dispatch european troops quickly. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. david: let's get more on trumped economic plan. moments ago, he addressed regulation. donald trump: i propose a moratorium on new regulations that are not compelled by congress or public safety and i will eliminate all l the list and job killing regulations on the books. david: wilbur ross joins us in new york. i want to get your reaction to the speech today. he laid out a goal for growth of 4%.
help us understand how a trump administration would do that. the amount ofng excess regulation which now has $2 trillion the year by 10%. there's $200 billion a year more corporate profits. and hireinvest that more people and do more capital spending and pay more dividend from a that is pretty close to $1 trillion over the 10 year scoring period the cbo uses. that, plus getting rid of the trade deficit. overall in0 billion the deficit of goods. just knocking out the deficit in trilliono adds another dollars.
that and cutting the trade and that you have one trillion mr. trump referred to as an offset to the $2.6 trillion deficit his tax program otherwise would involve on a dynamic basis. , he will takef it out one penny a year out of every dollar of discretionary spending other than on military. that adds up to another huge amount, hundreds of millions of dollars over the period. the final would be cutting out other ways. it's very interesting that he has produced a dramatic growth plan that is pretty much self financing. let me ask you about something he said with regard to globalization. he talked about a new americanism. there will be investors who watch this speech who wonder how a move inward like that is beneficial.
we've been told that the world is increasingly global, opportunities are global. isn't that inwards look inherently backwards? wilbur: donald is not against trade. what he is against is stupid trade deals that leave us holding the bag. we are exporting jobs instead of products. we should reverse that. anie: just to give you example of something that would affect your own businesses, it there are terrorist put on imports from mexico -- if there t aterro tariffs placed on imports from mexico -- wilbur: there are a lot of nontariff abuses that hurt our exports.
many of those same countries by other products from other nations that they could just as well buy from us, but they don't. a lot of this could be accomplished by simply improving export. some of it will have to be by reducing import. we think there will be $181 billion more personal income created just from the tax, trade and regular savings. $500 billion in products. it all of that had to come because of terrorists -- tariffs , you would have to say the inflation would be 36% to match the personal income gained. you will not have to put 36% tariffs. the whole business of the sky is falling is silly. get as specific as you
can. let's say nafta, for example. how would you change something like nafta? wilbur: under nafta, something like a third of the total value of the car that is assembled in mexico and brought into the u.s. is permitted to come in from a non-nafta country. for example, china or anywhere else. that comes in duty free to mexico because they do not pay import taxes. it will come into the u.s. free of u.s. tax. that has nothing to do with hurting mexico. that has to do with closing the loophole that should have never been in the thing to begin with. there are a myriad of things that will not be destructive to the mexican economy.
we are the bulk of mexico's exports. aspectse many technical of the nafta deal in the south korean trade deal in many of the others that can be fixed. pretty easily without that much damage, but will help us. david: we got more details today on donald trump's tax plan. he's talking about going to three brackets. when you look at the possibility of that happening, acknowledging the fact that tax reform has an dead in the water in washington for many years now, you look at trump's favorability in the republican party, how can you assure us that when he gets into office, tax reform is finally going to happen? wilbur: his plan is quite similar to paul ryan's plan. unless the republicans somehow lose control of the house, which i don't think anybody foresees, that should not be a problem getting it through the house.
as to the senate, assuming the republicans keep control of the senate, it will go through. the reason tax bills have not gone through is the democrats have had enough ability in the to not overcome a veto by president obama. it's a whole different situation. julie: this speech today was much closer to standard republican orthodoxy when it comes to economics. in particular when it comes to tax cuts. when you look historically and you look at tax cuts and what , it hasn't always had the intended effect. it certainly has increased deficits. there are a whole lot of assumptions and what you just said. the message of his tax plan is a very, very clear one.
reason why companies offshore taxed -- then and head yet that a foreign company to escape real big tax and repatriation of earnings that they already pay tax on in their local country is nuts. just bringing back that money at a 10% rate will be a big help. in manylatory part is ways the most important thing. i have breakfast yesterday with an oil and gas guy. to get a port of potty ty brought to certain sites in the southwest, they have to get a permit. it usually takes more than three weeks to get just that permit. that is absurd.
one other line that stood out to me -- how technology is affecting the labor market in this country. how do you square that? how could he propose turning that around? wilbur: i don't think it's all that difficult. people have mainly lost their -- that may of that be a problem to deal with in the future with artificial intelligence and driverless cars and things like that, but nobody can deny there is a lower percentage of gdp being contributed to by domestic, private investment other than residential. it has gone down quite a bit, .5%. that's a big reason why productivity has gone down. productivity generally is substitution of capital to
labor. instead of fixing factories in the states, they are just moving the whole factory out of the country. 'som the corporation point of view, that may be very efficient. corporate america does not mind it so much. julie: we will keep you here because we have a lot more questions for you. david: we will also get perspective from the other side of the aisle. my interview with elizabeth warner still ahead. betty liu will be joined by stephen schwarzman for his outlook on the markets, private equity and politics. this is bloomberg. ♪
david: this is "bloomberg markets." julie: we are back with wilbur ross. i want to continue our discussion of donald trump's economic plan. you were just talking about the landscape in america right now. fewer people with jobs, people not making as much. i want to turn your attention to the poverty rate. you can look at a chart on the bloomberg for this -- this shows the rate, blue and red coated for republican and democratic administrations. we see the poverty rate at the going back to 1974 as a percentage of the overall population. i guess what i'm asking is, you have this vision that donald , make americained great again, people are not doing well, they are struggling. and then i see data like that and i see the jobs data for that matter, that does not square
with that. ask the 8 million people who entered poverty during the obama administration. if they believe those statistics. julie: you are saying the statistics are not correct? wilbur: maybe a lower percentage because it is a higher population. more people are in poverty now than before. i don't think you can dispute that fact. so, there is a problem with that. there's also a problem -- not all jobs are created equal. a guy who used to make in the hour isll making $50 an now flipping hamburgers at mcdonald's for a third of that. i know the steel industry. we did not lay off people to get
more productivity. we utilized the people sensibly. we did not add one single robot and yet, we became the lowest regular mills in the entire country. please don't tell me that it was just technology that caused these people to lose their jobs. causes people to lose a steel jobs is china has hundreds of tons of excess capacity and steel. the total capacity is over one billion tons. that is half of the world's total capacity. you need 700 million domestically. they don't another 100 million tons externally. that's what's costing jobs. steel here and steelmakers in european markets. i want to move into the breath of your portfolio. you deal a lot with energy. something trump said today is we
will put our great miners and steel workers back to work. when you look at that landscape, how difficult is that going to be? for minors and steel workers out of work and think they will have jobs in the sectors going forward -- miner s and steelworkers out of work to think they will have jobs in those sectors going forward? you could deal with the 100 million tons, he put a huge number of people back to work. it's not creating new tons, tons being consumed, it is just that we are being consumed with discounted export. they're making the banks keep lending to them to keep these zombie companies alive. china is not about
profitability. china is about jobs. donald trump is going to make america be a little more about jobs. julie: mr. trump talked about negotiating with china. described the way the chinese negotiators operate. from specific individuals yet who are going to serve as negotiators on his behalf? is mentioned numerous times that we will get the best negotiators. who are these people going to be? wilbur: you will have to ask him that. i'm not the one who makes personnel decisions for mr. trump. he is doing one thing that is not helpful to me. the carried interest is out. will gotive tax rate
from capital gains rates to the full 33% rate. 15% for-through of the operating businesses will not be available to private equity and other people with carried interest. julie: that seems the price you are willing to pay for the other -- wilbur: i'm willing to pay it because i think it will make the country better i think he will spend the money wisely. it was fascinating saying one penny out of the dollar of discretionary spending is a huge amount per year. i can't imagine that we cannot take one penny out of --discretionary spending that should not be a heavy lift. to the feding ahead meeting next week, i would love for you to give us your sense of what you would like to see happen at that meeting i would
also like you to respond to some comments donald trump made last week that interest rates have been left low because this democratic administration has had influence over the head. -- over the fed. wilbur: that is his opinion. i think a rate increase is long overdue. many serious people in the financial community do. the reason is, sooner or later, we will go into a recession. particularly if we get hillary clinton and the least huge tax increases and more regulation. the fed needs to replenish its toolkit. it doesn't have much of a toolkit right now. we have to get ready for the next recession. if the onlyem is thing keeping us out of really bad times is 25 basis points, that's not much of an economy. i dispute the fact that it is.
i think what they've done is a terrible error by generating so much come over 25 basis points -- it is foolish to be inducing more volatility into the markets on a self-inflicted basis. they handle their communications abysmally. wilbur: given the hand we've -- we'vet with the fed been buying bonds of distressed oil and gas producers. far, that has been starting to work out quite well. people are getting over the hysteria that oil will go down to $30 or $20 or some low level. we are not expecting it goes $100, but at $50 to $60 a barrel, u.s. producers will do very nicely.
we think that is a realistic number. other than iran, there is not a lot more capacity that is able to come in in the other parts of the world. venezuela is in shambles. one that can increase production, but you are only talking to hundred thousand barrels a day. just 200,000 barrels a day. , thank youur ross for joining us. david: don't miss our interview with larry summers on the anniversary of the lehman brothers bankruptcy. he has a new paper out on the safety of banks. this is bloomberg. ♪
at bmi research it's a global import demand will be strong in the next year amid growing deficits in asia. gasoline is also higher. one of the colonial pipeline will not be restarted until next week. we have gas shipments on hold -- oil climbing from a two week low as stocks advance, seeing a risk on environment today. prices had dropped earlier on the concern of the global supply glut would expand. gold is the outlier here. it is lower because investors say they are confused about what the fed is going to do in terms of rate increases. that is reflecting what we've seen in etf's. chart tok at this illustrate the further decline. largest in the world's
exchange traded products dropped. david, you are standing by with more on gold and more on this story. joins us now.ux what a racing ahead of this meeting? -- what are we seeing ahead of this meeting? joe: people are waiting on the sidelines, they want to see what the fed is possibly going to do this month. they are also looking at the fact that they made a lot of money up to this point in the year. 25% for the first half of the year. now seeing a bit of a pullback. even in the brexit, we have a better idea of what's going on there. julie: is the fed the driver here at this point when we talk about gold falling back today? is that on people's minds? joe: and that is all people have
on their minds right now. even last night at the big precious metals dinner, the only talk was the fed. is that fed going to race in september or december? a speech and sing with people are looking at december as a possibility. rubini. when you listen to these guys, they seem to be thinking a little more than 50% chances of it getting raised by that point. david: what about the highs we have seen over the course of this year? it got pretty expensive. athad the best year through least until august that we had not seen since 1979. you had a bit of a pullback from that. who got in early did end up making a lot of money and a large part of that was the question at the beginning of the air, we thought we would see
multiple hikes. august, better data coming out, talk has shifted. if you do get a hike, you are not going to keep buying gold because the hikes were counterintuitively to the return on gold itself. julie: i just pulled up a chart of gold volatility. three-month volatility for gold prices. across the board, we've seen across asset volatility start to up in stocksck and bonds. joe: we always assume gold will have some sort of volatility. when a potential for discussion , evenup -- even next week though people are saying we are not expecting it, you never know. sometimes you will see a spike in gold higher or lower.
a lot of people trying to make some early guesses on which way you might see the fed go or not go. back to market weight in gold. they had been very bullish in gold. we don't want to be on the table with the possibility of a move. let's stay back right now and that the make the call. and then everybody else can do whatever they want because come it really come if the fed makes a move when everybody's not expecting it, if you are in the market in a big position, you could get hit one way or the other. people don't want to have that risk going into the september meeting. julie: one way or the other. david: if they're are not putting money in gold, where are they putting money?
joe: other metals that are attractive to investors, moving away from precious, you look at -- it has been the best performer. that is a fundamental supply question. a lot of people see that as a bullish story. julie: fundamentals, what are those? let's get a check of the headlines. mark crumpton has more from the newsroom. onk: hillary clinton is back the campaign trail today after being sidelined with pneumonia. she is focusing on uplifting families and children as the campaign tries to break through with a more positive message. clinton told reporters that she is "doing great." tonight, she joins president obama at the congressional hispanic caucus awards gala in washington. donald trump leads mrs. clinton
in the battleground state of ohio. in a leads clinton 42-39% poll of likely voters. gary johnson draws 4% support. the margin of error is plus or -4.4 percentage points. 32-year-old joseph shriver is being held on a charge of second-degree arson with a hate crime enhancement. sheriff's investigators say he confessed to setting the fire to the islamic center of four peters. prosecutors in south africa will appeal the six-year sentence imposed on oscar pistorius in the murder of his girlfriend. the papers will be filed tomorrow with the court of appeals.
global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. david: still ahead, my interview with elizabeth warren. why is she is making a new push to put bankers involved in the financial crisis under investigation. julie: oracle earnings after the bell today. the numbers you need to look out for. ♪
investigating those involved in the financial crisis. that -- bob ruben , daniel mudd and chuck prince. the doj record of action on these individuals nearly six years after the doj received the referrals is abysmal. earlier today, asked for how the referrals were discovered and whether someone from wall street should in fact be prosecuted. sen. warren: when the national archives unsealed five years we start digging through their documents and find out that they had made referrals directly to the department of justice and why? because they thought there was substantial evidence that federal laws had been broken. so, i want to know what the heck happened. this was not just why didn't the
department of justice get out on its own and find it? the people who had done the most ,ork, got in the most evident bipartisan had been charged by our government to do this made referrals to the department of justice to investigate and prosecute individuals and large financial institutions and nothing happened, basically. david: you say not every is guilty andpany not every referral result in a conviction. these could have been dead ends. sen. warren: i don't expect them to bat 1000 here. everybody will have -- and ultimately with enough evidence for a prosecution and a conviction. but nobody on that list got so much as a public indictment here?
i want to hear more information about what happened within the department of justice. david: you make a clever case to the director of the fbi. the fbi released summit information to hillary clinton and her e-mail server. they should be able to do the same thing for the investigation here. theyou comfortable with president there that it was within the fbi's ability to -- sen. warren: you have to have a level playing field. the fbi for decades has taken the position that if there is no indictment, they will not release their notes from investigations and documents and they will not have a press conference about it. they clearly changed that standard when they released all the information about their investigation of hillary clinton. a big long and had press conference about it and went in and testified about it. he did thatdard was
because there was intense public interest. in that topic and that is what it happened this had happened with hillary clinton se's e-mail server. i think there is intense public interest into who caused the financial crisis of 2008 and why none of the top executives were ever held accountable for it. the chairman and ceo of wells fargo in the news right now. do you think it is appropriate for him to keep his job? sen. warren: let's have a little personal responsibility here. what troubles me about wells fargo right now is either he did not know, in which case there was a massive long-term fraud on his watch, does that mean this is just another bank that is too big to manage?
this is one of the banks that could threaten our economy. this is one of the banks that just fail it's living will test. it could be wound down without taking out the rest of the american economy that's either that is the case or it is the case that he didn't know what was going on. either way, he has to be held accountable for this. david: that means step down? sen. warren: you should not be able to keep your job and keep raking in the millions of dollars in bonuses. in particular, look also at this woman who ran the entire consumer division. that she could be in charge of this division, get yearly bonuses based on how much fraud was occurring in her openinglently
500,000 credit cards and checking accounts, she was getting bonuses all along and now, she walks away with $125 million in bonuses for having presided over a division that systematically broke the law and cheated customers? badlyells me something is broken at that bank. everything weg talked about following the crash of 2008 of the culture of this aboutbank is still profits, even if it means treating people and breaking the law. david: my interview with massachusetts senator elizabeth warren. apollo global management is considering a higher offer for tdc according to people familiar with the matter.
an initial approach was rejected in july. apollo is working with financial advisors and raising funds for its new offer. the new bid may come within a week. the company says research and development now underway will lead to the semiconductor being produced at its facility in upstate new york. john boehner is joining the board of directors at reynolds american. that is your business flash update. david: stocks hovering around session highs. we see the dow up 1.1%. about the same amount percentagewise. the nasdaq up almost 1.5%. the imap on the
bloomberg, we see the health care sector performing especially well today. oliver: health care doing pretty well. looking at today because this is a sector that has not been taking part in the sort of recovery for u.s. stocks. this is a big part of the market here. thehink about stocks over course of the bull market, health care with a massive part of it. we started to see weakness a couple years ago. today, we are getting this risk on rally. we are seeing investors can into tech companies and health care as well. up ofs a straight line about 120 basis points. the select health care etf. take a look at what's been going on the past couple of years with this sector. you cannot have had the rally we've had without this company taking part. last year, we had this big drop off.
was a scare in biotech and health care in terms of regulation. that dialogue that was amped up in the political realm. 2016, this year, we had that selloff in february, health care got destroyed here. investors start to feel the risk on behavior, they want to get back into stocks. that will be an important part of the markets to watch. let's he was moving in terms of the company that makes up this fund. -- the the big winners stock is down roughly 26% year to date. we see two big winners here. and life corefic throwing a bit of relief to
julie: this is "bloomberg markets." the fight over the cloud is heating up. the main players positioning themselves to grab market share this summer. i had of oracles earnings, let's go inside the business in today's numbers don't lie. oracle is essentially buying marketshare with netsuite, one of the first cloud services companies. the public cloud market is expanding rapidly.
revenues forecast to reach $140 billion in 2019. oracle is competing against the likes of salesforce, microsoft and sap. deal on a revenue basis, it wrecks among the most expensive software takeovers in the past be years. the transaction is a multiple of 11. is apparent in recent purchases made by salesforce and sap as well. all three valued their deals with revenue multiples near 11. oracle is positioned to capitalize on the growing cloud market. cloud software is a service and platform as a service, the white line. posted the revenue growth of more than 50% in constant currency terms. -- newe licenses update software licenses fell by 10% there. as oracle shifts to the cloud, it is seeing overall sales growth decline.
a huge surprise. when software companies make this transition, upfront license fees decline as revenue rises. something larry ellison try to minimize in the past through serial acquisition. oracle releases its earnings after today's u.s. closing bell. david: for more, we are joined by cory johnson. he is with us from san francisco. let's start with that, the transition oracle is undergoing. switching to the cloud. could we get today about how it's navigating those currents? cory: software is a place where the accounting happen slow. there's a lot of paying in advance. quarter is, the baked in. what's really interesting about this quarter for oracle is they better than salesforce, but
-- whatally be rates salesforce gained in the last quarter was a lot of big deals. closeaid they would still on those deals, they just happened. we will be listening closely to the oracle resorts -- results to see if they are getting big cloud deals that salesforce's train to go after. -- trying to go after. their bet is to spend a fortune on marketing, 50% of sales are marketing expenses trying to get new customers. bigger oracle is so much , they can spend a lot bigger dollar amount. they have the potential to crush salesforce in terms of marketing spend. is it working? we may getting big clue tonight. a big clueay get tonight. julie: will we see some of that
already? cory: we will look for name dropping of big deals closing. we will look for the percentage growth on a year-over-year basis. the suggestion that year-over-year growth has been great. this lots of other stuff to look for. hardware is down 10%. is that business finally seeing a bottom? david: i'm wondering, there was some trouble with t. rowe price regarding the netsuite acquisition. how big of a hurdle is that shaping up to be? cory: it's a big one and a really interesting one. you have larry ellison who personally owns 20% of oracle. he owns over 40% of netsuite. he has nurtured netsuite for over a decade into one of the best companies in the cloud.
other bidders have not emerged for netsuite as they have for other cloud companies. maybe because they knew allison was sitting there. -- larry ellison was sitting there. oracle is looking to buy netsuite, i will let the other shareholders decide the terms. that means t. rowe price will be the decider here. priceay not accept the that oracle offers for netsuite. more on that on "bloomberg west." ♪
♪ we are live from bloomberg world headquarters in new york for the next hour. covering stories in los angeles, chicago, ukraine, and syria. stocks are surging today, apple among the biggest gainers as it has been, extending the four-day winning streak and hitting the highest level since december. in august posting their first decline in five months. our consumers once again reluctant to open their wallet? and we are joined at the bottom of the hour with a take on donald trump's economic plan. and all the attention paid to the fed is simply a distraction. one hour from the close of trading. stocks are at their high. a 200 point game. oliver is here to talk through it.