tv Bloomberg Markets Americas Bloomberg April 19, 2017 12:00pm-1:01pm EDT
from bloomberg world headquarters we will take you from washington, d.c. to san francisco and london. a mixed picture for you as stocks and the dollar is rebounding. the nasdaq is leading gains while the dow is edging lower. treasuries slumping as the 10 year edges above 2.2%, the pound extending gains after hitting the strongest level since october. blackrock ceo larry fink sees "warning signs" for the u.s. economy and thinks they need validation that the economy will stay strong. we will have more from his interview with bloomberg television. morgan stanley posting first-quarter numbers that beat estimates thanks to its bond
trading. shares reached their best day in two months. there was a few hand. -- hints. julie hyman joins us with more. we have a mixed picture that is the u.s. stock market. the dow is down because ibm is taking a chunk out of it. the s&p hanging on and the nasdaq is doing the best of the three. why? semiconductors. snapshot, theou a philadelphia semiconductor index, which has been hit lately, is up about 1% thanks to lam research, a maker of chip making equipment whose earnings beat estimates. it is helping applied materials and teradyne. another strong performing group
is consumer discretionary, automakers largely higher after european car sales came in at the highest in five, with an 11% increase in registration. market share won and we are seeing a left generally in ford -- lift generally. we are seeing some risk appetite come back into the market. the so-called haven trade, the places people go with a are more concerned about the outlook and a lot of these places have been gaining money lately. not so today. the vix down 5%, under 14. gold coming down 5%. , and thear yield down dollar is gaining versus the japanese yen. it is not enough of a reversal to erase the moves we have seen recently. case in point, the 10 year yield. we have the trend that the 10
year yield has been in. it fell below an important technical level just last week and even though it is up today at 2.22% it still has not gone above that level. it would take more significant of a move and a longer move. vonnie: fascinating. economy is pushing into the year with strong growth and lower credit risks. the outlook for the banks is also positive but the shanghai composite saw the lowest level since november. market,ity in the showing signs of cracking, what does that mean for equities there and globally? joining me is jordi visser. fascinating. where are you most concerned about? jordi: i think we are going through a time where the new
president is making some statements around the globe that are changing the way the markets are act. there is a lot of -- are acting. there was a lot of hope coming into the year and i think we are consolidating some of those thoughts and reassessing. we have seen rates move lower, markets pullback. the biggest concern right now is warning signs are certain to show up that maybe the economy will not accelerate in the way we thought and the position needs to readjust. vonnie: we do happen to have that fink soundbite. larry: the market has been validated by a synchronized growth. it was not just the election and more importantly, for the market to have another leg up we need to see the validation of these policies from the trump administration. vonnie: is that what is going to do it or we might have to wait a
while if that is the case. they said even tax reform might the done before the -- might get done before the promised date of august. jordi: there is always things that can come in and capitalize things. one of the more important things to think about, we focused a lot on the united states and i think one of the reasons i am here, and one of the trends that has been occurring is this fear of info let's around the world -- sphere of influence has been shifted to asia. report,ook at the imf the focus for global growth will be driven more from asia than the developed markets. although we are fixated on whether tax reform will drive things, i think we will have to get more measures out of asia in terms of just the growth picture. market is trading lower and iron ore prices are
going lower. there is concerned the chinese government is tightening monetary policy and reining in speculative measures. whenever that goes on, i think it adds an elephant -- element of question into the market. if we see stability and growth out of asia, that will be more of a catalyst. vonnie: you are saying cheap cash on hand and asia will save the global economy, but on the other hand, watch out because it does not look very stable. jordi: in the short term we have had a very large run across the globe in most asset prices, so what was not just from the election time. we had a global synchronized recovery where pmi's rose from the lows of last year. i think we have been rallying for a year and are consolidating those gains, and in the short-term it is going to be more difficult for asset prices to move higher.
we have time for sentiment to drop in positions to come down. vonnie: one and a half billion dollars or so, macro funds and a long short equity. several long short equities. obviously you are all over the place when it comes to the market but credit wise, if you are shorting credit, or their industries that are attractive given for your stock portion you are keeping that in cash? jordi: we have two credit strategies, focus on investment grade and high-yield. on the high-yield side, with yields at lower levels there is a general feeling it will be more difficult to extend the gains from last year and it will be more of a trade environment. we have seen that for the better part of the first quarter where we got off to a great start, started to see some weakness. we expect that to persist and given the low yield, our view is that yields will stay low and
rather than having longer trending markets there will be shorter bouts of trading opportunities and we have been seeing that. vonnie: what is your management doing? jordi: moore trading in terms of moving stuff around. onre we focus last year opportunities for the value created in the first quarter of this year, for the high yield and equity market, things are a lot more fairly priced so it is more difficult to think a particular trend will work out. about every three months there will be another regime shift where the current regime shift is leaving their reflation trade and we have been seeing that come off asset prices. it will probably persist for andher four to six weeks then you can play on the back of what has unwound. vonnie: what will unwind? jordi: i believe we will take air out of the growth related trade. we have seen that in the energy
sector. industrials, we have seen a reasonable amount of disappointment. i still think there is some elements of that. the group that has not been hurt yet in a meaningful way is technology, and it will probably underperform for the next three months as part of the catch up but the growth related sectors will underperform and the more interest rate sensitive. my guess is the surprise to the market is the fact that rates stay lower than anticipated. vonnie: you said this to me a couple of weeks ago and it looks like the air is coming out of the reflation trade already. would you buy the equity of these companies? is that what you think is attractive or is it their debt outstanding? equity market to me is persistently in a situation that frustrates people where we have shorter and sharper cycles that are down. it will stop quickly and reverse the other direction. i think the pattern that we have
decided to focus on, when sentiment gets extremely high and focused on growth driven in the way it was in the 1990's and 2000s, led by industrial growth, we just do not see it so when you get to that point expect a sharp reversal. my gut tells me high-yield will outperform over yield -- over the equity market. vonnie: so risk reward has shifted, jordi visser, thank you for joining us. of weiss multi-strategy advisors. mark crumpton is here. mark: utah a republican congressman jason chaffetz is returning to the private sector. the house oversight committee chairman then he will not run for reelection or any office in 2018. he was elected to congress in 2008 and said his decision was not based on health or political
concerns, adding he was confident of his reelection should he have pursued it. president trump will meet with the turkish president next month. white house officials say the administration is discussing the possibility of a face-to-face meeting ahead of a nato summit. mr. trump called mr. erdogan on monday to congratulate him in a victory in a referendum, and to discuss developments in syria. the vice president has issued a warning to north korea. he said all options are on the table the end kim jong-un's nuclear program and reaffirmed nuclear support for japan. >> you can rest assured, the full range of the united states military capability is dedicated to the protection of japan. you are our friend.
and on thatally foundation, we will face the future together. mark: meanwhile, it turns out that u.s. aircraft carrier task force was not sent to waters off north korea. said a powerful armada was being sent to the region. instead, the uss carl vinson sailed south for exercises with australia's navy. newassachusetts, former england patriots player aaron hernandez killed himself inside his prison cell while serving a life sentence without the possibility of parole, for murder. aaron hernandez was 27 years old. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. crumpton. this is bloomberg. vonnie: thank you. blackrock chairman and ceo larry fink gives us his side dish his
♪ this is bloomberg markets, i am vonnie quinn. blackrock ceo larry fink says he sees warning signs for the economy. lackluster u.s.'s growth and uncertainty around the trump administration pose a risk to markets. earnings season is probably the most important issue for the markets today. had higher expectations on quick actions
out of our government related to , andeform, infrastructure then deregulation. those are the three things the marketplace look for -- looked for and that is going to take more time. if we don't have earnings validating these higher pes, and we can adjust downward 5% or 10% , and if the administration does succeed in some of these items the market will reassert it health going higher. erik: you make it seem as though u.s. stocks have nowhere to go unless this is a validating picture. larry: the market has to be validated on a continuum. if it moves up it has to be evaluated -- validated, otherwise it goes down. the pes are relatively high --
very high on a relative basis. higher than europe and asia. so it has to be validated one way or another. we have had, since the third quarter, synchronized global growth. the slowest economy in the world, or in the g7, is the u.s., so you are seeing china growing much faster. a year ago we were still worried that china was going into a recession. they are up close to 7%. we worried about japan and they will have positive growth, spain growing at two and three quarters percent to 3%. and you have canada, so here we are worried about north america. canada was estimated to grow 2% and it grew over 2.5%. the market has been validated by a synchronized global growth. it was not just the election. more importantly, for the market
to have another leg up, we have to see the validation of these policies from the trump administration and validation from the earnings. my worry is it will be a harder picture. we sense there is more uncertainty. because there is uncertainty related to tax reform and the timing of deregulation, we are seeing more and more businesses holding back. you are starting to see that in different economic numbers, so i would say there are some warning signs here that are getting darker. because we have seen some pullback, you are seeing that in car sales. you are now starting to see a slowdown in m&a. you are starting to see things that are now -- people are taking a pause. valuations are high, slowing on m&a. uncertainty on tax reform.
>> and you have 2.2% on the 10 year. larry: that is one thing i have been calling. >> how low do we go? larry: i said in december, january, there is a 51% probability the ten-year year treasury could go below 2%. i do believe there is still great uncertainty. it was the most crowded trade in the united states that everybody is shorting rates. >> does that mean it is a short covering call or a trump reflation thinking call? larry: i never called it a reflation trade. we are seeing weakness in energy again. we are seeing a lot of signs that inflation is not picking up. vonnie: that was larry fink, ceo of blackrock speaking to bloomberg editor at large erik schatzker. time for our latest bloomberg business flash, a look at some of the biggest stories.
jpmorgan has agreed to sell a portfolio of student loans to navy yet. --navient. the bank no longer makes student loans. navient is the largest servicer of you -- student loans in the u.s.. -- according to a goldman sachs study, victoria's secret and others rank among the highest among young shoppers with online presence playing a significant role. nike is second with technology determining a grand popularity. amazon was determined the favorite for men. that is your bloomberg business flash update.
some headlines from the white house press secretary sean spicer's press briefing, he is holding it now. these are live shots. he has told us the president will host the palestinian authority at the white house on may 3. he is talking about the democrats going all in on the georgia race, and there is a runoff and a big loss for democrat. at live go on the bloomberg. this is bloomberg. ♪
it nearly double but what was the quarter like last year? alison: dear point, it nearly doubled. the other banks, it was helped by an easier comparison versus a year ago. a restructured their business in the fourth quarter of 2015. what is positive for morgan stanley and what investors and analysts are excited about is the fact that after that restructuring they have come back and are meeting their target in terms of the revenue run rate. perspective,ll basically meeting all of their target. fixed income has improved. they are on track with their cost targets. that puts them into about a 10% r.o.e., backing out of the tax benefit we saw this quarter. vonnie: what can we read overall about goldman sachs? when we look at morgan stanley,
it is great as an investor but you want to know what it means for goldman sachs. alison: that was really a week number for goldman sachs. they did talk about getting the markets wrong. they are certainly not getting it right. they talked about not having an inventory write-down that materially impacted the whole firm which implies that maybe there was some issues. there are some mixed effects. their business mix is a little bit more different, they have more commodities than everyone else, a different client mix. it was sort of a little bit of everything. vonnie: in terms of the fixed income underwriting market, is it growing or shifting around? alison: the underwriting market was extremely strong and that is one of the reasons that banks had a good quarter. on a fixed income trading front
what we have seen is another positive quarter because aside from goldman, we got wrought based beats across the other banks. this is the fourth quarter in a row, so a full year of positive surprises on the fixed income front. this is a major headwind for most of the banks. we have had cyclical issues. a lot of the managements said based on what the cyclical bottom was, so getting this recovery was helpful. equity trading, not so great. vonnie: we will look at next quarter and have you back before then. that is alison williams. we will be talking silicon valley. ♪
quinn and this is "bloomberg markets." the majors, the dow is down about one quarter of 1%, but the s&p 500 is up more than 1/10 of though there are important stocks lower, including energy down and the nasdaq up. a mixed trade today. let's get more now from abigail doolittle. abigail: the member ranked return function on the s&p 500, ibm is down about 5%, the biggest drag on the index. after the company beat earnings estimates in a big way making more than five dollars per share, roughly 3%, they raised their growth, leading the s&p 500 from a
percentage standpoint, on pace for its best day since july 2015. up sharply after the company reported a monster first quarter, they beat those earnings and revenue estimates. company.hip equipment we have some of the other companies, including applied materials trading higher. a bloomberg intelligence analysts said when you dig through those results, a point of strength -- typically, strength is seen as a leading indicator for chip companies themselves. the semiconductor index up nearly 1%, and this could also be the rebound rally. i just spoke to the head of technical analysis who thinks we drop from here a and in turn, that could weigh on the broader market.
we have a great chart that suggests more downside could be at the head. chart of the-year s&p 500 in relation to a 50 day moving average and blue. the 200 moving day average and green. we see the s&p 500 slicing through the moving average of around the election and for the first time since the election, the s&p 500 below that moving average. below 2300. a drop there is some agreement that more of a pullback could be ahead for stocks. a last chart that could confirm more of a pullback for stocks, in blue, we have the s&p 500 and and white, the 50 day moving werage and the point here is see that is moving higher, telling us more investors are seeking protection, perhaps
suggesting there is a pullback ahead for stocks, something to keep an eye on. vonnie: thank you for that one. tech companies are struggling with growth. the silicon valley investment sayser and another manager stagnation has set in and the move to consolidate still exist but there are not many companies to choose from. basically, your fund dabbles in private as opposed to public companies. explain how that works. >> for us, it has been a nexus size in finding great stories investors have not heard of before. when we founded the fund back in the 1990's, a lot of these young interesting companies were probably traded but lately, they are still private. vonnie: the idea is at some point they will go public if they are as good as they claim to be.
are we seeing fewer and fewer looking at an exit strategy now? kevin: yes. the poster child for that today is a company like uber, unheard of that it has gone to be so big and successful invaluable despite the fact it is burning all that cash and it is still private. is really resistance there. companies do not go public because they want to hurry to get to that passage. they put it off. retail if i'm a investor, looking at your fund, i am thinking, why should i, there is so much talk about these companies making revenues but operating at a loss at the same time. i trust that at some point in the future, they will be the companies they say they will be? heaven: there was a time when no one had heard of facebook and then there was a time when they had heard of it but it was growing fast and losing a lot of money, and now it is a time where there are blue chips among blue chips.
back, and pickk your favorite example, whether it is netflix or anyone else, the time they wish they had bought the stock or invested in the company is when most people had never heard of it before. that is why -- what is so hard about the game. you look at most venture portfolios, it is a collection of companies you've never heard of. vonnie: what companies are you looking at? kevin: on the public side, we are trying to avoid owning stocks that have an stale. arista networks is a fairly extent -- expensive stock but they are taking advantage of the functions to go out and take market share. we will buy a company like workday, you have to pay a little bit too much for it but it is better than owning oracle. vonnie: you have produced great .eturns, 6.5% and it certainly looks like there are plenty of gains to be had there.
what is your next big idea? a fund manager or at least a strategist was on earlier talking about the stocks being attractive again. kevin: those will come and go. it is almost too bad we are fixated on ibm, which continues to go in the wrong direction and shrink quarter on quarter. it keeps us from looking at companies like google and apple and asking, how old will these company's get to before they stay stale? eventually everyone plateaus. there may be good trades this year around apple and google, but they are getting old. >> is it on an individual company basis or is it an area like health care where you know there will be winners in the next few years? byit has to be company
company. any example, google, i can list off one dozen search companies where you lost all your money if you invested in them. think about how many social networks fail before facebook got it right. you have to go company by company and we found you cannot chase after what everyone else is chasing after. everyone else is looking for the next version of the last thing that worked. everyone is looking at the next facebook but what you need to do is find a great company with a great story that is nothing like the last thing that worked. why don't i buy the technologies of the s&p 500? is you will own ibm and oracle and intel and cisco and a bunch of other stocks that are mostly played out. what you're really doing is buying mature and almost dow like companies with the added risk they are in technology. huge -- here was
when it went public. do we see any more of those this year? by the way, the stock sincemance has been great the actual ipo about a month ago, little more than a month ago. >> we would love to see airbnb go public. that would be exciting. if you look down the road, a well-established trend, there is only one stock you can own to that on the right side of the trend, and that is netflix. there might be a second one maybe not later this year but next year, roku at some point will go public, a great bet on streaming. that is pretty interesting. vonnie: netflix disappointed yesterday. there are talks they have to keep being cash flow negative there. >> yes. the bear case on netflix has been well articulated for the last dozen or so years and a lot of people never tire of getting it wrong and ruining careers on
that stock. as someone who has been long both small and large, i look back on the chart and all i can see our mistakes i made when i sold the stock and trimmed my position. are working at netflix. they had a light quarter, no big deal. very best of luck. hope to have you again soon. kevin for firsthand capital management. a few headlines now, the federal in upstateaking now conference, he is saying the fed bonds rate is likely to be negative more often in the future. it makes sense to use rates -- he also talked about the fed balance sheets getting shrunk and says it should happen very gradually, a gradual shift, a rate hike, and he talks about
reinforcing the primacy of great policy. very much underlying the fact that rate policy is the top priority for the federal reserve and with that in mind, rates on the fed funds rate is likely to be more negative more often. let's get to mark crumpton. britain's house of commons has made it official, lawmakers have voted in favor of to reason may's call for an early election on june 8. the prime minister wants to increase the conservative party's margin in the comments as she prepares for brexit talks. conservatives with a 21 point lead over labor. suspects, one of the arrested for allegedly plotting an attack days before the presidential election have been on the radar of belgian officials. federal prosecutors said the country had opened an investigation into the 23 euros after his family alerted
officials that he had been radicalized and possibly planned to go to syria. apartment of the two men arrested, police found an automatic rifle, hand guns ammunition, and explosives. their biggest airline said it is reducing flights to the united states. a drop in demand caused by tougher u.s. security measures and attempts by the trump administration to ban travelers from a number of muslim majority nations. itscuts will impact five of 12 u.s. destinations starting next month. in houston, former president george h.w. bush has been hospitalized with pneumonia. mr. bush's 92. according to a family spokesman, bush remains under observation and will not be discharged today but looks forward to going home soon. global news 24 hours a day powered by more than 2600 journalists sent analysts in
joins us with more. on the face of this, it is a good time to be apple. you have a little leverage with suppliers, much like walmart did for a long time with its suppliers. -- when we hear what will be in the new iphone, apple suddenly has to rely on samsung. at the end of the day, is it a good idea for apple to diversify away from the suppliers? >> absolutely, particularly in the chip semiconductors space. chipmakers around two years ago. that gives a certain amount of power to the semiconductor industry to set their own prices. less competition to negotiate. apple likes to have at least two suppliers and any given component, often playing the two against each other. apple has been developing its own chips for quite a while. increasingly becoming available and that returns a little bit of
negotiating power to apple. do we know which of the suppliers are most phone herbal in the next round of cuts? collects a lot of it is speculation and reading between but analysts have highlighted a few. we know about imagination technologies, it shipped design are in the u.k. who announced a few weeks ago that they are going to lose apple as a customer and that stock fell two thirds as a consequence. analysts have identified semiconductors, another that might be vulnerable. -- makes some components to control the touch screen on your iphone. analysts say it is a medium to low possibility. vonnie: wise apple developing its own chips? is cost the only reason? >> there are two other reasons.
january, ornce in february actually, they said it is cost, quality, and timing. and as they move into new spaces such as augmented reality, and we saw on the airports, the bluetooth headphones they released last year, these require specialist components and apple can tie them more keenly to the software and its needs if it is designing this hardware in-house. vonnie: so the mom-and-pop designers, what do they dnext? >> these are quite big companies but i understand. there are some people who are concerned about being overly exposed to apple. a question of diversification really. qualcomm,a giant like the base of the deal last year,
diversifying that portfolio a little bit, opened them up to applications and automotive, and therefore, it means they are less dependent on the smartphone industry for growth and licensing revenue. it is a question for a lot of players in the semiconductor industry of how they reduce on the likes of apple. vonnie: the advice is to always have a plan b. look at for our latest some of the biggest business stories in the news right now. brought in more money for fixed income trading been goldman sachs. first quarter revenue containing bonds currencies and commodities atost doubled, and came in $1.71 billion, edging out goldman's $1.69 billion. morgan stanley last beat its competitor in the second quarter of 2011. . war of words intensifies
plan, lessegic valuable than its own $24 billion takeover approach. the bid proposed to break itself off by carving out a special position within 12 months and returning $1.7 billion to shareholders. months,by most in six the luxury retailer sales in the americas are falling at a faster pace. burberry has withdrawn from u.s. department stores and nonpremium .ocations the americans make up a quarter of burberry'sales. that is your bloomberg business flash. coming up, long-time conservative commentator bill o'reilly out at fox. plus next, for the network, revenue-generating.
vonnie: this is "bloomberg markets." bill o'reilly is departing fox news. this stems from recent sexual harassment allegations. , coverings entertainment and media news, it is new york magazine reporting this. sources are telling him this is happening and there is a board meeting a fox news parent company 21st century fox to discuss this matter scheduled for tomorrow.
the reporter covered fox news for years and has written a book ailes, the-- roger producer and cofounder of fox news, who was ousted last week after sexual harassment allegations. he was a trusted source on this. thatrday, we confirmed over highly was very likely to be going and finalist -- final decisions have not been made but that was the way it was looking leveledesh allegations against him of sexual harassment allegations. board meetingng a thursday tomorrow where the board will properly sign off on the murdochs decision. vonnie: it seems a geely
question executives have to discuss is not the severing of ties but had to do it without having collateral damage to the actual parent company. >> fox has not said anything, i should make that very clear. 21st century fox, a parent of fox news has been pretty .ightlipped fox news itself is a huge profit generator for fox, a quarter of its profits, and bill o'reilly has been the most popular host for years, and even in the past few days, on a scheduled -- then, the replace and replacing has generated much
lower ratings than he has been able to draw in. he has a great, loyal audience in and it is a phenomenon in cable news, but one we've reported is that his show alone, $200 million a year in advertising revenue. vonnie: worthwhile and $20 million in years, now that roger ailes has left, 40 million to go. what will bill o'reilly take? >> i do not know what he would take. but it is very important for fox clearly to have this dealt with efficiently and quickly. they do not want it dragging out much longer.
days. house speaker paul ryan's best hope to avoid a government shutdown may be to ask his democratic counterpart nancy pelosi for help. dealmaking together within the republican party. of president donald trump moving forward in congress outside the u.s. bye of his views including partisanship in washington. later this hour, we will hear from the head of the national committee who says the republican party will need to keep his from anthem and the health care bill will take some time. plus, her view on president trump's egg's achievements in his first 100 days in office. ♪