tv Bloomberg Best Bloomberg January 29, 2017 6:00am-7:01am EST
>> trump administration hits the ground running. >> he wants to create jobs in the u.s.. >> we are going to start by getting fair shakes with our trading partners >. >> a lot of people thought he was going to start with taxcutting and tax reform. >> we ask what is in a number? >> we are inspecting can ipos in the next week. >> greed comes back. >> parliament will get to vote on brexit. to a foilimilar
getting boiled. >> we welcome them in madrid. >> we will run down some of the results. >> i see investor confidence is there. >> the are revealing -- we are reviewing our priorities. erik: it is all straight ahead on "bloomberg best." ♪ hello. i'm david gura. this is "bloomberg best." let's start with a day by day look at the top headlines on monday. three days after his inauguration, president donald trump cut down to business. against his trump first full week in office.
leader's --iness they had a business leader's meeting this morning. he basically said he wants to create jobs in the u.s. he wants to reduce taxes, reduce regulations, but he says that they decide to take their business to other countries, they will face a big border tax. >> president trump is not wasting time. he has signed an executive order from theaw the u.s. tpp. >> that was meant to contain china, his nemesis, but he has indicated he wants to renegotiate the north american free trade agreement with canada and mexico. for several days, the markets were all focused on less regulation and lower taxes. now they are beginning to wake
up and say there might be things we don't like on the trade front. >> he did what he promised he was going to do. >> what is a bit unexpected is the fact you people like malcolm turnbull reaching out to shinzo abe and the prime minister of new zealand and singapore, let's take this tpp with its 11 members unless drive ford without the united states. -- u.k.ighest court court ruling that theresa may needs the permission of parliament to trigger the countdown to brexit. today, by majority of 8-3, the supreme court rules that the government cannot trigger article 50 without an act of parliament authorizing it to do so. >> this government determined to deliver on the decision taken by the people and then in the kingdom to live european union. we will do this that -- we will
do just that. >> they will put the word a document at the aim of which to try to give fellow lawmakers as little to object was possible. the third largest party in parliament -- they said they will bring 50 amendments to whatever the bill is. it then. the speaker of the house. -- it then falls to the speaker of the house. yesterday decide how many of these amendments are allowed in and how many get airtime. >> to what extent does this ruling delay the triggering of article 50? >> i do not think very much. most members and the parliament and house of commons, with the snp --on of some, the fromart from that -- apart
that, there should be healthy majority for the bill. opened, --arket gets crossing the dow 20,000 level. the dow now sitting at 20,019.4 6. up 5/10 of 1%. we got very close a few weeks ago. we have now done it. >> wall street has forgotten about the dow. all of the analysis is based on s&p 500. the dow as a price-weighted index is not really practical in this day and age. it was fascinating to watch that zone0 becomes a resistance in early january. clearly, people were viewing it as a technical level, and now seen is in, and we have really focus on the
equity-friendly parts of his agenda. >> it finally happened. it held above that level. dow.dvanced point for the what does it really mean for investors? >> the bigger picture is you had last four to the five weeks, but some international indices as well. from a technical perspective, that is pretty bullish. sideways consolidation pattern followed by an upside break down. >> republican lawmakers in philadelphia putting together a plan for working with president trump. the president of mexico tweeting that he will not attend a meeting with president trump. >> is is really stunning. donald trump would tweet out to the president of mexico -- don't come. then he would get a response
from the president of mexico saying, ok, i'm not coming. >> there is a lot of question about how the order of things transpired. we are here report yesterday that the mexican administration were already thinking about potentially canceling the trip based on trump's executive order to begin work on construction of the wall. >> theresa may will be addressing the republicans shortly. why is she doing it in this forum? when i go to washington and address congress and both parties? >> she will be at the white house tomorrow. the development across the pond influencing perhaps the leverage that republican officials, including the trump administration feel they have in negotiating a deal with the u.k. in terms of a trade agreement. that was before the withdrawal of the mexico meeting. a lot of moving parts today.
>> why my washington? because -- why am i in washington? because theresa may will be here. she will be the first foreign leader to meet donald trump at the white house. how significant is this trip? >> it is really important. the fact that trump sees the relationship with the u.k. being critical to the success of his administration. to me, what is important is trying to flesh out what he has in mind in terms of a relationship. for theresa may, clearly, the challenge in terms of an economic slowdown post referendum is out there, but what we need to see our clear plans on how to seek investment into the u.k., i continue to enable the economy to grow. >> what is president trump expected to get out of this meeting? >> david, i put that question to his senior counselor, kellyanne conway.
what she told me was that the focus is going to be all on trade. i can tell you that kellyanne conway also told me that perhaps something the might be discussing privately is ways in which president trump and his administration could assist prime minister may and helping her meet that march 31 deadline of triggering brexit. clearly, a lot of different moving parts behind the scenes. >> what about for him? does he need a win? given his problems with mexico sending it along with countries? >> the latter. the political orbiter president trump and the people in that orbit tell me that today the goal is to have any hiccups publicly. david: we do teeth into the week's discussion of donald trump and trade policy and whether doubt 20,000 calls for champagne or caution? can we go through earnings reports.
>♪ this is "bloomberg best." i'm david gura. 's giant electronic samsung is working to told consumer confidence after the note 7 smartphone debacle. >> samsung electronics has confirmed faulty batteries cost its galaxy note 7 models to burst into flames. what exactly are they saying? >> samsung said that manufacturers were saying electrodes in the first batch of
a short circuit and the defense were in the design and in the manufacturing phases. businessof the mobile apologized for the issues and said that is about 200,000 phones and about 30,000 separate batteries were damaged. samsung has announced it will buy back nearly a billion dollars in shares on strong quarterly results. fourth-quarter profits double to $6 billion. samsunglts show the empire was not badly damaged by the overheating smartphone fiasco. >> semiconductors has been doing
very well over the last year or so >. >> they are saying in the first quarter, they expect earnings overall to decline quarter on quarter. produces have agreed on a way to monitor their compliance. they are not at 100% yet. -- saudi energy management the saudi energy minister says they hope to reach that in february. everyone fully complying with their levels. they're setting up a committee -- they'reof the setting up a committee that will look at secondary sources. it will look at the market. president trump taking steps to advance construction of a controversial keystone and dakota pipeline. one is on transcanada, one is on the dakota pipeline, and the third is the idea that has got
to be done with u.s. steel and u.s.-made products. agencies direction to to look at things quickly to number president trump is coming from. but these discussions and negotiations have not yet begun. >> one of them has interesting -- one of them have something interesting, which is looking at regulations impeding american manufacturing. he is asking for collection of comments on that that will help them guide the regulatory andess going forward elimination of regulations. what he is saying, i like pipelines. if you want to be applied, i am in favor of it. >> and elimination of regulations. president donald trump acted on two of the most fundamental and controversial elements of his presidential campaign could building a wall on the border with mexico and tightening restrictions on who can enter the u.s. >> beginning today, the united
states of america gets back control of its borders, get back its borders. >> this was an executive order in which the president ordered the construction of the mexican wall. but what needs to be done by congress -- what needs to be done by congress to move this forward? >> this was campaign rhetoric repackaged. now the ball moves to congress. house speaker paul ryan are already meeting with their advisors on how to move this president's agenda into a budget. >> there are some creative ideas that i have been coming up with another's in the congress where the taxpayer makes the initial down payment, but then eventually, the security measures are paid for by things like increasing -- putting a border security fee on visa applications from mexico and central american countries that are the biggest offenders of illegal immigration.
to things like a border security fee for crossing the border, and looking at remittances going from the united states into these countries, a border security fee attached to that. networking giant cisco has announced yesterday that it will buy software maker apps dynamics. to pick it trying the business -- pivot this out of the hardware business. >> if you look at our dynamics, it is a cloud-based application performance management system, but in reality, what they do is they translate application performance into business insights for the customer, and they do it across private cloud and public cloud. willthink the synergy
create visibility than no other country in the industry can provide to our customers >. china's central bank is ordering the nation's lenders to curve the loans in the first quarter. a tricky situation you have to balance and keeping liquidity and funding, but at the same time, credit risks. >> and the mountain of debt in china. you have to balance that always. as the chinese new year is coming up quicker this year, and the time in which banks frontload their lending for the year, especially mortgages. that is a concern. you need to balance the credit risk, but keep enough funding ahead and into the prolonged lunar new year holiday. the didi oc has ordered banks to strictly control thanks i keep
increases in new mortgage pboc ordered them sister to control -- has stashed johnson to be thelp j&j forefront in medicine. owners to gothe with j&j? how did they structure the deal and the end? >> the answer is in the structure of the deal. everybody had been openly talking about the ceo was reticent and giving up control of the company, and this is the best of the critical together in terms of the structure. he needs -- j&j gets the assets it wanted.
barclays bank has settled on doubling its main hub. it will move 150 of its staff. choosing dublin as a hub for the european union is one thing. >> barclays has never been on the end of some of the apocalyptic warnings of the demise of london after brexit. that with the plan to hire and moved to dublin. what we can see as cities emerging as winners -- we have dublin, number of banks looking to go there, and we have frankfurt and lloyds looking to in other cities.
♪ welcome back to "bloomberg best." i'm david gore. it has been an historic week on wall street with the dow jones topping 20,000 for the first time. what does this milestone mean? at an inflection -- are we at an inflection point? what is your take? >> that is certainly the hope. i remember when i woke up november 8 and ninth and the dow was down 600 points. since that time, we have come roaring back 300 points or 15%. it is hope. and the hope is we are going to see a reform corporate income
tax regime. we are going to see him perform elector eight regime to be more advantageous to be a business maybe infrastructure spending. doubt 20,000in the and it has been a raucous day on the floor of the new york stock exchange as we get that milestone number. >> doubt 20,000 signals momentum and sustains momentum. -- dow 20,000 signals momentum and sustains momentum. this change or forecasts of comedy companies you will see listed on the new york stock exchange is mark >? 2015,the first quarter of we did not have any ipos. companies were not able to take money to invest in their business. look at where we are now. we are expecting 10 ipos in the next three weeks including four on friday.
those 10 ipos are really big ipos, most in the neighborhood of 500 million, 600 million. $7.1we expect to raise billion. this is good. >> where do we go from here? what does that say about what is around the corner? over the balance of the year, we think both earnings and the economy are on track to essentially keep this bull market going. the near term is a little less certain because what we have really done is we almost destroyed this wall of worry in large part that the 7.5 years of the bull market has climbed. whether you think about it in terms of the low level of short interest in the market, the very, very high confidence levels on the part of both consumers and optimism in small business, both of which those
numbers are extremely spiky, and when we have seen those numbers dip in the past, it has been difficult or stocks to sustain the kind of momentum that we have seen the last couple of months. >> there are people out there saying round numbers don't matter, but a lot of people said to get the retail participation, you need those big headlines on the front pages to induce their appetite to buy equities. , ande of the great ironies people are still calling this a rally, but the market bottomed on march 9, 2009, so this is a bull market. the great irony that this has happened without any breach of participation. -- theret addictions has been met redemptions. this makes a difference because there are good reasons why retailers are out of the markets.
greed eventually comes back. >> it says doubt tops 20,000. that is a kind of headline or my mother-in-law calls me and says, what happened? should the real money be selling? >> i don't think so. sir john templeton said bull markets are born grow in pessimism and skepticism. it is hard to say you have euphoria if you have had -- from retail investors. there is a lot of people that have sat on the sidelines for the past eight years that may want to start to get in. , we will revisit some of the week's most compelling interviews. donald trump's tough talk on trade got responses from economists and investors, and brexit could mean big changes for european businesses that may not be all bad.
♪ david: you are watching "bloomberg best." i'm david gura. days after taking office, president donald trump made statements on trade, withdrawing american support for the transpacific partnership and promising to implement protectionist policies. throughout the week we discussed the possible global effects of trump's stance on trade. here is some of that conversation. >> we do think that trade barriers will probably go up. we don't expect the sort of numbers on across-the-board basis that trump was using during the campaign, 45% on
china, 35% on mexico, but we think this will be a major focus. what we have seen so far confirms that. >> how does this affect your outlook for 2017 for the u.s. economy and the global economy? >> it does to some degree. the economy generally is in pretty decent shape and the u.s. the main change is we are now building in easier fiscal policy should have an effect late this year and 2018 and sort of prolong this period of above trend growth into 2018. we think we will probably go beyond full employment. inflation will move higher and we also have a lot more in the funds rate. >> do you consider a strong dollar to continue as well? >> we do expect a strong dollar. is mainly based on interest rate differentials. for the euro-dollar we expect
parity by the end of the year. our monetary policy view is that the fed does need to normalize and will normalize, whereas the ecb and the bank of japan still can keep it for a long time to come. >> how confident are you the tpp will continue and live on? >> the decision by the president was not unexpected, but that doesn't mean you should walk away from these things. there is still a lot that can be gained and we intend to pursue that where there is opportunity potential for other partners to step into this. australia is a trading nation. is all offirst policy these things. oue economic interests are much aligned with that approach.
we have had excellent arrangements finalized with china and south korea and japan. the tpp was an important part of this. we will just get on with it. >> a very major border tax. we had the idea that was coming. plusses and minuses for the u.s. economy, or just minuses in your view? >> what we don't know is what form that will take. the republicans in congress seven talking about a border adjustment tax which would really be kind of like a -- vat. but donald trump previously said he doesn't want a border adjustment tax. this one sounds much more like a regular tariff. if that is what he is talking about, i don't think the market will react well to that. i think a lot of people were kind of hoping he was going to start with tax cutting and tax reform and that more protectionist tendencies would come later, if at all. his inaugural address and now these actions suggest maybe he is moving that to the front. >> there was talk about
neo-mercantilism -- could it out again work for the u.s.? >> it has not been working for china. and you know, you raise it in a good way in the sense that mercantilism and protectionism, economic isolationist thinking has been tried hundreds of times around the world and it does not work. it works the wrong way. it makes you poor, it does not make you rich. >> we will see real capital investment. we will see trade competitiveness from our corporations with a lower tax rate. we will eliminate off-shoring and europe stealing our tax base. we will start getting fair shakes for better deals with our trading partners. all those things will happen and basically full employment. we will see a stimulative environment is trump is successful, with will be very positive for the united states and slightly negative for the rest of the world, but it is telling the globalist nightmare that they are trying to make it.
the u.s. has been a wage giver and a price taker. and we are just going to be a wage-taker for the next few years. >> is it as simple as short rates, dollar strong? >> if you need to boil it down to a soundbite, i would say yes. they are idiosyncrasies of every trade relationship, but one would think if we get to -- the question is how to we pay for it? had a we pay for cutting the corporate tax rate? it is my view, our view at our firm that border tax adjustability is the limited pay for it. that is basically taxing the trade deficit. alright? it is broadening the base and forcing your trading partners to
pay for the cut and tax. is actually very elegant. >> britons anticipated break with the european union is affecting the outlook for investors. interviews this week delivered insight on that issue. let's start with guy johnson's conversation with guy hands who expected to be represented with good for business. >> we will have to continue to borrow money. we won't have the -- the fact that we are with the so interest rates will start to go up. that will lead to bankruptcies. it will lead to opportunity. sadly, and this is always one of the strange things about business, i think it is probably bad for the majority of people and that for the country. but i think my business is probably going to be good. >> on what kind of scale? how good is a get? how big will the opportunity be? giving some other numbers. how higher interest rates going up? >> when i said a reduction of
wages, i was talking about real terms over 20 years. very,0 years, so that is very small over years. it's a small change each year. it is similar to a frog getting boiled. it is not going to be quick. it will be very slow. and terms of interest rates, that will take some time as well. but the u.k. at some point is going to have to continue to pay for itself. people talk about the j curve. the j curve in terms of devaluation has never worked for the u.k. the u.k. did it for 200 years before joining the european union, constantly devaluating. how much, i don't know. but the differential between us and europe will need to be several percent. >> my colleague francine sat weekin madrid this
botin.na >> you did 19% of your revenue in the u.k. we have not had article 50 yet. consumer spending has been holding up. what happens when article 50 is triggered? >> who knows? in the short-term the u.k. is doing well. the last six month seven good and they should be positive for the next six months. inflation will hurt consumers obviously. we are respecting lower growth in the u.k. for 2017. not as low as we expected before. we still expect growth, lending to grow less but still to grow. again in this context, the u.k. has a great job this year. we absolutely are totally committed to the u.k. is a local british bank. we have grown our lending, from loyal customers. it will be less growth is still positive and this is important.
francine: if the u.k., as it seems at this moment, loses passporting rights, does it make any difference to how you operate and manage the u.k.? >> for us it makes no difference. we are a british bank so we take the profits and we landed them in the u.k. what we care about is our customers. it will affect our customers and this is what we need to think about as we work out what's going to be the new relationship between the u.k. and the consonant. we are very close, lots of exports, imports, and we need to think about that and the people. there are a lot of british people on the continent. millionabout 15 visited spain last year. so let's think about the people and the customers, the small companies, trading between the u.k. in europe as we work out.
francine: we expect to see you at davos. the big u.k. banks are moving to frankfurt in opening banks. do you have a sense that a lot of these bankers would move talent to madrid? it is a financial center. ana: well, of course if anybody is going to move from london we will welcome them in madrid. we have great people and a great infrastructure. i think it's a great place. london is still the hub first talent, the market is there. i think london will remain the most important center in europe. ♪
e-commerce company was it better than expected results. where is this revenue growth coming from? >> there is not much growth and user numbers anymore. or 9%.ly got about 5% is the first time in a long time bailey at single-digit growth. it is coming in. users are spending more. but we saw compared to a year ago is 30% growth in the average revenue per user. that is really big. on mobile, 50%. people are purchasing 50% more than the year ago. that is really important for alibaba because china is so large that they are almost hitting peak usage, over 800 million users. they will not be heavily a much more out of it so they need to get more per person. >> alphabet shares fell in extended trading at her fourth-quarter profits came in below estimates. it was dented by heavy spending to support its cloud business and a one-time tax payment.
core ad business did show strong but they closed at a record high yesterday. how do you weigh the results? >> they beat on sales, they missed on the bottom line but the core business is very strong. it was 36%, the highest in four years. was really driving this growth is the you tube and mobile search. that growth momentum will continue. the cloud business, and you growth avenue for the company, might induce margin volatility going forward. it's a large market so all in all the growth opportunities continue to be there but the margin volatility might surface. >> microsoft second quarter and profits exceeding projections, both by rising customer sign-ups and office cloud computing services. the first running reports since they completed their $26 billion purchase of linkedin. >> the business continues to
grow for them. nearly doubled. there is no sign of that slowing down. the office 365 business is interesting as well because i successfully moved from this model where he always to pay for a copy of office to now only paying a subscription. in the long run that has some nice financial benefits. we are starting to see some opportunities they are driving from that as well. interestingly enough, given the windows business did ok. it still had some opportunity. they are heavily involved in gaming. that's a hot area as well. they are nicely positioned as they move forward. >> earnings update from yahoo! the company's fourth-quarter adjusted earnings per share beat analyst estimates, rising to $.25. revenue also be estimates at $960 million. more important is the state of the acquisition by verizon. despite suffering both to
largest corporate eta breaches of all time, the deal is still on. it is now pushed back to the second quarter. >> we see the company trying to bail itself out of a situation. intoole it's dug itself over really a quarter of a decade. we saw declining revenues of about 4% a year over year basis, but that's better than previous quarter's we saw double-digit declines. they will take the they can get. can they find a business underneath all the garbage that is yahoo! that actually is a profitable business for them to run? >> they deliver their numbers. the fourth-quarter adjusted at one billion euros. that is a slip below. a slip below. one billion euros is will he earned in the fourth quarter. tomorrow from 1.02. where was a little bit of a shaken the fourth quarter? if it is fair to represent it that way.
>> i look at a slightly different, but it's important to know the philips group had a defining year in 2016. we separated out lighting. brought it to the stock exchange. we are still consolidating lighting but phillips is growing as a health technology company. within health technology in the fourth quarter we saw 5% sales growth and 190 basis points of profit improvement. so you can conclude our health technology activities really have momentum. >> shares of boeing on the rise this morning after the jet maker reported fourth-quarter earnings better than analyst estimates. topline, what is good in these numbers? >> the improving global economy and increasing demand for passenger and cargo jets. that is helping boeing. >> as you look forward to growth, the military is not that big. it is less than 50% of the revenue. it's not really in the forefront.
do they plan to grow that military? >> they key is their cyber security business. the biggest concern for governments and corporations are cyber attacks, more so than military attacks. boeing is a key player. people don't know how big they are in cyber security but they are a very big player. that's an area where trump said we need to focus on, for the expenditures are producing and increasing tremendously. and unmanned aircraft with a defense spending is increasing. the mitigation, cyber security and unmanned aircraft are a big growth areas. >> the swiss drugmaker announcing plans to buy back $5 billion in shares and a potential spinoff of its eye care unit. how far down the path are you? are you actually talking to potential buyers? >> we announced we are going to conduct review of the next year. this will include all options, including retaining the business to exiting the business the capital markets such as an ipo.
this without a clue the pharmaceutical part of alcon, we took that part of the business and we integrated it into the innovative medicines division. we are just starting to review now. we are not down the path to far but we thought we should be opened within so in our own associates everyone knows we are conducting this review. >> an 18 month high this morning, 2% in sydney after releasing production numbers for the second quarter. it seems like both numbers are in line with estimates given just no surprise given how much iron ore has rallied. copper was the big disappointment.
>> we are in the media so let's do the bad news first. copper a big letdown. 357,000 tons with a quarter. the market expected 411,000. the risk is much better. iron ore second quarter output was upbeat. up 4% on year. federal production was down a little. coal pretty broadly in line. overall the markets welcoming of these numbers from bhp. >> ericsson. those shares up after higher fourth-quarter revenue that analysts predicted. it is some relief to the ceo who took the helm last week. 10 days and and you have cut the -- >> we are reviewing priorities and investing in areas where we can and must win. and here i think we have great opportunities. we have a strong platform, a strong position on technology. a very good financial position as a starting point.
>> ford is out with its earnings. spot on at $.30 for the fourth quarter. slightly better than forecasted on revenues. some saw the number of vehicles sold in the u.s. europe was much stronger for them. they also got guidance in the next year. they say the investments and strength is in autonomous vehicles and electric vehicles. are they shifting towards europe and china? you are profitable and europe for the first time last year. >> one of our objectives as a company is to get a better balance of profitability. as we get into 2017 we do expect that our profits are going to be continuing to be strong, but also at the same time in europe and china we will continue our positive performance. we do expect europe to be done a bit this year. that is based on the weakening of the sterling because of brexit. >> numbers out of ubs this morning.
beating estimates because of a surgeon equity trading revenue. the u.s. wealth management business have a record period. ubs has seen improved investor confidence in the u.s. >> investor confidence is there. we are talking regularly the clients and we do see a readiness in planning for investments and not only financial markets, but the underlying businesses. it's quite clear investors are looking for concrete actions by the new u.s. administration before they go into investment mode. ♪
the 42.7 out of david: about 30,000 functions are on bloomberg. we enjoy shown you are favorites. we hope they become your favorites as well. another function you will find useful, quic . and get fast insight into timely topics. here is a quick take from this week. >> taiwan is a constitution, and army and an elected government. get the united nations is not formally recognize it. the reason, china considers the island one of its provinces. the government is illegitimate and the talk of independence is deeply hostile. a new president in taipei and the leading aggressive party is testing china's tolerance and the new president in washington. the first female president provokes an angry response in china by speaking to donald trump by telephone after he was elected. in difference to the beijing
government, no u.s. government directly to aked taiwan president from us for decades. she wants peaceful ties with china while resisting the china principle. that principle has underpinned relations with china in the past. it's the understanding of both sides will long to one china, even if they had different ideas about what that means. trump says his support for one china policy hinges on cutting a better trade deal with china, prompted a complaint from the chinese government. president trump: i don't know why we have to be bound by a one china policy unless we make a deal with china. >> polls show strong support for maintaining the status quo and little immediate interest in independence.
here's the argument: taiwan's 23.5 million people have built their economy into a technology and manufacturing powerhouse. the average income is three times that of china's. apple iphones are made there. they want to keep the peaceful while keeping international ties and a future less dependent on the mainland. while many china watchers say there is too much at stake in a military confrontation, trump's election has added uncertainty. and an increasingly assertive china has more than 1200 missiles pointed at taiwan and no peace treaties in seven decades. for the u.s., some say it's allowed the u.s. to sell weapons hasaiwan which
♪ announcer: from our studios in new york city, this is "charlie rose." charlie: we begin with developments in donald trump's order to build a wall between the united states and mexico. the mexican president canceled a meeting after one day after outrage at the decision. aftercision comes one day aump's decision to build border wall. trump said at a news conference