tv Bloomberg Daybreak Americas Bloomberg January 27, 2017 7:00am-10:01am EST
friday, good morning, and welcome to "number daybreak america's." -- to "bloomberg daybreak: americas." the situation cross asset looks like this. the cable rate retreats ahead of a significant meeting in d.c., at 1.2534. alix: prime time on capitol hill, it is opposite attracts -- it is opposite to track as theresa may heads to the white house for a meeting with president trump. despite president trump loading a 20% tax on imports from mexico, the trade war threatens to spoil decades of trade cooperation. play it cool. economists reject a slowdown -- a slowdownts project in growth. we will break down the numbers and dissect the market reaction. that is what you need to know. jon: let's get to the big
meeting. wantsitish prime minister a strong relationship with president trump, when she first meets with him later today. she emphasized to the united kingdom that she hopes to pursue trade talks with the u.s. in the coming months. prime minister may: a new trade deal must work from both sides and serve our national interests. it must help to grow our respective economies and provide the high skilled, high paying jobs for the future for working people across the u.k. and america. jon: a core mandy moore's and to guy, is bloomberg's johnson. what is coming up and who needs to get the most out of this meeting? guy: in some ways, they both need to get a lot out of this meeting. donald trump had an interesting time in the last 24 hours in relation to mexico. it would be nice for the white house to talk about a positive
relationship when it comes to trade. maybe he is able to achieve that with this meeting with the british by minister. from the u.k.'s point of view, president trump may be theresa may's trump card. ismay give her a card that easy to play when it comes to european negotiations. there is a lot on the table here, jon, but what is interesting is, how much can they get done here? remember, the u.k. is still a member of the e.u. we do not even have a commerce secretary yet. jon: what interests me from the speech from prime minister may was not just the spatial relationship with the u.s. and the united kingdom, but she really talked about international order and the role that britain plays in that. it is not all fun and games, about trade, it is about
diplomacy as well. talking will be about what is happening with russia, with the global architecture, nato a big part of that discussion. the meeting is about trade and also about security, and how these two nations are going to work together going forward. remember as well, the president will be speaking to vladimir putin tomorrow, so theresa may has an opportunity. in some ways, the u.k. is an outlier in terms of having a more hostile relationship with moscow right now. it will be interesting. signal iss going to that this is a relationship that can go forward and strongly. leaning on a little bit of reagan-thatcher, here is what she had to say on that subject. prime minister may: when it comes to russia, it is wise to turn to the example of president reagan, who, during his negotiations with mikhail
gorbachev, used to abide by the adage "trust but verify." [applause] prime minister may: with president putin, my advice is to engage but beware. chemistry is going to be impact here. it is fascinating to see how they are going to fit together. the british prime minister talked about maybe opposites attracting. we will see how that works later on. fascinating is not she is notry, meeting the 45th president of the united states, she is meeting the first ceo of the united rates. she says there will be one-on-one deals, and if they do not treat us fairly, we will send them a notice of termination.
donald trump says there will be one-on-one deals, and if they do not treat us fairly, we will send them a notice of termination. you now have a ceo in the white house who will try to cut costs. on0-day termination period trade deals? the profoundone of ways that he is not like ronald reagan. it sounds like walmart. it is a very different approach. we have never seen that in a president. jon: we wonder how difficult this will be for prime minister may because she is not dealing with a typical politician. she's meeting a businessman. guy: she has already laid the groundwork. remember, boris johnson has already been here. her closest advisers have laid the groundwork for that. when it comes to the mexican situation, may be can take advantage of that. maybe there is an opportunity to allow the president to appear
presidential. maybe there is an opportunity to allow him to finish the week off on a good note. maybe there is an opportunity for the u.k. a seniornt to bring in security strategist to rbc capital. what is policy and what is theater? how do you interpret it? >> that is one of the reasons we are not seeing currencies react more. if you look at the mexican peso, it has been trading in wide ranges, pushing new highs in dollar-mex. there is a lot of talk but very little -- david: what does an investor do? do you sit on the sideline and we for something concrete to happen? elsa: there is a lot of positioning already. a lot of positioning in the pound as well. people are waiting to see something more concrete coming out of this administration, with
respect to mexico and with respect to the u.k. alix: volatility has not picked up that much. it has picked up a little bit but it is not around the record highs. you would think if we are waiting for the markets to interpret and understand tweets, volatility would be picking up. elsa: we are trading within well contained ranges. we have to sit on the sidelines and see how this will play out before taking big positions in either direction. the markets together with diplomacy -- is the market impacted if she gets a stronger hand that she can come back to europe with and take negotiations through the spring and the next two years? you would have thought that in theory it would continue to go along those lines. but if there is a chemistry here, if there is a meeting of
theresaat will allow may to have a slightly struck her hands -- and you saw was a french finance minister said overnight -- he said this is nothing. maybe that suggest there is no sense about this on the continent of europe. but maybe if she goes too far, there could be the other effect, that the european position has not stopped. it is hard to read. david: she gave a very nice speech in which she said we are not closing down from europe, we are opening up to the world. this could be a concrete action if they come up with some specific talk. the first concrete action to say that maybe the theory works. guy: that is the idea that certainly never 10 is going to be pursuing, that we are open to trade with the world. here is a massive trading partner in the form of the united states, being put to the
front of the queue. from a political point of view, this will be a huge success. how do you deal with gm food? agriculture will be a major problem. the trump administration has said that they could get a deal done in a week, but only on favorable terms. we are a long way away from that. and the chancellor, philip hammond, in brussels this morning, said the u.k. will continue to speak by the rules. is a startingis point, but it could be an important one. what doe question is, you feel like president trump will ask concession wise? if theresa may wants to put something in relatively concrete to the e.u., what might he have to get from her? elsa: i do not think we will get that much concrete today. but personal chemistry is the
most we can hope for from today's meeting or that should be apparent in the press conference. apart from that, trade deals do not take a week to negotiate. they take many years to negotiate, unless one side is willing to give up everything. it is clear that with the u.k. -- health services, financial services -- there are many issues. -- picking up with personal chemistry, the first thing the president elected was send out a tweet of who the ambassador is. will there be discussion about nigel farage? guy: i would not expect that, david, to be honest. i think she is going to want to keep this very professional, but try and develop that kind of personal relationship that i was talking about. how do you do that? we have already seen president trump put the bust of churchill
back into the oval office. that is a significant signal. he has already talked about the thatcher-reagan relationship. how does she play to that? all of these things would have tried to workave out how to make that relationship work. on paper, these two people do they do note -- look like they are going to stick together any way like reagan and thatcher did. jon: how was travel at heathrow airport yesterday? guy: i am going to take the fifth on that one. david: you are in washington, so you get to do that. that is good, guy. guy johnson, thank you for joining us from washington. coming up at 1:00 p.m. eastern time today, president trump holds a joint news conference with prime minister theresa may. coming up on this program, it is prime time in washington, d.c.
it would be a three-week retreat, the first since march of last year. dollar strength just coming back a little bit. treasuries going off two basis points on the treasury yield. 2.52. david? david: tensions between the united states and mexico grew yesterday when sean spicer suggested that the u.s. might pay for the wall between the u.s. and mexico with tariffs. >> it is a practice that 160 other countries feel right now our country pass policy is to tax exports. by doing it that way, we can do $10 billion a year and easily pay for the wall. david: this cames on the heels of the trade deficit with mexico. it is not quite as simple as all that, as this chart shows. what has really happened is that u.s. exports have risen
dramatically over the years. but so have exports from the united states to mexico. so it is a two-way street. the yellow one in the middle has remained relatively constant. the co-chief investment officer of -- capital management joins us. talk about this relationship between the united states and mexico. the border goes both ways right now. if you shut it down, it will shut down both ways. diego: mexico is the third largest trading partner, half $1 trillion. people are forgetting the fact that the u.s., there are 6 million u.s. jobs exporting things to mexico. a million economists just worked out what a 20% tariff actually meant. toonder if investors went
buy up a load of pesos yesterday. diego: they did. we would argue that in a regular tariff would be more than absorbed already by current prices. alix: meaning that? that should be fine. the market seems to be predicting -- i do not know what kind of worst-case -- you have the worst possible outcome out of the election in mexico next year. the: elsa, is that what currency market is telling you, too? elsa: we have a fair value range 2160 -- 221.60to -- we see the potential to break to new highs based on the fact
that there is a lot of headline risk and you could seen a more aggressive tone from both sides of the border. like you said at the start of the segment. this is an important trade relation, but it is not clear that the administration can deal with that at the moment. david: one thing that is not clear is how much is real. is this working in president trump's advantage? he can continue with negotiations or his stance. he is throwing a lot of things out like you might in a negotiation. in international relations it is different. it is not that you have only one set of things to negotiate. why would you single out mexico? at the end of the day, you have $500 billion of trade, with the trade situation with canada and
china. you have a billion dollars with japan and germany. so why mexico just because you want to pay for the wall? it does not add up. at the end of the day, it makes sense from a politics standpoint -- at some point in time you have to have a coherent international trade policy. jon: i am trying to understand how you can be an investor in this environment and be successful. if you ignore the soundbites and focus on policy, you can successfully invest. the day. stronger on i want to understand, if we get more of these dislocations in the market and you look at mexico, what assets are you looking at the on the currency itself? diego: in general, we think that local bonds in pesos might be the best near-term opportunity, because that is a sector that is
affected the most. one of the things that we have noticed is, despite the bad headlines, the peso has not weakened further. it feels that the decisions are already varied. it is not that you can get worse, but we think most of the bad outcomes have been priced in. alix: thank you so much. ferro.gnos and diego taking on some risk in mexico. coming up, a cloudy outlook for big names in tech. more on this next. this is bloomberg. ♪
water in london. 02%.ax retreats by .2%.y 0 yesterday we had a seven-year awkward -- a seven-year auction of u.s. treasuries. a little bit of a selloff has been stabilized over the last couple of days. rate raised to 1.2536. that wraps up things across assets. let's cross over to alix steel. alix: we want to start with ubs having a really bad day, off-white by over 3%. its worst day and about five months, the lowest level of the year. ubs' money management units saw a decline in the
quarter, the third straight quarter of declining margins in wealth management. we will hear from the ceo in the next hour. it is an interesting story when it comes to alphabet. the headline number rattled markets a bit. but remember, google hit a record high earlier this week, and there are huge numbers coming out of the company. revenue growing over 20% for the third straight quarter. this company is $550 billion. it is extremely difficult to get that kind of growth when you have that kind of market cap. you had a lot of money coming into the cloud computing business as well. on to the u.k. for some mergers. --had tesco and burgers tesco and booker. this deal valued at $4.6 billion, a 12% premium to booker
's close yesterday. the deal could face potential antitrust scrutiny. but it may surprise many analysts as well. no one had expected something like this, but now we have to turn to regulators to see what we are going to get from them. let's get an update on what is making headlines outside the business world. in the chandra is here with "first word news." emma: theresa may becomes the first foreign leader to meet president trump at the white house. yesterday she embraced trump as a friend and ally but cautioned him not to turn his back on long-established political values and global institutions. she said they can lead together again in the world. coming up at 1:00 p.m. eastern time, trump and may hold a joint press conference. we will bring you that live on bloomberg. vladimir putin is set to speak with u.s. president donald trump iphone over the weekend. it is set for tomorrow. he congratulated trump after his
victory shortly after the election, but they have not spoken since then. the kremlin has applauded to mend ties with moscow. it is said that concrete is a potent source of greenhouse gas, and the wall will mean a loss of it -- a lot of it. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am emmaountries, chandra. this is bloomberg. jon? york, moreew bloomberg next. ♪
stretching a little bit higher. kickrday the s&p 500 did 2300 points higher, then we had a marginal retreat down. look at the currency pair. it is the cable rate, 1.2551. what the meeting today will say about dollar-sterling strength, and what prime minister may can do about it. alix: high expectations. primetime in bc and opposites attract as theresa may heads to the white house to pitch a trade deal with president trump in hopes of breaking groundwork for a prose brexit that for a post-brexit britain. the trade war threatens to spoil decorative economic cooperation. the u.s. will report fourth-quarter gdp in one hour
from now as economists predict a slowdown in growth, expecting a wider trade gap in moderate consumer spending. that is what you need to know. jon? jon: shares of ubs in switzerland down as the company reported 15.2 billion in the fourth quarter. the ceo painted the more popular picture. manus cranny spoke with him earlier and asked about what he considers a success for the bank. is thesuccess investments we have been making in the last couple of years to rebalance our business and ittle bit more toward the u.s. it is paying off. if you look at our business in general, in equities we are having a strong performance. when you look also at more
to sustain this business. manus: everybody is looking at america. there could be deals in the offing where you look at m&a. where do you stand on wealth management? where would you be content to shift gears from where you are in the usa? losing $150e were million pretax. $1.25ear we posted billion pretax in the u.s. we are very focused on growing organically, but of course the time of consolidation in our industry is starting. it is almost inevitable to address both overcapacity and in
some cases profitability issues. support, doyou say you want to be one of the players in that consolidation? : consolidation is one option, but it is not the only option. we have to look what fits into our strategy. we have a clear strategy. lose our want to strategy just for the sake of consolidating. there has to be a merit, strategy, and financial merits in doing that. we are open to exploring any option that makes sense for clear value for our shareholders. jon: we are down on the day, the stock down 3.64%. i want to bring in manus cranny from zurich. margins, what can sergio do about that? he has all of his ducks
in a row review did not get the trump bump in the numbers. the point about it is, margins are dying. that is what is niggling the market this morning, $15 billion leaving the bank because they overrated related that they overregulated themselves. -- they overregulated themselves. when you come from a news conference and you absorb what you talked about all morning, 50% of the clients, both clinton and trump supporters, have plans to act in terms of transactions. there is a mile between thinking about trump's acting and actually hitting the button. days tothe first 100 take from thoughts, delivery, and margins. i never thought that when i crossed over to him that he
would begin with champagne. i will be talking to him about -- manus: i started with the orange juice. jon: talk to me about the investment bank. manus: i think there is an interesting thing here. theybody has been so -- fixed him -- the fixed income part of it was ripped out. the equity side of the business did very, very well, up 22%. think of commodities. commodity did not do just as well, but that is not the skew of this. some of the deals came through. you have derivatives trade coming through quite nicely. it is a profit oriented investment bank. one quarter will not bolster everything. there is still going to be a debate, and the people own next picking at it are saying you are way out behind the curve, but
maybe that just goes through his over the medium term. equities up 22%. that was quite a surprise. jon: to come back on that and going back a little bit, over to switzerland and knowing this bank inside out -- we have talked about the turnaround, refining what they did with the investment bank. the question that keeps coming up in the united states, when we do get this term secretly -- structurally, who is in the best position to take advantage of that? ubs has been in the best position to take advantage of that for the past six years. how do they set up for the next six? manus: they built up their capital buffers. -- there wasense
one message coming through from davos that we might be usa light in terms of our exposure. weber hinted in asia last week that they might be ready. i get a sense that they are looking at this market. i cannot see them scaling back up the curve in terms of fixed income. i do not think it will be in their blood, and it would be a dramatic u-turn for ubs to do something like that. get that man and orange juice. good to see you, mate. david: just to hear him say ducks in a row. now we are going to take a short step from banking over to investment banking and mergers and acquisitions. yesterday greenhill and company reported fourth-quarter revenue full-year upevenue
28%. joining us now is the greenhill ceo. welcome back to the program, scott. let's talk about those results. what led to the dramatic uptick in revenue? scott: there is still a strong away from the big banks like ubs as well as goldman and jpmorgan toward firms like ours. if you look at the five big american banks, the aggregate was down 5% last year. you are understand advising on the tesco-booker deal announced overnight. what does 2017 look like for you? scott: i do not feel reasonably optimistic about 2017. i know there is concern about taxes and other things, but i think the tesco deal is significant in one respect. even all the questions about
brexit and how it will play out, here's a company doing strategic transaction. scott -- ared: a lot of people interested in doing deals but not pushing the button because they do not know the specifics of what the trump administration will bring. as people to be done push those buttons? scott: i think they are pushing the buttons. i think companies are ready to do things. you can say let's wait and see what the tax rate is and what happens with trade deals and so on. but what is well understood is that we have a pro-business government in washington now, and that is the all having clear signal for companies to do deals. global equity is really rallying throughout the week. at what point do the devaluations become limited? scott: if your stock is going up, that gives you a strong currency to be up to buy things.
what you're saying about the market is very important, and our clients think the same way. clearly markets are discounting the negative stuff like trick wars -- like trade wars and counting on the positive stuff. the markets would not be going up if they felt we were going to have trade wars. they are going up because of less regulation and less taxes. i do not think people think there will be trade wars. alix: when you look at it, is that a mistake? beingthe market actually smart this time and looking at trump and saying this is a negotiations tactic, not policy? scott: you could argue that the market may be underestimating the possibility that some things do not turn out as well as they are hoping. so much of the markets are driven by the so-called animal spirits. are we in a positive trend when companies and individuals feel positive, want to go out and hire people, make investments, buy a new home?
with trump -- i know there is a lot of uncertainty and people do not like some of the rhetoric -- but clearly there is a positive signal there. : you said they are not interested in a trade war, but is there a preference for domestic within the border deals as opposed to cross-border deals? scott: i don't think so. we had a very good deal last year. 40% of the deals came cross-border. a tremendous amount of cross-border interest right now. david: thanks so much to scott bok, the greenhill and cubberley ceo. next up, former fed chair ben bernanke says not so fast. we find out why next. this is bloomberg. ♪
emma: this is "bloomberg daybreak." coming up in the next hour, the global head of ethics strategy at unicredit on his latest call on the yen. alix: the next fed meeting is next week. the big question is, will the fed discuss any unwinding of the balance sheet? ben bernanke had some strong words yesterday in a blog post, saying it is not unreasonable to
argue that the optimal size of the fed balance sheet is currently greater than two $5 trillion, maybe $4 trillion or more in the next decade. in a sense, the u.s. economy is growing into the fed's $4.5 trillion balance sheet, reducing the need for rapid trigger jova the next few years. a bloomberg economist joins us now. he laid specific reasons out as to why the fed needs it bigger balance sheet for longer. basically the balance sheet could correspond -- should correspond with the sides of the macro economy. we are bigger on both accounts compared to when qe was originally introduced. as we normalize the balance sheet, it does not have to be a full reverse, but to some higher level likely over $1 trillion. alix: we have not really heard that from many fed officials.
will we start to see the conversation about when to do it theyow to do it? carl: have been quiet because there is so much disagreement. they are working on the nuance details but not trying to make a strong case publicly. i suspect they are working behind the scenes as to how this will work out. the fed has to have the buffer in case they make a mistake. temper tantrum and how that panned out. policymakers want the fed funds rate high enough that they can reverse course if things do not go smoothly. alix: the timing and -- jon: the timing of this is intriguing. becausebring this up you will be confronted with his page. go to the far right tab and have a look at fed holding. look at when these start to roll off. look at that hump right there.
20.18 on the far right side. the policy is to reinvest. the conversation is around major stock and doing that. carl: they are looking at the dynamics of the balance sheet, saying maybe we cannot just pulled the plug and say no more reinvestment because that would be very unsteady. instead, they have to figure out a formulaic approach to make sure the deflation of the balance sheet occurs in a smooth and orderly fashion. alix: also in 2018, janet yellin will no longer be the head of the fed. we do not know who will be replacing her. david: the thing that struck me is, he is really adamant. whatever you do, you should make it clear right now that you will not reduce your balance sheet until interest rates go up. carl: absolutely.
at the time when quantitative easing was being introduced, which was in the depths of the financial crisis, chair bernanke tried to say with great confidence to the markets that do not worry, this is not a separate monetary policy tool. it is just more easing. even though we're closing in on zero for the fed funds rate, we are pushing further. even though we got the transcripts and heard what was happening behind the scenes, there was far less confidence. there are unintended consequences, so the fed has to move very slowly and cautiously. because we are still growing at a fairly slow pace. bernanke ran a very different federal reserve. he approached congress and said you need to do more with little did he think that several years later he might get an administration that would turn around and say we might do more. isn't that the real story? you now have a fed chair in janet yellen, and now they are thinking about doing more.
carl: the timing of fiscal stimulus is certainly inopportune in this economic cycle. nonetheless, it does look like it is coming down the pike. i think it will be more concentrated into future years past 2017. but if the fiscal level is pushing in a positive direction in the economy, that eases the burden on the fed and allows them to move more quickly with either normalizing interest rates or normalizing the balance sheet. alix: if that starts to happen to the balance sheet as we get more fiscal stimulus in 2018, will we see private demand to support the rolloff? carl: that is the question. given where interest rates are right now, you would say that the demand is right there. the fed has to move very cautiously, look at issuance under trumponomics, what that
debt issuance could look like, and smooth this out so that we do not have a clumsy exit as more supply comes on to the market. alix: while we change fed chairs. if you were listening, please consider an additional term. alix: coming up, a health check of the u.s. economy. fourth quarter gdp will process in 30 minutes' time. we will preview the results and unveil what is next. this is bloomberg. ♪
later after that at 10:00 eastern time, consumer sentiment for january. looking ahead to this data is matt boesler. beginning with the previous quarter, it was the sword being quarter. let's do with that first. just walk us through it. the -- the volatility component fluctuates up and down. the key thing to look for is what happens with private investment -- private fixed pasttment and -- over the quarter, business fixed investment has gone up over those quarters. does that turn around, or does that bottom out? brought chart you have for us today is what happens
with business spending. the story i want to confront you about is whether that changes in the coming quarters. at what point are we set to the -- set to see that confidence translate into spending? matt: this is really key. if you look at the economic data we have gotten since the , a lot of the confidence data and the survey data have soared because people are expecting -- the hard data has not come through in that way. that is what the fed is wondering about waiting for, to see until they get more aggressive on raising interest rates. they want to see that confidence data translate through to the hard data. we will get the bulk of that today so we can see how that is going. jon: we will get the sentiment numbers today as well, from the your resident michigan. will we see that go higher as well, or will it stall out somewhere? the: if we do not see it in
hard data, is there a limit to where the confidence data can go? we will also get a clue on inflation expectations, which the fed cares about as well. they have gone up in the market, but if they do not on the consumer side, that may be a cause for concern for them. jon: six months ago i sat at the desk, and we had a conversation about the federal reserve, when are they going to hike now it is about fiscal policy. people are so focused on what is going on in d.c. and on the political side. janet yellen said the fed is not behind the curve. how are they not behind the curve when no one knows what is coming in the next 18 months? matt: the drama around interest rates this year has been more muted than it was last year. last january was really bad with a lot of ups and downs. but the market is poised for two rate hikes this year. it is 50/50 that they get four. you have to set higher than
where the fed itself is saying it will go this year. that takes a lot of pressure off of them. jon: bloomberg's matt boesler. the fed chair's job becomes a little bit easier, not harder. will talking up, we about whether the peso has hit a wall. the mexican currency faces intense volatility as president trump risks may be a trade wall -- a trade war with his border talk and the wall. this is bloomberg. ♪
daybreak. i'm job than -- i'm jonathan. and we're on a three-day winning streak. futures on the dow are up. the s&p kissing 2300 for the first time ever. we switch on the board quickly. treasury is stable through the morning. 652 the yield and up marginally by two basis points. the dollar is flat on the week with the potential maybe we roll over for a third straight week. lyx? alix: teresa may heads to the white house and plans to pitch a free trade deal to president trump in hopes of laying the groundwork for a post-brexit britain. borderline catalyst. comparing against the peso and off the high recession despite president trump threatening a tariff on mexico and the trade war threatens economic cooperation and friendship. play it cool. we'll record third quarter
g.d.p. and economists reflect a wider trade gap and modest consumer spending. we'll break down the action after they cross. what's what you need to know. david: we'll turn to kevin to set the meeting between british prime minister teresa may and president trump. we heard from our colleague guy on what to expect. what is the prime minister may expecting and what is president trump expecting and hope to get out of the meeting? kevin: i put that question to e kellyanne and she said the focus will be on trade and last night they huddled with prime minister may officials at the u.k. embassy in washington and discussed potentially different sticking points they do all -- could all work together on to get the ball in motion. david: i wonder if this is a different sort of meeting for prime minister may. jonathan has been making the
point it's not so much the and there chief was a quote that said there would be one-on-one deals referring to trade deals and if that country doesn't treat us fairly we send them a 30-day termination notice and they'll say please don't do that and we'll negotiate a better deal in the 30-day period and is perfect for a c.e.o. to take a supplier but this will be different. he's not a politician. kevin: i think yesterday in philadelphia prime minister may's tone was respectful of trump and highlighted their differences going to the attack. i can tell you kellyanne conway told me perhaps something they might be discussing privately is ways in which president trump and administration could assist prime minister may in helping her meet that march 31 deadline of triggering brexit. clearly a lot of different
oving parts behind the scenes. but looking to have a seamless day after what happened yesterday with the mexican president. david: president trump making the deadline helps her. what about for him. does he need to come away with a win. or is it enough given the problems with mexico saying i can get along with countries. kevin: the latter and the political orbit, the people in that orbit i'm talking with tell me today the goal is not to have any hiccups if you will publicly from a communication standpoint and to project not nly to congress and the u.s. that president trump can have a meeting with a foreign leader go commoothly. david: many thanks. kevin cirilli reporting from the white house. jon: a meeting that won't happen next week is a meeting
of the president of the united states and mexico and the 20% tariff is the reality and not anyone is sure of that. let's bring out the two-day chart. the dollar is mixed. so the peso selling off and then rolled over and essentially what you've ended up is dollar peso the last couple days is dead flat with a weaker peso on the market. the market has already adjusted. the high for this was 22. the intraday high on january 11. the move has been 15% since the election. we've had an aggressive move. is that enough? let's bring in our london analyst. if you look at the situation with the peso, how do you look at it, have you had the adjustment, and these conversations are just kind of on the margin? guest: i think for sure we had a sizable adjustment. but i'm not sure however we have actually seen the worse of it. let's don't forget about aside from these discussions and meetings and the potential
building of the wall, we also have the potential renegotiation of the nafta agreement and out of the countries that are part of the nafta agreement, mexico is probably the weakest one. there are a lot of hurdles for mexico going down the road if indeed trump does go down the road of a more protectionist policy. alix: there's two schools of thoughts and we had diego of graylock who said i'm piing the peso because it's undervalued and hit so hard. the other part is any of those issues could fundamentally reshape the mexican economy and who knows what would happen to the currency. which in your view is the safest, shorter term bet? guest: i think i would go with the latter. let me explain to you why i'm saying this. all of us, the economist, forecasters deal with fundamental models and we try to gauge and estimate a fair
values and try to come up with a fair valuation, whether currencies, equities, bonds. the problem, however, is it depends on a number of fundamentals for which you assume there's no structural break. if you get a political event like brexit, for example, or like trump, what happens is that more often than not you get big structural breaks in your models which is impossible to know in advance. how they're going to play out and therefore making a statement that a currency is undervalued based on current models is quite tricky because you don't know what the underlyings now were. david: go to that specific point, a structural break. it occurs to me there's a break in our dealings with mexico, whether it's an economic or trade issue or political issue because it was triggered by the wall which has much more to do with donald trump appealing to his base who is worried about immigrants than it has to do actually about economics.
guest: well, i think that these things are interlinked, right? if there is a significant decrease in the amount of mexican workers that cross the border and go to the u.s., then there's going to be a significant reduction in the remittances from mexico to and it will affect the exchange rate. there also will be a direct change, structural change in the domestic labor market in mexico. so i don't think that we can actually disentangle the political from the economic impact here. what we can say is that the politics are in the driver's seat. but they definitely affect the economic developments. jonathan: we talked about the relationship with president trump and how the negotiations will go in mexico. the meeting with prime minister teresa may and president trump a little later, is this afternoon the united states. what is your advice to knows in the fx market and city of london, is that an event or do
they get down to the proper start to the weekend? guest: i don't think it's an even. i think it's pretty simple. i understand that there seems to be a big desire on both parties or at least this is what they have communicated, that they want to move on with a very quick, very swift deal. the reality of the matter is simply this is not happening. this is not happening because a, histories that proven that trade negotiations take really a long time to conclude and in many cases they don't conclude as both parties would like them to. they ondly, right now think the u.k. is part of the union and from that respect it is impossible for the u.s. to contemplate what their relationship is going to be with the european union after the u.k. exit. jonathan: you've lived in london and know there will be a serious news conference to stop people from going to the pub on
friday? david: the good news is they can go to the pub and get a pint. thanks, vaseliuos, head of global strategies and he'll stay with us. let's get an update on what is happening to the business world and we turn to emma chandra. emma: the french president hollande says the trump administration creates challenge on issues as trade rules and how to settle international crises. he made the comments at a news conference with angela merkel. the kremlin says russian president vladimir putin will speak by phone with president donald trump tomorrow. putin congratulated trump on his victory shortly after his election but the kremlin says they haven't spoken since. the kremlin applauded trump's promises to mend ties with moscow. the white house press secretary shawn spicer says an investigation into what president trump says is widespread, voted for the election and would be focused on understanding where the
problem exists and how deep it goes. he singled out california and new york, two democratic stronled holds. spicer said trump will sign an executive action to launch the probe today. there will be tighter security on some european trains. belgium has sealed an agreement with france and the netherlands to draw up passenger lists and introduce passport checks on international whale services. the move will tighten security on the high speed trains and track criminals who might be using them. global news 24 hours a day, powered by more than 2,600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. alix: equity futures going nowhere fast but industrials get hit on earnings. honeywell off by 20% and they had weaker business jet demand that weighed on the aerospace unit and their sales missed $100 million in last quarter. in terms of guidance it lowered
the high end of their 2,000 sales guidance. we heard cautious commentary from industrial players like ratheon or caterpillar. we'll decide that later. air products had a miss and guidance flopped as well. check out paypal, failed guidance for paypal was also light, however, the bigger news is the c.e.o. may be in talks with amazon to use paypal accounts so the market not factoring that in this morning. earnings after the bell last night, the highlight was the cloud. you got microsoft and intel, both giants seeing the biggest growth from the boom in cloud. you have microsoft cloud unit was the 5 -- 95% in terms of revenue growth and almost doubled. intel is up .6%. and saw chip sales rising 30%. the cloud continuing to be a big theme for these tech players and we'll discuss it later when it comes to google in the show. david? david: thanks very much, alix.
we switch out the board, heading maybe to a weekly decline on the margin is the dollar index as we began but the last hour the dollar strength emerging on the cable rate, 12541. treasury is largely stable at 25.52. alix: the bank of japan boosting bond purchases in the medium term debt to keep zero yields under 20%. maintaining the yield curve target heading to the next b.o.j. meeting next week. the yen falling against the dollar for a second day. with us is the uni credit research global head of excess strategy. i need your take, i saw your note and you were going short dollar yen at 113.50 and have a target of 108. cool, contrarian call. the last few days have been rough. guest: very rough, absolutely. and definitely makes us want to reassess the view at least in the short term.
i think there are a number of misconceptions here. i understand the news overnight about the bank of japan increasing the bond purchases. but they've been falling behind generally. what the bank of japan did was bring them in line with the previous monthly purchases. i don't think at any point in time anyone really made an argument about the bank of japan not speaking -- sticking close to the target and the promise to their commitment of what it is they want to achieve. from that respect, i don't think what the bank of japan did was any news, it is something that brings them back to normal. i think the weakness in the yen has largely come the back of strengthening growth of the dollar. i think what our premise has always been that over the medium term what really matters for the exchange rate market
are real rate differentials which is basically nominal, taking out inflation or inflation expectations. i think in the short term, we have gotten and we will continue to get periods when the market gets excited by rises in nominal rates and pushes the dollar higher but my bottom line is this, i still think real rates matter. that's the number one factor for exchange rates. i think dollar yen now is trading too high relative to real rate differentials and not to say it can't go higher but i'm making a fundamental assessment here. alix: vasileios, how does comparing the dollar come with a trump defeat or rhetoric out of the administration, which one ends up winning the end of the day? guest: i think it depends a lot on the size and nature of the stimulus that trump has in mind.
because if we go down the road where we are going to inject a lot of infrastructure stimulus in the u.s., we have to bear in mind we're talking about an economy that does not operate with a big output gap. it's an economy that's very close to full employment. very close near capacity. that means that you are injecting a stimulus that does not affect long potential growth or productivity but pushes inflation higher. so in the interim, yes, that is going to put some pressure on the fed to raise rates but the question is how much market has already priced in which is outpacing what, is it nominal rates outpacing break evens or break evens outpacing nominals? and i think if trusm goes down the road of a massive infrastructure stimulus it will be the road which we'll see compression in real rates in the u.s. jonathan: i want to wrap this up and put it together and construct a framework for thinking of the f.x. market at
the moment. many economists sit around the table and point out the four big countries that run trade surpluses with the united states, whether it's china, mexico o germany or japan. when you look at japan, we haven't spent a lot of time talking about the japanese currency and president trump making a lot more noise about that than, say, the chinese currency. if that comes on the agenda in the coming months, is that something you ignore or take notice of? guest: that's definitely something you cannot ignore. as we've said in the outlook, although the economic figures have improved considerably, there is an unprecedented amount, unprecedented level of political uncertainty right now. these things obviously you cannot ignore. if trump sets out on japan's surplus with the u.s., that certainly is something that markets will take note. alix: great to get your perspective, the short term call on shorting the dollar yen. from unicredit head of f.x.
jonathan: from the united states this is bloomberg with a focus on swiss. 9 shares of ubs are down after they reported 52 billion in the fourth quarter with word the wealth management business declined for a third straight quarter. however, when the c.e.o. spoke with bloomberg earlier, he had a more positive outlook. sergio: the most important things for me is see how clients are optimist and the reason is positive momentum
particularly with our u.s. investors and clients and this could be a turning point but is very important to see that the new administration also puts in action their plans and to give our investors even more confidence. jonathan: joining us is bloomberg intelligence senior bank analyst alison williams. looking at ubs, the stock price of some of these banks the optimism has yet to be seen. the c.e.o.'s aren't seeing activity among clients has picked up yet. will that happen? alison: they're talking about confidence and that's the leading indicator and they've been hearing it from their corporate clients. goldman was optimistic about that. if you look at this measure of c.e.o. confidence, it's the high nest 10 years and all is a good leading indicator and helpful to activity. however, with ubs, i think the issue really relates to their global wealth business. they're the leader in this business. it's a business people like because it's higher revenue and
more stable but they've been having outflows and margin pressure is a concern. jonathan: the concern is the market down 3%age points. what's the options for the c.e.o. now? alison: part of it is the issue of regularization which is referring to money coming out of the bank due to customers having to comply with local taxes. so that is something the c.e.o. said will continue in the coming year and that's more of a concern for investors versus some of the cyclical pressure because that's permanent, that's structural. the c.e.o. talking about the margin and that's another area where investors have been dis.ed for a few quarters now and may be the lowest in several years if not the company's history and part of that is also structural said the c.e.o. so part of that is the money coming out was a higher margin business. part of it is seasonal so you have this sort of seasonal pressure and the cyclical pressure, the structural pressure so all kind of coming to bear in the fourth quarter. david: is there anything that
can be done because it sounds like the promise is swiss and they can't stop being swiss and they used to think the safest place to put money is a swiss bank lue the u.s. people have gone after it for tax purposes and is a disadvantage. alison: it's sort of a one time thing and playing out over several years. it's not something that will go into perpetuity and what they can do and what he says they're doing is trying to accelerate that. but what is difficult is it is tough for investors to know are these outflows because they're being accelerated or should i plug it in the next several years. jonathan: this is a bank that got so much praise on how they restructured the bank for a new era, are they entering a different era and how is ubs positioned for it? alison: ubs will stick to their model and they have restructured and had a solid quarter in there. sort of the problems of the wealth business are
overshadowing the investment bank because as we discussed the wealth is their focus and had a good equity tradings result and part of that is comparisons and a positive result there, the other thing is litigation we haven't touched on but costs coming in there lighter than expected but doesn't necessarily mean a reduction of risk but means maybe they're not as far along as others. jonathan: great to have your take on the banks globally and in the united states. bloomberg intelligence coming up on this program, the health of the u.s. economy, fourth quarter g.d.p. crossing in a few minutes' time and break the results. slow economic data coming out of the united states. from new york, this is bloomberg. ♪
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on a three-day winning streak. yesterday on the s&p we kissed 2,300 for the first time ever. switching out the board on treasuries we are up a basis point to 251 as the data in the united states drops right now. pped -- g.d.p., 1.9% and the median estimate was 2.2%, down from 3.5%. personal consumption the fourth quarter annualized 2.5% and in live with the estimate of 2.5. core p.c.e. at 1.3% in the median estimate. down from 1.7%. if you take the headline number and looking at g.d.p., 1.9% for the fourth quarter, down from 3.5% in the previous quarter and it is below the median estimate in the bloomberg survey of 2.2% and there's other data to get through as well. alix: the durable goods order, the preliminary read down .4%. the estimate was up 2.5%. the negative point 4% is better
than in november which was down .5% and was revised lower at 4.8%. durable goods, you'll pay for them and pay longer, think of things like a washing machine and those sales orders not doing well. looking at capital goods orders, nondescent if you script that out, came in better than estimated, up .8%. november revised to 1ity.5% and a little mixed it coming to capital goods orders and durable goods orders. jonathan: you take the headline numbers, treasuries were an offer coming in, bids marginally lower across the basis point. you see the curve. treasury yields lower and the dollar index rolls over as well and at session lows if you look at the u.s. dollar and positive on the day, david. david: looks like the shortfall in durable goods was transportation. if you look at transportation, it fell short. i wonder looking at the numbers whether personal consumption will be the important one
because we're concern fed that's driving the economy and is in line with what is expected 2.5%. alix: if you dig deeper, on top live go is great input for everything g.d.p. and we saw the biggest drag in trade six years and the more moderate consumer spending, david. david: for reactions to the economic data we just received we bring in michael mckey, our international economics and policy correspondent and paul lee, chief economist for north b.n.p. paribas. you are such a wiz, give us your initial reaction. paul: it's a little disappointing, the market expected to slow down from q-3 because in q-3 we had incredibly strong exports including soy beans and expected that to come off and has, a little bit more than expected. the consumption held up with what was in line with expectations, slower than q-3
but nothing to worry about and the key thing going forward is we've seen a surge in confidence post election and what will it do as we go forward in consumption? we can't tell from the figures, it's too soon. the key thing will be the consumer in q-1. slightly disappointing but not too much to worry about. jonathan: alix pointed out the top live block on bloomberg is a decent piece to read and break down what's happening with the g.d.p. numbers. but were sitting with us when we broke the q-3 numbers and talked about soy beans pointing out the growth was dragged down following 2010 following the soy bean shipments in the third quarter. i want to look at michael mckey, business equipment spending rising 3.1%, the first gain in five quarters. michael: i'm getting a look at these data and it appears to be a reasonably good quarter. i would caution everybody we see major revisions to a lot of the categories and in the last couple quarters we've seen major revisions to personal
consumption. that number could be revised up. what's interesting is the turnaround in business investment, 10.7% overall, business fixed investment which is what you want to look at, 4.2%, intellectual property 6.4%. we've seen businesses spend money again. most of the reason this comes in as a little bit disappointing not just consumer spending but also a big decrease in exports that hurt e economy trade and consumer spending issue rather than a decline in the economy and bodes well. jonathan: you mentioned trade and a little later president prumple will meet with teresa may, approaching the tomb of the unknown soldier in d.c. to lay down a wreath. that's prime minister may on the screen. the trade balance as someone pointed out, that's the big subtraction to growth here. mortimer-lee, whether it's soy beans or not that will be a big topic of discussion in d.c.
over the next four years, isn't it? paul: absolutely, yeah. clearly if we had a smaller trade balance, then we'd have better growth. mr. trump is very focused towards that. the key thing is, global trade is picking up and i think global investment is picking up and that should benefit the u.s. the real kind of threat to that story is the strength of the dollar. and whether that goes further and clearly with the fed planning to hike rates this year, potentially some of mr. trump's policies adding to strength in the dollar, the border tax adjustment, for example, would do that, then the key question, the key drag on growth won't be domestic as mike said, domestic investment seems to have turned the corner and some of the investment surveys show strength to q-1. i think investment goods, consumers should be sullied and the hiring will chip away at that a bit.
the key is net growth trade and where the dollar goes will be the driver. alix: we'll go through the positive and negative. a positive, you had final sales of domestic purchasers and rose 2.8% in the fourth quarter after 2.4% increase in the third quarter. talk to us about the strength there. michael: we're seeing general strength in the united states maintained. paul: it isn't going up significantly or down significantly. this trips out inventories which actually had a reasonably sized build during the quarter and it strips out exports. it's what we're selling here in the united states and it does show that the consumer and businesses are hanging in in terms of what they purchased. jonathan: so paul, does this underscore the challenge to mr. trump as he takes over this administration to get up to the 4% growth number given the fact that a lot of his policies seem to be pointing in the direction of a stronger dollar, it's hard to get there. mall: i think there are two challenges, one is getting net trades to stop being a big drag
on growth. the key thing is raising productivity because this is an economy that is basically for employment according to the fed. in terms of growth going forward it is not coming from massive increases in employment and could be increases of course because of the population is increasing but what we've got to do is raise productivity per head and why i think the investment numbers were pretty encouraging and why some of mr. trump's policies will increase the investment. we've got to do that because the only way that we can get paid more is it we earn more and we can only earn more if we have higher productivity. michael: we're seeing the labor force decline as baby boomers retire. productivity is key to getting it up. i have a chart, go inside the bloomberg here and look at the last time we had 4% growth, the 1980's. we've been below that with one or two quarterly exceptions since then and it is very hard to get that kind of growth, to get the kind of growth you're
going to need from productivity is going to be very difficult. productivity was rising 20 years ago at 2.1% annual rate. last year it rose .4. a major turn around will be needed. jonathan: prime minister may will meet with trump and i keep hearing it, the 1980's and parallels that have been drawn at the moment, how misplaced are they? paul: i'm not sure they're misplaced, they're clearly not exact. both countries, the u.k. clearly with brexit says it wants to be going some way. mr. trump said america first. so there's some parallels in the broad thrust of policy i think and i think both governments see the free markets, innovation are important going forward. i think one of the differences is mrs. may is talking about global britain whereas mr. trump has a bit more of a
protectionist agenda so i think there's a difference there. but they face the same challenges. clearly the u.k. challenge is trade with europe. where is it going to go? and mr. trump's challenge is trade with china and trade with mexico, how are they going to be improved? there are big parallels here. i think mrs. may's hope is that she can get some way in terms of a trade deal with the u.s. and i think if you look at the u.k., basically it has balanced trade with the u.s., a bit like canada and therefore a trade deal should be possible. the countries are going to have roblems with mr. trump and the ones that run -- whether the u.s. has big deficits, including mexico and china. u.k. is not in that camp and i think there's a decent chance they'll get a fair but tough trade negotiation with the u.s. david: paul mortimer life lee
you have good and bad. the bad is that they only eastern 22 cents. the estimates were for 64 cents. the good is that we finally saw chevron swing to a profit. also production wound up rising sequentially, coming in 2.7 million barrels equivalent a day a. and however the earnings miss weighing on the stock and looking for more commentary on cap x. president trump promotes energy independence. president trump: unleash the full power of energy killing restrictions on shale and clean, beautiful coal and put our coal miners back to work. alix: integrated like chevron might have problem taking advantage of that policy but u.n.p. companies may not. joining us is head of america's equity capital markets for credit swiss. you call this guy, he's your
first point of contact. what kind of capital raising will we see this year with those promises from mr. trump? guest: it will be a vibrant year and we've had two vibrant years and looks to continue and accelerate into this year. i think you've seen active capital raising from u.s. independence and this year you'll see more active capital from the service providers that provide services to the independents and the majors as well as the midstream companies. alix: you said oil services and waiting for them to charge more for their products and hurt e.n.p.'s but on the calls we heard this week from baker mousse and halliburtons, we haven't heard a lot of that yet. guest: the investors respect recovery moving into 2018 and that recovery will be focused on what we call the completion component of oil field services so some of the larger companies have a broad portfolio of services, the ones that appear to us and to our investors to
be getting tight are completion oriented services so pressure pumping, sand and completion oriented services and that's a 17 back end, 18 story. a lot of capital will be raised and they'll do something with that capital and what will it do in terms of production and ultimate oil prices, does it come back and bite them because they overproduce? guest: that's the question and investors will watch as we move through the second quarter and back of the year which is the micro so good it pressures the macro. certainly the story of u.s. core on conventional at 55 is a very rosie story and so we'll be looking for opec production growth. alix: my question is i understand the idea you get a pro energy president and therefore will go to the capital markets but getting the reality is very different. we saw president trump tweet a memorandum about the keystone pipeline and dakota pipeline but that's very different than
all of a sudden you're shoveling earth and building a pipeline. why do c.e.o.'s have a confidence when that difference is so large? guest: these are projects that have been on the table a long time and you're seeing people having a level of confidence projects will get built over time as opposed to tomorrow and the market is discounting one to two years anyway ni how. alix: do we see more midstream pipelines than c.e.o.'s? guest: more in 2017-2018. david: hutch of this is real and how much will get done and how much is talk about it? specifically in this area of energy, what are the one or two things you'll look at to say yeah, they mean business and will make a real difference in the marketplace in their regulatory approach? guest: the biggest bottleneck for energy has been midstream in terms of being able to move barrels, getting them off railcars and into pipelines, those types of questions. i think those things probably will happen.
what is driving fundamentally the u.s. production growth is the quality of the reservoirs and the cost competitiveness and i think that is here to stay. and then the question is, is there some kind of border adjustment tax or other tax that has a step function impact on production and price. alix: i love you brought up the tax adjustment and we talk about it on the program for what it means for oil prices. look at bloomberg, this is the function, ccrv and you look at the curve coming to commodities and other indices. the orange line is the bent forward curve and the bent line is wpi forward curve and you see them almost converging but not until 201-2020. have we factored in a 20% rise in oil? guest: the market views a border tax at 20% is unlikely and not discounted in the curve. certainly maybe 20% expectation, 10% expectation and that's not a base case. i think you'd expect the front
end of the curve, w.t.i., to go through brent in the near term if you had that kind of policy adjustment. alix: if we to do that, what's the ramifications to the capital markets, is it more i.p.o.'s? robert: i think you'd get tremendous investment in production growth and obviously a significant reduction in world oil prices as people calibrate the flows because it would be a meaningful adjustment over the short to midterm. over the long term you'd have a more moderate effect and a largely independent u.s. and a world that has to grow a little slower to adjust for those barrels over time. alix: oil services i.p.o.'ing and coming out and raising capital the end of this year would be a very cool call. robert, great to see you. jonathan: one thing, coal is beautiful, yes, but that was a while ago. coal beautiful, have you heard that before? alix: i've not heard coal is beautiful. robert, good to see you. head of equity capital markets
alix: microsoft, intel, alphabet. all stocks we're watching because they have in common the cloud. each company posting quarterly results yesterday and the largest result came from the cloud offersings. google stock is down in the premarket and here's why, posting a disappointing profit hurt by taxes. before the numbers came out, you have hedging costs against the company actually rising quite significantly. i want to dig into why. with me is dan ives, senior vice president for finance and corporate development. are those increased hedging costs a reflection of we don't know how we feel about the quarterback or just hit a global high and we need to see pullback and what we're seeing? guest: it's a combination. dan: cloud is the gold rush and
microsoft has evolved and found the success. when you look at google, it's around advertising and specifically on mobile and youtube but really what advertisers are paying per click and is the key and what will be the next growth frontier and comes down to the cloud when you look at golotale -- google, microsoft and amazon. alix: we saw growth margin slipping and does that introduce unpredictability for google? dan: in terms of transition you saw with amazon and microsoft, as you transition there will be fluctuations but really is all about on the other side of the curve where do you get to in terms of growth, better margins and is really what from a street perspective there's a focus on, as you've seen other evolutions with microsoft that's done to the last few years, now they're on the other end of it, nodela being a great success story. david: google with paid clicks up 20%. it was a dramatic increase. why didn't investors rally?
dan: it's what you're getting paid per click. that's been the focus and mobile advertising is about the growth in what you're getting paid and is there compression there and that's a land grab opportunity when you think everything is focused on advertising through mobile devices and through search and what is the next growth frontier. it's not just growth but the amortization and we see it in the mobile market. jonathan: pivot to the macro story on the g.d.p. numbers and bright spot was business spending, a pickup for the first time in five quarters. we talked about efficiencies and how these tech companies are taking advantage of that from a business side and wonder is businesses going to start spending again and have a positive contributions to g.d.p. and accelerate. which of these companies is best positioned to take advantage of that. dan: when you look at microsoft the cloud what they've done especially on businesses as they move more, especially in op-65 and what they've done
cloud computing becoming second to amazon. microsoft has been through the transition and now really everyone is following what microsoft has done from google and amazon top of the perch. alix: when would you think microsoft would be hailed as the leader in that space? dan: 20 years ago. alix: the other issue, that's where the macro on the positive side. on the downside there's a possibility of a trade war with the u.s. and rest of the world at the end of the day and microsoft got $45 billion of its revenue from overseas. which is least best positioned to weather some kind of trade war? dan: that's why a lot of these large cap tech players are a risk when it comes to that especially when you talk about china and the interdependencies and you bring in apple to the mix and why all these tech c.e.o.'s from silicon valley here look at what's going on here because when you have 40% of revenue coming from international, there's opportunities but also risks. you're seeing the volatility
factored in. david: if you're a c.e.o. of a tech company how do you factor in of repatriating money from overseas? dan: you have a game plan in terms of what could potentially happen, how you can react there because obviously that would be a huge boondoggle for u.s. companies and you could see significant buybacks, dividends and i think that's something right now from a large cap tack when you look how much money is overseas, you look at the top five tech companies and that's a playbook being built for the second half depending on the trump board. jonathan: how much of it has been spent? dan: right now some of it could be game plan spent. jonathan: what you mean by that they borrowed it from the debt market already? dan: it's been from a debt perspective and been the opportunity to borrow and now it comes down to what is the use of the cash? you've gotten it, now do you deploy the m & a or buybacks or dividend and from a investor
perspective it's optionality but driving growth for the future and cloud is the new gold rush. jonathan: appreciate your time. senior vice president for finance and corporate development. coming up, dow coming off the second straight record close but investors preparing for the worse. since october of 20156789 we count you down to the market action and recap the u.s. economic data that dropped about 26 minutes ago. g.d.p. calling, a more moderate consumer spending but a big boost this time, not from trade but from business spending and dig into that from new york, this is bloomberg.
january 27, i'm jonathan farrell with alix and david. after a three day winning streak on the dow and two straight days of record closes, we are firmer by .10%. on the s&p 500 we tread water after kissing 2,300 points for the first time yesterday. switching out the board, the scene set like this, treasury quarter bid, very briefly off the back of weaker than expected g.d.p. figures. the business spending numbers are what was a surprise to the upside. david: you need to know primetime in d.c., teresa may says opposites will attract as she heads to meeting at the white house with president trump. the british leader plans to pitch a free trade deal in hopes of laying down groundwork for post brexit britain. border wars, the u.s. pares dollar despite trump threatening a 20% tax on imports from mexico. could a trade war spoil decades of friendship and economic cooperation? the u.s. grows, fourth quarter
g.d.p. through 4.9% and the estimate was 2.2%. that's what you need to know this hour. alix, to you for movers. alix: the airline index, a five day day chart. the index. the best day for the index since september. the highest close since 2001. a real reversal for this group. american airlines coming in and joining southwest saying they're regaining some pricing power and huge price war between these device and seems to have stopped. and all of that having a huge impact on the individual names, american airlines the winner up by 2% in premarket. its revenue per available seat mile had its first gain since the fourth quarter of 2014. we had a price war i was talking about that started in 2015 and raced to the bottom to gain market share and that's now dropped and higher demand is letting airlines to raise those prices. and will it sustain itself if the economy is able to grow. more stimulus comes in from the white house, jon [
jonathan: thanks, alix. g.d.p., big market. economic growth slowed with g.d.p. rising 4.9% on the biggest drag from trade in six years. a positive contribution though from business spending for the first time in five quarters. a look ahead to what it means for the market joining us is bloomberg stocks reporter holly and david. great to have you with us on the program from ubs. as you look at the g.d.p. number, downside surprise on the headline but positive aspects if you're looking at business spending. what's your take away? david: it was a little bit of moving pieces in the g.d.p. report but focus on the fact consumption was in line and consistent with continued growth in the economy and the consumer funls remain good and job market seems to be doing fine and energy prices remain in check. so reasonably good outlook. as you point out, the fact we're seeing a pickup in business spending is a clear positive and definitely the message we're getting from the
industrial sector in the fourth quarter earnings season here is there's been a pickup in investment spending in that area. alix: on the downside you had the biggest drag in trade in six years and lobbed off 1.7% from gbd and you can -- g.d.p. and you can imagine it willig night fervor from the trump administration in terms of correcting the trade deficit. how does that wind up weighing or influencing the market? david: it could. the numbers seem a little bit strange so we'll have to dig into them a little further. but yeah, obviously trade is a big hot button issue now at this point. and the markets are very focused on it and corporate america is very focused on it. i wouldn't read too much into one number because it does seem to have one time items in there that don't make a ton of sense. and the bigger picture is that this administration is definitely wants to try to renegotiate some of those trade agreements we have with our overseas partners.
david: oliver, how much mystery is this, doesn't it follow night to day the dollar strengthens exports go down? oliver: that's the conventional takeaway when you have a stronger dollar and makes it tougher for u.s. multinational companies. a lot of times when you have that stronger dollar it is strengthening for reasons that will benefit stocks and also strengthening for reasons sort of the same case with interest rates where a lot of times the past couple years people say interest rates will go up and hurt stocks but if you look at the data, when interest rates go up stocks are doing well, too. it hurts the multinationals but if the overall environment is condeuce timberwolf economic growth you see the numbers picking up and we have a ways to go from 1.9% g.d.p. from the trump four or projected three. jonathan: i thought we were blaming soy beans. in q-3. david at ubs, the question for you, you look at the business spending numbers, it's a positive, is it a positive as an equity strategist in the near to medium term some of
these companies might use that money for cap ex-and not buyback? david: i think so. ultimately the question for equity investor is what kind of return are the companies getting on the invested capital and to the extent there's a better demand environment especially in the business sector it probably makes more sense to devote some of that excess capital to investment spending. when there's lack of demand, if they're spending it on buybacks i don't think that's problematic either. the question is what's the prudent use of capital and in a firmer business spending environment it probably makes more sense to be investing more as they're starting to do. david: that's an interesting point because the shareholder friendly activity we've seen is we shift into an environment that could be conducive to exapex and is a great question what will happen. oliver: a lot of companies, investors like to see that exapex and we heard from david
that's true. but if you look at the performance of shares, they do better when they are buying back shares, companies with higher buyback programs and companies that pay out the dividend, especially as of late and historically there has been great research done on this, it does sort of boost the shares more and those companies perform better over time. but investors like the idea of crapex and whether it will go to capex or stay at the dividends in the buyback is a huge point. alix: buybacks have been so supportive of this market as retail has not played a part. yesterday we were told we have seen so much net redemptions in retail. if you lose the buyback support, how much institutional buyback buying can make up -- make up for it? oliver: great point. a something that's a misconception is capex hasn't been low but elevated but hasn't been growing as much. and there's a lot of truth to
it. it hasn't been growing as much as shareholder active but been knew. how much they can boost on where it's been is an nteresting question. what do these g.d.p. numbers tell you about earnings coming up? david: it confirms the outlook that we have and frankly most of the market participants have is we're going to see a reacceleration in earnings growth and the headwinds from the energy capex crufrpbl are beginning to fade and we're seeing that from the industrial activity, putting it all together, earnings look like they're on pace to grow, 6% to 8% in the fourth quarter for 2017. that probably accelerate as bit, energy which had been in the energy sector which had been a big head wind will turn into a bit of a tailwind and if we get some boost from the new administration's proposals we think we could see double-digit earnings in 2017 and that's really what's propelling the
markets higher. david: our both staying with us and now an update on news outside the business world and turn to emma chandra and here with first word news. emma? emma: donlt trump is set to meet his first world leader teresa may. the meeting is being hailed by the british government as a sign the transatlantic special relationship is valued by the new u.s. administration. the visit comes a day after the mexican president called off his own trip to washington amid wrangling over who will pay for a wall along the u.s.-mexico border. a reminder, we'll bring you trump and may's news conference at 1:00 p.m. eastern here on bloomberg. well, may today, putin tomorrow. the white house and kremlin confirm the russian president will speak by phone with donald trump tomorrow. putin congratulated trump on his victory after the election but haven't spoken since. french president francois hollande said the new trump administration creates challenges on trade rules and
how to settle international crises and he made the comments at a news conference with angela merkel. imf managing director christine lagarde said trump's plans to overhaul the tax system and increase interest spending should accelerate go-to over the u.s. economy in the next two years but is too early to predict how the other policies may impact economy. global news 24 hours a day powered by more than 2,600 journalist as and analyst in more than 120 countries. i'm emma chandra, this is bloomberg. david: the trump administration is to mean a new day for infrastructure spending but do the industrial companies see all the promise of the new growth the markets seem to anticipate? that's next, this is bloomberg.
alix: this is bloomberg daybreak. as we close up, one of the busiest weeks for earnings, the question is what's the reality versus the hope when it comes to a trump white house. example, case in point, caterpillar up 15% since the u.s. election but the company has a less euphoric outlook for 2017. it said in its earnings release the expectations for sales and revenue in 2017 are now slightly lower due to the strengthening of the u.s. dollar the past few months. overall economic environment remains challenging. also with us, bloomberg's
liver renick and david levovits. i'm trying to see the hope priced into the stocks. david l.: it takes time, alex. that's an interesting quote from caterpillar because i think what it speaks to is even though a lot of the economic data, the numbers we get, jobs, unemployment, all this stuff has been solid. at the end of the day it's still sluggish environment for operators of businesses especially industrial businesses like caterpillar. i think there's a little more enthusiasm when you look at what's happening with analysts and updated to grade line analyst. you have to wait to see what ill happen with capex. a big part for the country like caterpillar. the capex is has been flat and starting to pick up. for you to get to that point it will be good for the company. if you're a c.e.o. do you want
to be speculative? alix: then david to you i ask when the financials came out and were asked about trump in 2017 they said it was too uncertain to tell but yet industrial companies like caterpillar and honeywell which had 2017 sales lower at the high end say something very different. they're quoting softness. hat do you make of that? david l.: the environment is mixed and industrials is a heterogenuous part of the market. the infrastructure spending everyone has been talking about, that's probably not going to make it through congress until probably early next year. so i don't think we can count on that in the near term. but in the short term what we are seeing is energy investment spending is coming back and you heard that from halliburton and slumber jay and g.e. and the market is looking better for some markets of the industrial sector and that's generally positive but the sector has
moved a lot and part of the reason why we're a little cautious on the sector and think expectations have gotten a little ahead of themselves. but things are looking a little better i would say in that space but we have to wait a bit for the big push from infrastructure. jonathan: when i look at this and listen to the c.e.o.'s and read the statement, it's as you were not a divergent. caterpillar has been silent and the banks has been a pickup. they're not seeing two different worlds but the same one in the last quarter and continuation of it. isn't it the point really the most prudent response for c.e.o. is not to talk up what can come in 2017-2018, it's to say this is my experience the last year so far, here's the trend and things are very uncertain. i think they'll continue as they were. david l.: that's right. if you're a c.e.o., you don't want to get out ahead of the demand you're seeing from your customers so you want to keep your capital spending in line with the demand you're seeing. and that's how they'll really operate their business is
financials, the reason things are better for financials is they are very interest rate sensitive and very reliant on what's happening in capital markets and seen improvements in those areas and why financials have benefited so much and industrials will take a bit longer for some of those trends to start improving. jonathan: oliver, isn't it really right the c.e.o. does not buy on the rumor or invest on the rumor but the news. oliver: absolutely. david: is that a good indication of what we're going even in the examplet david gives us. energy is different because oil prices have gone up. that's not a rumor but is happening. when it comes to infrastructure, we don't know that's happening. ol remember ver oliver: david and jon hit it. when you look at guidance throughout the fourth quarter of 2016, post election, preelection, it was quiet. bank of america has a great metric they track how often c.e.o.'s are talking about the future and pretty much went mum and weren't excited to start speculating and think it will take a while before you get
bets on the table from people who run companies. alix: sure, i get that but if you look at the bloomberg commodity index since they're talking about commodities, it's run 20% in the past year. i understand companies like caterpillar have been weak for a while but there's underlying strength there you feel like that's reflected in the stock? david l.: we have to think this is a bit of a nuance but we have to think about commodities and sort of peel back the onion a bit. for oil and gas, these are areas that need continual investment spending just to maintain production levels. other types of commodities, you really still have a lot of excess capacity and don't need to invest much right now. you can still produce more from those minds. there is a bit of difference because you're seeing pickup in investment spending but more of a delay in other parts of the commodities. jonathan: and what we hear from the c.e.o.'s, it's the value of the story, we're not doing what we did the last 10 years just because the price sub and we're
jonathan: from new york city this is bloomberg, i'm jonathan farrell. futures positive on the dow, up .10 after a three-day winning streak and two straight days of a record close, up 32 points. we switch up the boards, cross asset. treasuries like this, very briefly catch a bit and stay with yields down a basis point after u.s. g.d.p. deliver as downside surprise on the headline and a nuance we'll take into later. the euro a little stronger against the dollar up .3. and it's weak, weak.
we'll get you to movers. abigail: one market on the move, oil. oil had been earlier but taking a sharp leg down around 9:00. it's not entirely clear what's behind this. it could be confirmation of saudi's reserves which could put perhaps some pressure on the market but could be something else behind this as well and is a pretty big move especially considering the bloomberg dollar index moved down and would typically help oil. one oil related stock trading sharply lower chevron, after the company missed in a huge way and put up 22 cents per share versus the expectation of 64 cents and a big miss. the refinery was a sign here with analysts looking for $357 million. this stock is up 40% over the last 12 months and could represent some consolidation of those huge moves. finally, colgate palm olive, 5% in the premarket as they miss in a big way as well and cut their forecasts and miss
revenues by 3.5%, putting up $3.7 billion. and he siting pressure says this stock is likely to underperform the broader markets this year. alix: thanks, abigail. for more we're joined by oliver renick and david leftowicz. chefion cutting the budget by 15% and local guys here like continental are raising spending by 77%. we going to see a big rotation in the energy sector this year? david l.: yeah, the key point here is it really depends, the spending environment will depend on where companies have their reserves and where their production is, for the lower cost parts of the oil patch, we're definitely seeing an improved outlook and you see the count rising steadily over the past six months in the united states, especially in the lower costs parts of the
shale basins in texas. other parts of the market are still not going to be economic, especially offshore and the big ega projects, l.n.g. and liquifaction and will be a bifurcated market but prices will continue to rise and we think $70 to $75 is the more normalized oil price and is a supportive backdrop for the sector. alix: the bifurcated market, the biggest, the stock up 50%. what is your thesis you described as currently priced in? david l.: there's still more to go for a lot of the shale related names. not only do they benefit from higher oil prices which i think we'll continue to see, again, i think you need to see that oil price range in the $70 to $75 area but on top of that, you'll see volumes begin to increase as well so you get a double benefit and if you look at
valuations for the sector, they look very reasonable, especially on price-to-book the sector looks cheap relative to the market. david: as i said earlier, valuation is ultimately tied to earnings and we're into the earnings season, give us a report card, where are we? oliver: for energy we have a long way to go. alix: stay calm. oliver: when you look to a year ago, obviously any earnings are great for energy and have come a huge way but if you look at what is expected, i'll give you the break down for the energy sector and the s&p 500, 17.6 dollars per share next year, over the next 12 months and roughly 350% higher than where it is. that's encouraging and you say we'll get a massive earnings growth. obviously that means there's a lot to live up to at the same time and basically going from a expected p/e which is nonistent because there's no e which calculated out is 140 and next year to a p/e of 30 on the energy space. it's a long ways to go.
if you look at the market and think we'll get to those levels then of course hey, that's a great place to be but there's also the game of expectations which is so important in expectations are incredibly high, too. jonathan: let's talk about price of sales and the dow very quickly. if you look at the price to sale as people pointed out to me this morning at my desk, you have to go all the way back to the late 1990's, 2000 for when that valuation metric is where it is now, what's that scream to you? david l.: there's an important distinction when you look at price of sales, it only captures the top part of the income statement and the other important part is how much of those sales are being transformed into profits and the punch line is profitability is much higher than it was in the 1990's so they should trade and companies should try a higher price to sales ratio and price to earnings makes more sense, the s&p on forward estimates is on 17 times, not too troubling and the long term
average is about 15 times. that to me doesn't look troubling at all. jonathan: we might actually get some e as ollie says. great to have you with us. david and oliver, we appreciate your time. we count you down to the opening belfour minutes away and here's how the stage is set. futures up on the dow by .10% after a three-day winning streak. yesterday the s&p 500, a new record high 2300 we reached the first time ever. switching out the boards, treasuries look like this, bit on the margin and yields down a basis point at 250 and the downsize price on a headline number from u.s. g.d.p. in new york, the cash open next, this is bloomberg. ♪ ♪
we have been flat throughout much in the morning. we look a little something like this. yields down a basis point at 2:39. -- at 2.39. off the backowth largely from a negative trade contribution. anything, spot of this is equipment spending. we cross over to alix steel. at a record high closing level and we are right at that level for all indices here. the dow over 20 set -- over 20,000. the s&p is set to break a two week down streak in the
individual sectors. pivoting on tech, the nasdaq is the biggest gainer in all three indices. stocks to watch, because you have a lot of cloud data information. microsoft cloud unit saw a near double in revenue. the intel ceo saying that shift to cloud computing is happening very quickly. google's other revenue line, jumping 62des cubs percent, though shares were down in premarket. of they are up by 4/10 in 1%. there is a lot of question of what to price and from president trump out -- from president
trump one a tweet goes out. we will be questioning that. this chart highlights that. policye line is economic in the uncertainty index. around here atx 10. it is the lowest in about 2.5 years. while policy uncertainty is very high. do you want to hedge the risk if you are going to look at a trump tweet? order used take a step back and say that is not policy. it is something investors are struggling with. : i want to pick up on your chart. we are joined by bloomberg senior editor -- we'll know the policy uncertainty is through the roof right now. what is going on? guest: this policy uncertainty,
it is a fascinating topic. how do you quantify and measure uncertainty. what a lot of these indexes do is computers read the newspapers and try to quantify how uncertainty there is. it is still a young field of science that has a lot of potential. david: every single guest talks about policy and uncertainty. it is a pretty fair guess there is a lot of uncertainty and polyp -- uncertainty in policy. guest: trump has this wish list of things he wants to do. we can agree he's not going to get all of it. david: there is a lot of equity friendly bullish things there. tendency was to take this instinct feeling and say there
is going to be some stimulus there. saying why is the market freaking out about border taxes and this protectionist mentality. trump is a dealmaker. i think the market is really what thingsscount will get accomplished and what things won't. >> in many ways they have been taken for an absolute ride. the volatility is on every newspaper on the planet. who yesterday printed a headline . today they went to the front page that said doomsday scenario where is the smart money? the newspaper editors or the guys in the market?
>> the news guys of course. obviously superlow. the volatility is in the sectors. not a china concern the whole market is going to tank. it is different hedging strategies. will it be industrials, will it be the banks? volatile -- there is a of volatility. on the whole market to stay at these depressed levels. >> it is possible for the media -- it is possible the media is just not prepared for this kind presidency. but is it also possible to market is not prepared for this
presidency. when does this uncertainty they don't know what to do with it so they sit back and say we are not going to do anything with it right now. there are more things to be bullish about. stock market is often given a lot of credit as being this incredible political scientist. the history shows that is not always the case. thought congress would pass. the market just tanked. they seem to have been wrong about brexit. that risk is definitely there. it goes to the behavioral finance things. people's political instincts are overshadowing the rational political part of it.
>> it is a subconscious bias. you look at the white house and expect everything that comes out to be policy. these guys are stupid. i'm going to published this really detailed piece of , whench in my newspaper really most people in the market woke up and took it for what it was, an opening bid and a little bit of negotiation. the bias is pro-the way things used to be. when you put it that way of theking about it -- when white house spokesman used to come out, that changed and people need to change. >> i think that process is underway. >> let's move to tech. alphabet hitting a record high
today after records yesterday. target.o your price what was the biggest take away? >> the biggest quarter is a very strong quarter. is at aa business that $70 billion run rate. the core margins were expected. i think there was a lot of noise when you actually a just for a lot of long timers. that is when you see the revision from the stock last night into this morning. >> google is growing so fast for a company that is growing so big. you're still at a $550 billion company. what happens if we do get a trade implication from a trump administration? cross orderabout tax, that is an retail, moving
across borders. google is a real digital mobile .omputing company i don't think it will be as impact by that by its forward -- >> you mentioned the earnings myth. is this a reflection by investors that they don't believe that it is money well spent or is this a short-term long-term issue? >> i think there were probably some one-time charges. we highlight 320 million. they are investing on the long-term. becoming comfortable with those investments, this is a quarter where you actually started to see some of the future growth. google home devices, cloud computing. i think the next big growth drivers are starting to emerge
and investors are going to be patient. me forward itk may be five to 10 years and tell you what that revenue mix is going to be and what investors wanted to be? >> investors want to see 20% plus growth. they want to see sustainability. we have formessage investors is you're going to see a greater diversification going forward into devices and hardware, into cloud computing enterprise. it can be both ad and subscription supported. , revenuedvertising growth sustains. investors want them to make that bet. they don't want to miss out on these big revenue opportunities. >> everyone is focused on artificial intelligence. explain how they are going to make money off of that.
>> it knows who you are, it's predictive about what you want to buy. preferences to help businesses connect with individuals. being able to get smarter about what adds to serve you or what song you may want to watch on your devices or on your tv at home only can create better loops of consumption and advertising consumption. >> the alphabet hitting a record high today. what is the biggest risk? >> we always highlighted regulatory. companies get to be the size.
>> in the markets, 15 minutes into the session. so much volatility. market participants are looking through a lot of the noise. high potentially on the close. let's cross over to abigail doolittle. intradaywe are seeing volatility among the various asset classes. the bloomberg dollar index had been nice -- had been nicely higher earlier. a macrogests there is cause. it could be that weak economic data and gdp interval out at 8:30 as investors digested information. the big story is the fact that it is down on paper its worst year.
some big weakness after the last quarter of last year. we have an orange 10 year yield. a rising yield will support the relative currency. in this case we are looking at a bit of a divergence there. this could reflect president thinks thep that he strong dollar is -- haunting the bloomberg dollar index. this is 3452, a very long-term chart. we see them move up, this area of congestion once again. the difference is the scholar index is above that downtrend. >> let's talk about some things that may affect that dollar. next week will be a big one. kicking off with the bank of decision.te
then we will get the bank of england's latest policy decision. is here.ckee i can make the case that each one of these is interesting, not because of what they do but because of what they say. >> they are still around. they are most dropped off the radar screen. everybody is waiting to see what their next step is and whether or not they do something on the monetary or fiscal side. the ecb is generally on hold but they want to know are they going to start tapering more than the announcement they made last time. but are they going to cut back on monetary policy? and then the fed. we are not expecting much from them because it is so early in the trump administration. they don't know what is going on. mode? in the rate rises or are we just going to sneak out of town without anybody noticing?
underlying that, household spending, moderating but still hanging in there. investment business growing. talk about that. than 18 economist says if you take trump out of it, the change of administrations out of it, the data justifies a rate increase. if you see the economy growing fast enough to perhaps generate some more inflation, rates are so low you could do that. talking about three rate increases over the course of the year. it is also a non-press conference meeting. that just makes the logistics harder. at this point they feel they probably can wait until march. >> it was dubious may 12 months ago whether the next move was up or down. time, who's to say
this bank may hike interest rates? it may cut them again. >> the pound is obviously getting weaker and weaker. that would bring inflation. if the economy slows significantly, that is a counterweight. nobody knows what is happening there. for most of his term he hasn't had to do anything. >> david owens and jeffrey came on this program. talking about changes to macro potential policy. consumers keep borrowing credit. that is going to be a sign of stability concern. do you think they will be tightening up the credit instant -- credit information? >> it really isn't a problem right now. seeing, even though interest rates have gone up
year, we are not seeing a tightening of credit around the world. financial index show they are really loose around the world. >> if you got to see one of the statements in advance, what would you want to do? economist point of view i would love to see what japan is going to do. from a market point of view it is probably the ecb. >> the answer is that depends. well done. --you're looking at occur looking at clarity from a central bank. thank you so much. up, primetime in d.c., president trump meeting his first global leader. we preview that big meeting next. ♪
breaking news, president trump has announced the initial membership of his cancel looking into manufacturing jobs. this is something you talk to us about the floor. he has also listed a long list of prominent ceos, including jeff from ge, mark fields from ford motor company, and at least two members of labor will be joining him in this group that was announced earlier, but they haven't revealed who is going to be participating. he has the heavy hitters it is fair to say. now let's bring in guy johnson at the white house. we are looking at the theresa may meeting. tell us what we are looking for. >> i think we are looking for personal chemistry. any talk of a trade deal is premature.
theresa may will push the boundary as far she can take it in order to make the politics back home look good. donald trump i suspect would like to see a global leader here at the white house talking about trade. of whatout the uptick is happening here. both have political narratives and are keen to pursue. they will talk about nato and security. is probably politics of trade that will dominate. fair, thewonder to be prime minister of the united kingdom, a tough time on the international stage in many ways. i wonder who needs to have the better day today? >> i think they both need to have a good day. it has not been a great week on the international fronts.
obviously front and center. to have a situation with the british to go off smoothly and make that happen and look good in front of the camera and international stage, i think it will work for the white house. losing the high court battle and supreme court battle. effectively doing a u-turn on the white papers. it won't be positive from her point of view. there is life outside the eu. i suspect a pseudo-work out what ultimately have the better situation here. probably donald trump. >> trump advisors commented on this meeting. they were likely to discuss the brexit deadline and the march deadline set by the government's trigger.
we have eight ranking theme throughout this program. guy johnson, summer -- someone guy johnson,nd -- great to see you. nearly 26 minutes into the program, into the open. westin -- and david all saying happy friday to you. coverage continues right here on bloomberg. equities get flat but it is a meeting of minds between the prime and esther of the united kingdom and united states. full coverage on bloomberg.
vonnie: stores at a san francisco, tokyo, and paris. breaking data in the u.s. following gdp and durable goods orders. consumertest read on confidence, coming in at 98.5. this is from the university of michigan. the current condition index lower than estimated. it looks like expectations are what led to that there. of thating on the heels gdp number for the last quarter. read issumer confidence a 13 year high.