tv Bloomberg Best Bloomberg November 19, 2016 8:00am-9:01am EST
♪ >> coming up on "bloomberg best ," the stories that shape the news aroundness the world to hold the phone -- samsung is moving into cars. hike. eminent rate >> chair the ellen: it could become appropriate relatively soon. -- it could become appropriate relatively soon. id: and the trunk transition has the world's attention. >> it is going to be much more corporate from the individual. a focused strategy, plan,
policy. david: it is all straight ahead on "bloomberg best." hello and welcome. i am david gura. this is "bloomberg best," your weekly review on the most important business news from bloomberg television around the world your most global equity markets ended the week on a tear, which started last week, shortly after the election of donald trump. for the global bond market, the week began on a different note. rout deepenedd after a record $1.2 trillion was wiped out of the market last week. 30-year yield topped 30% for the first time since january. jon: i wonder how long deal can keep spiking. >> there will be plenty of
buyers for a higher yield. there is still a thirst for the yield in the market, and at some point, value in a treasury market will be there. i do not think we are that far away. i do not think inflation is going to get out of control. where with a 10-year world,3%, around the those yields will be quite attractive. the: as an investor over last five days, what do they want to hear from donald trump? so far, the market pricing reflects the view that this will be a change in the policy makes, more fiscal stimulus, potentially tighter money. i think would they want to hear from president-elect trump is some way that he will renegotiate and reevaluate these trade deals. there will be fiscal stimulus, infrastructure, tighter monetary
well onderegulation is the financial side as well, but i think the big wildcard is how the candidate and then president-elect trump will deal with renegotiations of trade deals. david: u.s. consumers are continuing to spend. sales at u.s. retailers rose more than forecast as we just learned, so what we make of these numbers, mike? mike: they are really good. not only did the numbers come in stronger, total retail sales went up to 1% from .6%. the retail sales control group, which is what economists look at, is up, and in the month of october, the control group is up. consumers are now spending again. jon: how does it influence the headline figure? michael: economists take a look at what they call the core group, which strips out
gasoline, food, and it also strip cell building materials because they going to gdp through a separate measure, select this point, it looks like a .8% rise for the month of october, and .3% for november, which strengthens the case for the fed us they want to raise rates. us continue to wait for decisions to come out of the trunk transition headquarters about the team that will take the field come january 20. yesterday, we reported that the team had recommended the former goldman banker for treasury secretary, but there has not been a formal announcement yet. the president-elect yesterday tweeted "very organized process taking place as i decide on cabinet and many other positions. i am the only one who knows to the finalists are!: " let's start with that. is it just held up? what is going on? picked as trump's
far as we know, and he is right, he is the only one who knows. david: why? ve: there is definitely a power struggle in the transition and what we do know is it is delaying the process, there is more paperwork they have to do, there is a kind of a restart, a little hitch, and they are already behind. there is some concern in the transition team because there is a lot to do. >> treasuries fell, and a fed rate hike could come very soon. previousiterated her statement that future rate increases will be gradual. the open question was -- what will she say, if anything, about stimulus under a donald trump presidency? what do we hear today? mention mucht
about that in her prepared testimony. probably the more interesting was of the whole episode the q&a, and she basically was saying, well, we needed stimulus early on in the economic cycle when the unemployment rate was 10%, eight percent. now that it is down to roughly 5%, it is much less critical, so she has warned that adding fiscal stimulus to an economy like this could generate an undesired pickup. vonnie: hang on a second, beggingey have been economists for years to add stimulus. carl: that is the point eared we needed it more five years, two years ago then we need it now. right now, it is just icing on the case here that being said, she was also bemoaning low
productivity growth, and infrastructure spending could help to move the needle on low productivity. the dollar has been on a , reaching its% highest level since 2003. you can see this outperformance we are seeing on the dollar index right now. it changes everything. if you had to terror of your models, the dollar is on a tear. >> yeah, this is really just a normalization of interest rates we have seen from the federal reserve. it has taken a long time. the dollar obviously benefit on the back of that, and now we are talking about the second rate hike. guy: it is the fed, not be presidency. mouhammed: obviously, the election has led to a surge. have now had 10 straight days of the dollar
rising, josh. what is driving the dollar, and does it stop at some point? of things, 1, 80 versions of monetary policy. it is likely the fed will raise rates in december. more importantly, the path of looking forward, people are anticipating maybe further hikes ahead, while the ecb is looking to put its foot firmly on the accelerator, not likely to take it off. then we have the election in the u.s., right? markets are focused on the process of pretty substantial fiscal stimulus coming in the u.s. you couple those two things and if i higher rates in the u.s., better economic outlook, and a stronger dollar. david: still ahead on "bloomberg best," a weak surge of opinion on the impact of the donald trump presidency. in sites from investors ranging from a saudi arabian prince to bill gross to a bond king. more on the top business story -- another hot cap is about to go public. this is bloomberg.
david: this is "bloomberg best." i am david gura. let's continue our global tour of the week goes the top business stories. there was a lot of buzz around mergers on monday with sims on one of the major players. several multibillion-dollar deals struck the market here samsung agreeing to buy a permit for a billion dollars. novartis is talking about buying a pharmaceutical company. and siemens will purchase another company for $4.5 billion, mentor. i want to start with sims on. this is about smart cars.
>> this is an $8 billion all-cash gamble to get into the car it the cars will not go away. has moved into other elements of the car, so basically, samsung will become an auto's player. they will be selling parts to 40, gm, chrysler, etc. ofmore than $25 billion acquisitions were announced in text, and financial services. i want to start with perla weinberg. the two will force an investment banker is. >> perella was not that strong andhe oil and gas space, pickering is very stronger and we have not had a lot of energy deals. i cannot think of anything maybe other than the ge new skill that happened to excel. that is the only big deal that happened. >> we have had plenty of deals fall apart.
exactly. oil will settle in a $40, $50, or $80, whatever, and it is the time to buy something to give you expertise, have a lot names, because there are a lot of deals to come out of that space if and when it takes up. is -- this is according to people familiar with the matter. second largest cigarette seller in the u.s., the offering is too low. what is the market saying about how much more money we may have to pony up her? of pop up tooone much more, up to 10%, but no more than that. trading below the original offer price, which i think goes to the fact that people are saying -- who else can reynolds go to? b.a.t. has a large stake in the company. guy: they are locked in really.
ruth: yes. b.a.t. has a bit of an advantage in this negotiation. snapchat ready to go public. it filed for an ipo. the company is seeking more than a 4 billion dollars valuation, anywhere from $25 billion to $45 billion. again, they do less than $1 billion in revenue. if we are talking about a $25 billion ipo, without the 25 times revenues at best, facebook revenue and12x collapsed afterwards. this is very aggressive pricing. >> this is absolutely aggressive. what they will try to emphasize, though, is there growth potential. very early on their
path for revenue, and they already have about 1/3 of facebook users in the u.s. they are definitely not making as much money off of every user as twitter or facebook do twitter has fewer daily active users and is expected to have $2.55 billion in revenue. snapchat will probably have $350 million, which is definitely a fraction, so their point is definitely to emphasize growth. boardroom got this battle intensifying with global beverage division becoming the first in the conglomerate to remove the chairman. what is the latest that we have? starbucks partner for , and it is the first to push out the chairman. 10 members voted to
replace them, and another will take over for chairman. a statement said there was nothing on the agenda about replacing the chairman, and the ousting is a repeat of the bid. tata sun holds the majority of the units, so that makes affecting the chairman much more difficult. events surrounding this has pushed tata lower, as you can see. uy: crude reversing after a surge in demand from u.s. refiners, and at the same time, the oil minister extracting -- expressing that they would share a deal. reached.ll be >> we saw a massive run off yesterday. it suggested that opec countries
to pulling out all the stops lay the foundations on november 30. there is clearly a lot of work to do yet. a is the next point of call. the saudi minister will join others there and ohio. what is the top of the agenda? iran, iraq? will: i think that is right. interesting that the iranian and iraqi ministers will not be there. saudi arabia has been pretty adamant all along that for this to work, he wants participation from russia. iran and iraq are clearly the stopping points. saudi arabia has put some red lines. we will see if iran and iraq and a way to compromise. announcingntral bank on purchases. news reporter kevin bucklin is with us. we knew this was going to happen
, and it is a better time now than ever. kevin: it is the fastest pace of yield appreciation since august when they were coming off of record lows, and he has responded to that with unleashing this tool but they have not used yet that they announced in september as part of a yield curve control, unlimited purchases, a fixed rate. what they do with a sort of installation is to set a line in the sand for yields in the two year to five eurozone. it also kind of goes some ways to answer a question, at least according to the current economic conditions of what shape of the yield curve the boj is after. set at 0%, and there was question about the shape of the curve in between those points. now we have got a little bit of clarity on that potentially. bank of cyprus, the
nation for the largest number, is applying for a standard listing on the stock exchange. that is to tap a broader pull of removing yourself from the athens stock exchange, coming instead to london, is this a vote of confidence in london as a financial center? >> unquestionably. we said we need to disassociate with athens. we have no business interests there. it is important that cyprus, which is in its executive growth positionededs to be as an investment opportunity isarate to this, and london one of the greatest copper markets. providers need its resources, and this is going to help. anna: it will remain so. john: yes. when he to address london separate to what the united -- wem is going to do
need to address london separate to what the united kingdom is going to do. francine: executives were arrested, allegedly involved in a million-dollar fraud. did the press conference say? >> we got more detail on the charges, one former valiant we have reported the prosecutors have looked at eant senior val executives, but we obviously did not see charges for them today. there were no charges against the company. those two things are probably good news for valenant, though not out of the woods yet. reachne: volkswagen has an agreement to cut 30,000 jobs worldwide through natural attrition. 23,000 of those will be in germany. the move is part of a plan.
30,000 jobs -- will most of it the volunteers? >> yeah, it will all be volunteers, essentially. this package is a typical volkswagen package. number/30,000ig -- it sounds like, but it is over the course of several years, and they agree to that for no forced layoffs. they expect people to retire early or retire in a natural course of their job career. or when people leave, as people do, they just want not be replaced. it is going to be a very soft program and easy thing to swallow for the employees. francine: 3.9 billion dollars in savings. will they be able to achieve that? they should be. they have a lot of room to cut a volkswagen. they have a huge organization. the group was over 600,000 people, so they have got a lot of capacity cuts. billion euros
david: welcome back to "bloomberg best." i'm david gura. throughout the week on bloomberg television, we explore how donald trump presidency could affect global markets and international politics. some of the most interesting arspectives came from prince l-waleed bin talal. erik schatzker sat down with him. global investor, because that is what you are, are you more or less confident than you would have been had hillary clinton become president? i do not likeed: to interfere with u.s. politics. i have a very good relationship
with both, whether republican or democrat, and what is important are the policies -- is the policy. that is what i am getting at. erik: are you more or less confident for the prospect of the u.s. economy, the global economy, for the returns you can generate with your investments? prince al-waleed: to be honest, when mr. obama took the reins eight years ago, the us economy was -- the u.s. economy was almost in a bankrupt situation, the banking industry was in shambles. i think the united states will be in good shape tomorrow. erik as: you know, your highness, there is a lot of concern that the trump administration will be less concerned with the middle east, because of the cost of military
support and immigration. do you expect a meaningful shift in u.s. policy here? prince al-waleed: it is no secret that the relationship between saudi arabia and the united states has not been very nice in the last eight years or so. it has been very turbulent. i think with the trump administration, we will have a focused plan, a focus policy. begins once trump the oil ofeply about the world and saudi arabia and of course the united states, i think the relationship will be a lot more improved between both groups. erik: so regardless of what exactly he tries to do, you see it getting better. it is just aeed:
shift between president-elect trump and president trump. we have already seen the change between candidate trump and press they elect trump. i can assure you that the change david: resting electron -- president-elect trump and president trump will be much different. you can see more of the interview on bloomberg.com. ahead, prominent ceo's and investors weigh in on the trump transition. >> increasingly now, they are the party of the working man. david: this is bloomberg. ♪
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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. david: this is "bloomberg best." i'm david gura. let's return to the number one topic of discussion -- the implications of the donald trump presidency for markets and the economy. it is too early to make confident predictions, but we spoke with business leaders and investors who are making preparations. does the ceo of a company of your size want to keep in mind as he considers the implications of the future? be mindful --ed: >> be mindful about many people.
if he asked me, but i would think the president-elect would to leave this country, just act as if it were your own country. erik: you have said, joe, that the populist tide in europe poses more of a risk to your business. what kind of an impact but have on siemens? joe: first of all, the way it populism starts into internationalism. nationalism is for trade. beenis whole world has global trade. globalization means many things for many people. to, this poses quite a risk
actually going to industrialization. everyone talks about opportunities for the rest of the world. so to think a little bit about the internet coming to the there is noorld, border that the internet would say hey, wait a minute, now i am going to france, i not allowed to enter. >> we have had such a run of regulation of the last eight years. what will be left of it over president trump's administration? how its hard to forecast will all play out. if dodd-frank is on a table, as it apparently is, some aspect of dodd-frank have been effective. i think most people would consider, even chairman greenspan's comments, that higher capital at major financial institutions is a good
idea and has made those institutions sounder and safer. think, your hand, i know, you do not want to treat all financial institutions that happened to be greater that have balance sheets more than $50 billion identically because they do not all represent the same systemic risk to the system. so certainly there is room to improve dodd-frank. one might wonder whether the consumer financial protection bureau has been a net plus or not. the jury is still out on some aspects of dodd-frank. i think there is a lot of room to improve it. i think if you repeal it, then the question is -- what do you replace it with, if anything? jon: the one thing you can repeal is dilute. it is a careful balancing act. you want them to have more capital, but at the same time, you are eroding risk-taking capital. as far as you are concerned, gary, how negative has that been?
gary: we have seen some drying up of liquidity. that is costly. we should not kid ourselves. >> how does donald trump's election affects the global oil market? >> i do not know. the opechat is around data numbers, which normally, production does, in september, october. i do not know. we will wait and see. erik: bp and a number of other oil companies supported the fairest deal. do you change your mind if trump wants to kill it? bob: not at all. we have six european oil amex ins, in fact medical, we will try to continue pemex in mexico, we
will try to continue to clean your we think gases the clean fuel of the future. more will be 2 billion people in the planet in 2035. the world will need all forms of energy. >> the ottawa lions came out with a request after the election for the new autoistration, -- the alliance came out with a request after the election for the new administration. is that something you will support, ? we will continue to support comprehensive tax reform, into your point, we want to make sure fuel economy expectations are aligned with market reality, and we willing gauge was very positive discussions with the administration and policy makers on what that means not only for our business but importantly what does it mean in terms of providing jobs and economic growth here in the united states?
scarlett: one of donald trump's big policy proposals is corporate taxes. tax cuts are great for corporate profits, but what do tax cuts do for labor, which has suddenly seen its share give way to capital? taxes, think corporate island mentioned, 15%, plus or minus that level, you know, certainly profit friendly, as much as 20%, as i mentioned. wages, it will keep prices low and ways -- and raise wages, which is a benefit for labor or it i doubt it. we know, too, that is part of the plan is to lower taxes on individuals, perhaps 50% of the individual taxpayers don't pay taxes to begin with. i think this will be much more corporate-friendly as opposed to individual and labor friendly. that is where i think voters
that voted for trump, you know, supposedly the populace in michigan and other states, although they had no choice, they want to change as opposed to the status quo, i do not think trump was the change that they really wanted. people making really big bets on infrastructure, caterpillar surging on this idea that we will be building all these bridges and hospitals. what do you think about the story? >> let's put this in perspective. the driver for commodities in instruction -- construction equipment will not be the u.s., even with an infrastructure boom. we talking about $1 trillion over 10 years. that is $100 billion a year in infrastructure. china does that pretty much in a week. down -- is slowing
joe: in a maximalist scenario, this is small potatoes. to the global commodity markets, global demand, that place in beijing, not washington. scarlet: i understand it is still too early to tell, but in general, there is a sense that regular chocolate rolled back. what kind of opportunity is there for someone like you who is looking for instances of corporate taxes, corruption, or wrongdoing? jim: i am not too sure. we are in one of the developments politically that we've seen this year was in the congressional hearings, in the drug area and wells fargo. in the past, you could generally rely on the republicans, in both the senate and the house, to provide cover or business executives who were brought up before the hills were rea willi. that is not what we saw in 2016. increasingly now, the republicans in it -- the
david: you are watching "bloomberg best." i'm david gura. it has been another week of corporate earnings reports. we begin with the world of the largest retailers. >> wal-mart out with earnings this morning, which top analysts' earnings-per-share estimates. they were helped by a gain in consumer traffic and online shopping. same-store cons slightly missed estimates. >> one of the things people are looking at is the overall trend line. they have been largely flat or turning down. is that the trend? >> currency has been a big drag outside the u.s.. that has been dragging down the
business outside the u.s. in the u.s., though, we are starting to see revenue -- walmart is a humongous company. when we say 1%, 2%, it is on an annual basis almost half $1 trillion. we are starting to see it moving in the right direction. david: the only question is a core question for analysts and investors at this point. they are showing growth, but are they keeping up with the amazons of this world? shannon: 21% growth sounds great, but to prevent comparison, obviously amazon has been churning out those numbers quarter after quarter. target, 20% growth online, so it is good, but they will have to keep that momentum up. target earnings and revenues are better-than-expected for the third quarter, but same-store sales to continue to slide. shares the retailer's have been on the upswing after since donald trump's election victory last week. >> it is a sort of site of relief.
trends definitely improve. traffic was down 1%, which is not great, but last quarter was definitely picked up there. profitability picked up significantly. all the different categories -- -- in and eight comments e-commerce was good. but to your point, it was still comp, slightly negative, to be honest. david: compared to the behemoth of amazon. joe: sales growth is great, but it is still 3.5% of sales. so you still have a very small they've, but it was a disinterested or for them to comps, and you are seeing growth. postedn's biggest banks better-than-expected earnings last quarter, but they remain cautious. shares are surging at the tokyo earning. what do you read? there -- it be analysts
expectations by over 20% each. there are pretty positive results in terms of net income. if you dig deeper into that, ranking wherel items were down across the board. also, the commission was down for all three major banks, which is disappointing if you're trying to focus on that area to make up difficulties. ,rade income was pretty strong and they also booked some gains as part of their efforts to step up governance. by a sale since injury of the uk's >> -- the u.k. erck coming at us 76
million euros. the estimate here was for a 1.56 three, so that is a be on the adjusted eps front. >> i wonder how worried you are considering the u.s. election results about trade. are you concerned that that can affect you in 2017 and beyond? honestly, we are not particularly worried about the outcome of the election in the u.s. we do not see significant impacts on our business. important a very country for us, we have basically 25% of our sales and 20% of our people located in the united states, and we continue to believe that the u.s. will be avery important country and very fair, good trading partner for us. >> we are getting breaking numbers coming through, 4.6 7 billion pounds against an estimated 4.63 billion pounds.
know some prices these numbers we had a various -- a very resilient year -- surprises with these numbers. we had a very resilient year. there of course was the , anduation of the pound then the dollar against the euro. when we move forward next year, the remains a degree of uncertainty for obvious reasons, but, the issue really is that consumers are going to get brilliant value. that means pricing will remain under pressure, and for all airlines across europe as well. >> is it perhaps a good time to set up a new headquarters somewhere on mainland europe? carolyn: no. we will remain headquartered in the u.k.
we will set up an eu operating company. better-than-expected , and thister results is after a plan to spin off the $7 billion services arm. what is the u.s. like it so much? >> it really drives up are our margins going forward. investors have waited for years, corenally, the company's income has been slightly positive this year, however, the company's position to go into this mess has really widen the losses. really will protect the andany from a downside risk
preserve the company aspects of the business. -- has reported a 19% jump in the third quarter hel helped by an net interest income. it also plans to cut 1500 more jobs. let's get to that cost-cutting plan. are you responding to a tougher operating environment? >> that is one of the reasons of course operating income is growing less than in the last couple of years, so indeed, custom troll is very important. ousef: what kind of impact does donald trump have got we have seen bank stops doing a tear. do you see anything positive for your business? kees: of course the bond markets reacts by increasing
practices, and there is a flat yield curve, so in that respect, i would say that was a good development. >> zürich insurance group will cut $5 billion. now, that news comes as the company holds an investor day today. let's go straight into one of the key lines going into the statement. $1.5 billion from 2015 through 2019. talk to me about what is driving that new plan. >> the insurance industry has a cost issue, which is common wide in the industry. zürich does have this issue, so we decided to attack it in the most responsible way by reducing over the next three years $1.5
billion of our costs. now, it would work on the i.t. expenses, it would work on contract, it would work in procurements. we have plans to do it. we are fully confident. >> let's take a look at tencent's revenue, asia's biggest internet company. this is everybody's favorite here. what is driving sales? quarter, it grew to $5.9 billion. how does tencent do that? it invests in business is like , cloudfinance, content building capabilities, and to do that, it has to spend more. income grew to $1.5
jon: if you are the fed right now, and i want to bring up the clock on the board, each dot represents what rates will be. are we going to see it start to drift upwards on the back of a trump presidency? about 30,000 functions on the bloomberg, and we always show you our favorites on bloomberg television. here's another you will find useful. quit.go. here is a quick take from this week. venezuela does not have its 30food to feed
million residents. it can also not guarantee electricity's or medical supplies. the country is staring down socialist evil, political unrest, and multiple states of emergencies have been declared. how does that happen with the largest oil reserve in the world? for years, subsidize oil influenced abroad and at home. the collapse in oil revenue have squarelyers pointing at the unpopular president nicolas maduro. polls suggest that it collect oral officials allowed a vote, lectoral lose -- if e officials allowed a vote, he would lose by a wide margin. he followed the late hugo chavez. he had a left-wing ideology and fiery rhetoric. saying of george w. bush -- >> it smells of sulfur still
today. >> while in power, chavez limited thousands of companies he said were not functioning in interest, and he focused the entire on one thing -- producing oil. that means everything besides oil had to be imported. while oil prices were high, it worked. then in 2013, the first domino fell. chavez died. took over for chavez, and in 2014, the second domino fell. the price of oil started to crumble. it accounts for 95% of the country's commodity earnings. the company found itself short -- the country found itself short on cash. money,ted printing causing inflation, which has surged into the triple digits without an end in sight. the economic freefall having country'sd -- the
murder rate is surpassed only by honduras. it has gotten so bad that food storage is have -- shortages has prompted major riots. demonstrations have been held across the country, calling for maduro's ousture. -- his the argument opponent say he should resign immediately. however, some say the alternative is not much better. alliance ison pushing for a new election, but it is made up of a dozen parties with no unified plan for the economy and no single leader to do it. with oil prices unlikely to head back to previous highs, neither maduro nor the opposition have a roadmap to fix the crisis. just one of the many quick takes you can find on the bloomberg. you can also find them at bloomberg.com along with the
david: what propelled you to pick google as a company? who cares about his search engine? eric: i did not think google was going to be a successful. david: is it awkward when you are the ceo dealing with founders? eric: our dress code, you have to wear something. david: you have been in one of these cars and you feel safe? eric: we are doing this to save lives. david: europeans seem to not like google as much as americans do. have you resolved those issues with europe? >> will you flex your tie please. david: people would not