tv Bloomberg Markets Americas Bloomberg April 28, 2017 10:00am-11:01am EDT
vonnie: we will take you from new york to london this hour and cover stories out of south korea and also seattle. first, breaking economic data. abigail: for the university of michigan sentiment index, the final and third reading is slightly lower than the survey. it's important to note that the initial ratings of 98 or higher than expectations. strategists said they defied expectations. butttle bit of a miss basically on target. not a lot happening on our averages. ehe dow and the s&p 500 ar fractionally lower. the nasdaq is on pace for a record close.
because we had that big rally monday and tuesday with consolidation wednesday and , this is the s&p 500 weekly performance. we now have two weeks of gains, up 1.7% on the week, the best weekly performance of 2017 going back to december. it's a pretty strong week earlier despite the consolidation we had for the last three days including today. turning to what's helping the nasdaq along with the s&p 500, we have some winners like alphabet and amazon and these companies beat top and bottom. from strong helped demand across all segments and investors are not too concerned by the youtube ad issue that developed a few weeks ago. amazon is also trading higher. alphabet and amazon are on their best pace.
western digital is up nearly 3%. apparently, the supply-demand -- isc is pretty profit pretty positive. we do have some losers today. at qualcomm,g starbucks and time. qualcomm is lower by 3.5% after apple said it's ending its licensing payments at this is not a surprise. one analyst told our team earlier it's worse than expected and qualcomm has cut its estimates and starbucks beat earnings every so often but missed comps sales for the first quarter. weakness continues in the u.s. and finally, time is plunging, on pace for his worst day ever. this is after they did not get the lending mark.
shares are getting a bidding today. mark: we are lower for a second day. it happened at the beginning of the week. we are on track for the third straight month for our best run since may of last year but down for a second day today led by telecom, real estate, and media. it's about banks today. that barclaysu shares are down by 5%, the biggest to clients in the june, europeang the latest lender to pose disappointing results that failed to live up to the gains american firms reported. 24% advance by the big five in the u.s.
not end earnings did there. quarterly profit, first time in more than a year, the chief executive stepped up the pace with shares up 4.3%. we will talk to michael about that in a moment. .3% in theonomy is first quarter, the worst performance in the dominant services industry feeling the impact of a squeeze on living standards. .7%.rior quarter was starthe least since the of 2015 with week in sterling pushing up inflation and squeezing consumers. it's playing out as a squeeze on the consumer. we will have to wait and see how long it continues. barclays shares dropped after it became the latest european bank topost results that failed
live up to the gains american companies reported. edwards aboutna their first-quarter performance. it generated a little north of 8% in the first quarter. that was 100 basis points better than last year. on a strong outcome in terms of banking fees which is mergers and acquisitions, debt capital markets, equity capital markets, we had a great first quarter. the debt capital markets revenue number in the history of the bank is the best. currency, one thing you have to look at is our for -- our strong first-quarter last year. on a quarter to quarter comparison, we did not have the uptick that a number of u.s. banks did. in part because we have a strong quarter in the first quarter of 2016. we always want to do better. wear comfortable how we came out and the overall profitability is
making good improvements. i think we feel pretty good about the quarter. to how happy in relation things have performed? and 11% revenue at deutsche bank. >> i am comfortable where barclays is as a competitive matter. a number of investment banks have very down quarters last have recovered from a weak first quarter. we had a good quarter in the first quarter of last year. we could have done a little bit better on the u.s. rate side but we will not make any judgment based on one quarters performance. >> what about the
whistleblowing? i know there is an investigation ongoing but i saw yesterday that a proxy adviser said shareholders should vote against your reelection to the board. can you update us on what you are hearing? do you still have a shareholder support despite what happened. before the board of the bank did its review and voted unanimously to support me as ceo of barclays, the information i'm getting from shareholders is positive and i am committed to barclays no more than i ever have been. the board has been support -- supportive so let's see. youru have made it personal mission to clean up the reputation of investment bankers globally and you have done a lot of work there. are you still carrying forward with that? the culture and conduct
and character of this bank is deeply important to me. think we have made a lot of progress but it's a long journey. we will continue to push forward that agenda. barclays chief executive ley. stak let's talk to michael moore. the investigation still has to play out on the regulatory front over the next few months. he certainly expressed confidence there that he has the boards backing. we will see what happens at the agm in a couple of weeks and then further down the line with the regulators. he tried to excuse the week fixed income revenue.
because of the strong course last year. our shareholders buying into that region? >> they don't appear to be. it was a strong quarter last year but that magnified some of those declines but aside from that, if their lowest market share relative to competitors relative to the usenet business -- but they didf it underperform and they talked matter ofwas not a the franchise losing clients and not a matter of clients stepping positioning in a couple of businesses. wealth management seems to be an area that banks can win in at the moment. they might not be winning on
fixed income but there is an improvement from ubs. will the rest have to find another niche? >> yeah, you have a lot of banks competing in that space. you macy's some winners and losers but i think that will happen over the next maybe five years. it will take a while to play up because banks need some room to run. barclays, a lot of the other businesses performed pretty well. they did better than expected. it was really the training units holding them back. deutsche bank is appointing a new cfo, one that had been coo will that improve the chances of deutsche bank?
>> because you have the capital questions of just raising capital and they are trying to get their ratios up to where they would like them to be and you have some questions about the funding mix and whether they can in your -- integrate postbank to help fund the investment bank side of things. there are many big questions that will fall under the cfo's that's a more important role than some of the other firms. some businesses have been performing well over the last few quarters but there's so many overhangs whether it's the legal to sell not being able
and propose a new plan to the eu. overhangs are still there and they will be there for a few more quarters. underneath that, you have a u.k. consumer business that is doing ok at the moment. mark: we have had credit suisse, ubs, deutsche bank, some of the big u.k. lenders and some spanish lenders. some it up for us. you saw some pockets of strength. the strength of the americans has been the continuing story but you did see some areas where people surprise whether it was brazil or ubs in the management side, there were pockets of strength. financemoore, u.k.
editor for bloomberg news. we will see him next week. that's for sure. anthem has failed to undo the takeoverst blocks the of the appeals court has upheld the decision that the deal harms competition. in other words, it's not going ahead. emma: eu leaders are ready to be united when it comes to brexit. there will be a summit tomorrow in brussels to discuss the u.k. departure. there is talk of unity and warned the u.k. against trying to create a position in the hopes of getting a better exit deal. the u.k., police say they have disrupted an act of terror in london and southeastern
england and one woman was shot and several others wounded. several counterterrorism forces stormed a house. counterterrorism police say 30 potential attacks have been foiled and last four years. in the u.s., president trump wants to expand offshore drilling. he ordered an interior department to revise a five your schedule for auctioning drilling rights. the goal is to open more opportunities to offshore rigs in the present will also order a review to not repeat the deepwater horizon disaster. global news powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: thank you. u.s. secretary of state rex tillerson is speaking at united nations security council. it's his first time to address to getc and is trying
to 48 andd oil down change and how long will it stay there? >> i think it is a combination of the fact that you continue to see oversupply being talked about a marketplace. we saw some of the geopolitical unrest that drove oil higher and that's being discounted in the marketplace and oversupply concerns continue to weigh on the market short-term. ofsaw a key technical level $48.25 yesterday and we are now holding around there. gdp growthe got7% that the market has not priced in 1%, maybe something below this figure. what might that due to oil prices? i think it will continue to hold oil within this range between 48-54. it is a backward looking indicators and we will see if we get rid of visions.
a slowdown in gdp is not particular positive for oil. it feels like we will stay with them's range of $48-50 four dollars. vonnie: what are you taking away from exxon and chevron earnings? positive, the bar was pretty low last year. you are looking at a shift. there is a shift in margins going toward an increase in revenues jumped so you see positive trends there and you see them shifting more toward shale production. some of these major producers are looking at shell is a revenue source and i think that will continue to be a theme moving forward. vonnie: what about hedging? what should oil companies be doing in terms of hedging their costs and everyone else? are looking at their profit margin, what they have to pay for oil to get the return they're looking for. ing are seeing a lot of hedg
which is been priced into next year. withthese news items hit production increases and decreases, the oil consumers have already hedged that risk. that will have not have too much of an impact on the price of oil short-term. longer-term, we could see trends slowly developing. 54 could be the next stop. vonnie: thank you. mark: let's get to washington were democrats are holding a news conference on president trump's first one hundred days. you can watch the event live on the bloomberg. ♪
emma: here to discuss this interesting topic is eric. this is pretty catchy and grabs my attention. our etf's weapons of mass destruction? >> in one way they are. the way this manager claims is that everybody is piling into etf's and buying stock with no regard to valuation was something goes wrong, they will pull out and it will cause a problem in the market. ande is some truth to it people are piling into it and are taking $100 billion. they still only own seven percent of equities. distort thenough to fundamentals. there is also value and growth etf's.
also, acting managers on the same stocks. with that said, how they are weapons of mass destruction is to active mutual fund managers by and i the assets of active funds. at the messenger of these etf attacks, you usually find somebody threatened by the product. this manager is underperforming his benchmark by 66 percentage points over five years. 35% cash so etf's are a scapegoat in this case. -- jimks ago, jim craver cramer went on a rampage against etf's.
this manager last week i will say should understand why people are leaving. ofould tell you 12 examples active mutual funds outperforming their benchmark and still see outflows. that is tough. mma: more objectively on etf's, what is wrong with the etf, what is there to worry about? >> i don't think the ownership is that much of a concern at 7% but the trading concerns, they are too connected to the grid. if anything goes wrong, the plumbing can cause problems. etf's trait so much every year, $20 trillion, they account for 30% of the trading volume. they are sucking out a little bit of liquidity and if they go to 60% of volume, echo be a problem. you don't want to take them as liquidity away from the things you hold in the third thing is over trading. they look at individual
investors the trade these things and if you trade too much, you typically lose money. there is the temptation to trade. another great conversation on etf's. have a wonderful weekend. vonnie: thank you. rex tillerson, secretary of state, has just finished his first address to the un security council. we knew he was going to speak about north korea and he says the time has come for new pressure on north korea and the u.s. goal is not a regime change. he says the u.s. will sanction those supporting north korea and called for bans on north korean imports. he said china has a unique economic leverage position over north korea. that's secretary rex tillerson at the u.n.. this is bloomberg. ♪
vonnie: house leaders have put off a vote on repealing and replacing obamacare. to pass thehy says measure, a vote will be scheduled. emma: republicans and hope to vote on it this week after conservatives signed on but a number of moderate republicans are still opposed. u.s. secretary of state rex tillerson plans to cut 2300 diplomats and civil servants, 9% of the agency. most of the cuts will come through attrition. critics say it will hollow out the diplomatic corps. pope francis is in cairo where he is showing solidarity with the embattled christian community in egypt. he met with the egyptian president at the start of the two day trip. three weeks ago, islamic militants in egypt killed more than 40 people on a palm sunday
attack. in the u.k., the economy had its worst performance in years. 3/10 of 1%.ew 23 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: thank you. we will take a quick look at the markets and see how things are faring as we approach the 100 day mark. indices are up about -- down of 1%./10 over the past few weeks, bloomberg asked some of the biggest names in business and politics how they would characterize donald trump's first 100 days. >> i think it been a combination of positives. work.k, work,
give people jobs. >>. it's a work in progress i think it's been chaotic and hence consistent have very little a compass on the legislative side. >> turbulent, difficult and as the first is always our and a lot of promise. >> when you look at the supreme court nominee, that will have implications well beyond when he leaves 1600 pennsylvania avenue. >> nerve-racking and concert -- and concerning. was able to actually rollback rules and regulations that are 1000 times more than any previous president in the history of our nation. joining us now to discuss the domestic and international reaction to the president's agenda is our editor for economics in washington and in london, the exhibit of error
-- editor for international government. potentiallyump overpromised and under deliver nice agendaet up a for the next 1300 days or so. ? >> it's nice to focus on 100 days but we really have to think about the totality of his presidency. by some measures, he has not a cop as does much as his predecessors in those 100 days. specific things, he has accomplished quite a lot. of setting the tone of disruption in washington which is what he set out to do. vonnie: to a certain extent he has been getting people used to do a different style of president. how has that been received a broad? are people getting used to this? >> i think people are getting used to it. people knew that it would be different. it would be slightly chaotic.
there is a clear distinction between europe and asia. in asia, is been more disruptive in many ways in europe. it shocked asian governments right at the beginning. there is frustration when you talk to asian government officials. there was an early decision to scrap tpp with asian countries. there was a feeling coming in that this deal was in trouble anyway. the fact that he did it so quickly really upset a lot of governments. we have seen a lot of fallout from that. as we approach the end of the 100 days, the rhetoric -- het north korea said said a major cop what was possible of diplomatic solutions fail. syria,hat happened with you would have to say north wise, hassitivity
overtaken. >> yes but this is part of his strategy. he wants to keep you guessing. he goes back to his days as a dealmaker in new york. he does not want you to know exactly what he is thinking or what he will do. they hissed area played into that narrative. it gives them a certain out of leverage with north korea but also dealing with china. with the u.s.ng president that cannot be intimidated as easily as president obama was. north korea is a big part of donald trump's international strategy. we don't know what he thinks about it. that's what we should see over the next three or four months. neil gorsuch, supreme court, that was the big success, deregulation. legislatively, what will be the first success of trump said ministration?
one of the biggest failures i think has been their inability to repeal and replace obamacare. it looks like the house is moving toward a compromise that will never get anywhere in the senate. it will be in the senate where you will probably get legislation that will be in producing that result and go back to the house. you will probably get that first legislative victory there. the spending bill that will pass today and extend the government for another seven days, you would not call that a victory but if they do get the more comprehensive continuing a onetion on spending and tax reform anytime soon. there is no legislative language that is written for that.
that will be a pitched battle. replace repeal and probably his first victory. vonnie: there are all these smaller things that perhaps we are not as focused on like the ftc or the executive order on offshore drilling. >> right, he has been using the executive orders under the of secure law passed under bill clinton to d regulate the u.s. economy. there has been a lot of positive feedback from industry with companies on his effort to do that. one of the things we really have to look forward to is this palace intrigue. --re is a whole gary cohn steve mnuchin traditional approach versus steve bannon -- steve miller wing. you can see in nafta and other things, that's working its way out. i would suspect in the neck 100 days, that will be a big issue.
one more from me. when it comes to europe, you would probably have to say his bark is worse than his bite. he was quite outspoken against germany like with nato and the u.k. relationship but it seems to be cordial. is that a fair assessment? >> there is a sense that the worst has not happened. we heard talk from his inner circle that they were thinking more tariffs on imports but none of that has come true. the angela merkel administration has tried to build this relationship. anka trump is a very important gateway to the white house. the only thing we know for sure is that donald trump will be unpredictable with a battle going on inside the white house.
they posted a 23% gain in sales in the first quarter. al about is rising above $20 billion tax in part to a surge in clicks on mobile ads. the managing director of equity research is joining us now. sheridan, thanks for joining us. my favorite quotation from an spent 720 $4mazon billion on $300 billion or a whopping 2% and sales grew by $6 billion and net income grew by 200 million and they are playing mind games with us. are they? they are very focused as they always have been since the beginning of the company on driving revenue growth above and beyond profit margins. they take almost every dollar of growth in the business and reinvested back to lowering the price of items for you and i, improving the speed of delivery
through their logistics network, and expanding globally geographically and into categories like consumer packaged goods. they believe they are far from an unfinished product in terms of what they can offer as a retailer globally. they will to could just they will continue to invest that way. persuade me that amazon is not at its peak. we have had a downgrade today from pacific crest, downgrading the stock, saying it's at its peak. do you agree? >> no, i don't. if you look objectively, this is a $155 billion retailer growing 24% on the top line. that is unparalleled on a global scale. and yet, when we look in a country by country basis, e-commerce is in the mid teens
as a percentage of overall retail sales. we have a very long runway ahead of retail sales moving to e-commerce platforms. we think amazon will be the main on a global scale of that trend. the second trend which is a key theme for their growth is cloud computing. we are in the very early innings of it services globally moving from on premise equipment to cloud computing. a three horse race between amazon, microsoft, and google and amazon is the leader. two very big long runways and it still early. mark: let's talk about alphabet and google. there is a beat as well, ending a four-year streak of lifting estimates after the holidays. sizing the growth of youtube as is the key driver but as we know, major markets
says poor spending on you to and they are over concerned about offensive content. what is the take away from that side of things? >> the search business continues to be a 20%+ grower and continues to surprise people. what people misunderstand their is android being on 80% of the world's phones, searches that happen on iphones in their market share, desktop continues to grow and search still has a long way to go as a business. that's for google and youtube had some noise about advertisers disliking the way advertising their brands went up again. to peoplet and talked because it has little to no impact on the business. i would argue that you are still a long way to go on youtube and that is more about poison
reality in the business and we have long options like cloud computing, media consumption that can be drivers for out for that over the medium to long term and that's not even getting into the other bets. vonnie: what to the executives say about immigration and what the potential effect that might be from the administration? >> no comment from any of these companies. you are correct to point it out but no public comments from amazon or alphabet. we will see a facebook makes any comments. are investors generally happy with technology and how it's going? it seems like it's an attractive and popular trade might be creek getting crowded. >> that's a worry we have. how crowded it is.
step back to do is and say we had u.s. gdp growth of less than 1% today. you have two businesses in alpha that and amazon they grew north of 20% despite being large-scale businesses. when i talk to institutional investors, there is a survivorship of where can i buy a growth stock in this market? amazon is always a tricky one-on-one valuation but -- 16et is trading 14 times topline growth. that's a fairly unique mix and is market. mark: great to see you and thanks for joining us. time for our bloomberg quick take where we give you background on issues of interest and today we are looking at if the government is doing enough to guard against cyber threats. >> hackers today are not like they were from the 80's and 90's. >> you want me to hack the
planet. >> cyber criminals can be state-sponsored, breaking into servers and disrupting national elections. ma theyf the lessons major off fr th is that they were successful introducing chaos. >> they could blackmail a multibillion dollar corporation by threatening to release piles of vince -- of sensitive data or they could be ages looking to expose the cia's own hacking capabilities. these professionals are always finding new ways to gain entry to government, industrial, and financial networks. luckily, as they get more sophisticated, so are the safeguards. 5400 data, more than preachers in the u.s. closed businesses, the biggest was the adobe hack of 2013 with 100 52 million records being compromised. individuals and not the only ones at risk. the u.s. has been battling an escalating cyber world countries like china and russia for years.
in 2016, multiple u.s. agencies concluded russia was behind the hack of 20,000 democratic national that were posted online. they were hoping to influence the election in donald trump's favor. this is a conclusion that vladimir putin denied. the property records are taken and not all hack attacks have unhappy endings. in may, 2014, 100 10 million credit debt payment card numbers were stole from target but they were useless because the pink codes were encrypted and the bank immediately canceled all the compromised accounts. cybersecurity is both worse and better than it's ever been. size, scope, and frequency of attacks has skyrocketed but the safeguards protecting individuals and corporations are always being improved. 2014 hack of jpmorgan did not result in financial loss for its customers who are covered by cousin marie by consumer
protection. the u.s. eventually identified and indicted the hackers. keeping data secure requires constantly updating technologies and human monitors watching for signs of trouble. high security comes with a high price tag. vonnie: you can read more about cybersecurity on the bloomberg. ahead, we will hear part of our exclusive interview with oaktree capital's howard his perspective on risk in the credit market and his investment strategy. this is bloomberg. ♪
investing is the mantra of howard marks and he reiterated that strategy in an exclusive interview with erik schatzker where her credit investor can earn a decent return with limited downside. are in the seventh or eighth inning of the credit cycle. >> in each market, you have to in the better credits hope that you can get them at a decent yield. but you can't. yes, it's very tough. get those and it's hard, which you emphasize, better credits were good yield? i think it's more important to emphasize the better credits. so you sacrifice return. >> exactly. i wrote a memo that said the market is what it is.
you can invest in it and say i will not but the one thing you cannot say is i want a different environment. you can't make that happen. where stuck with this one, it's a low return world. how an investor functions in a low return world is very challenging. erik: after listening to the where yournings colleagues used the word harvest on a number of occasions. is now the time for oaktree to harvest but who is on the other side of those traits? be differently, who would dumb enough to take market risk in credits right now? about market risk, we sold an asset this week as you know. the buyer was strategic. a don't care about the market price of that asset in three years.
and strategic buyers have been very good buyers lately. that's just one example. lower cost ofve capital than others. in america, we have a high cost of capital. pension funds want to make a percent so that their hurdle. i was talking with someone who was approached by a foreign pension fund who has a 4% cost of capital. for them, some of these investments more more tractive. if we are in the eighth inning and there is still a full innings left for this game to regulation, what is going to drive the market? what factors underpin higher prices for credit assets right now? primarily the quest for return. in other words it's not
fundamentals. >> i think that's right. most asset classes are in high valuation territory. annie: that was howard marks exclusive interview. votes to has the continue funding the government for about a week until may 5. you can see the vote tally on your screen. the house has the votes for a short-term funding vote. this is bloomberg. ♪
quinn. the european close on "bloomberg markets." ♪ mark: we are going to take you from new york to london in the next hour, plus covering stories out of brussels, zurich, and ay.ssels tod the stoxx 600 pointing ahead to a loss, despite big earnings from ubs. we will hear from the ubs chief executive as his wealth management business searches. -- surges. vonnie: the u.s. expands at its lowest rate in three years. is it a glitch or will give the federal reserve reason the to pause? almost 100 days into