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effort to get appropriations in the budget meant the administration was giving up on having mexico pay for the wall as the president promised. other mexican politicians have repeated what he has said. what is your response to that? mulvaney: we have an opportunity to move quicker than we expected. because president obama was not able to sign a full-term cr, we got a fight at -- got a bite at the 2017 apple. if president obama had passed one in 2016, we would not year because this would have been dealt with and none of this would have been available. none of the additional spending for defense, school choice or the border. secondan unexpected light at the 2017 apple and we are happy to get it to start things moving quicker. .y job is to spend the money
we are working on ways to try to get mexico to pay for it, but that is not my concern right now. >> it looks like you have a wall there already. : this is the stuff that is already built. this is the picture of the levee wall. whenis what it looks like it is currently built. we don't have the picture of the cyclone fencing. this will be replacing cyclone fencing. >> do you have a wall in all of these cases where there is existing fencing? is that a good way to spend the government's money? esther mulvaney: there are places where technology will help in their places where we could start land acquisition. hiren start ramping up to border agents and we have additional beds so we can effectively end catch and release. one of the difficulties we had was the beds were full at
detention centers. when you look at it holistically, it's a tremendous improvement in border security. of hundredcouple million dollars to do it and this is a several year process. you could not build that in one year. >> yesterday, you said i think it's great the democrats like the bill. we think it's a great deal for the administration as well. -- yesterday it was great and today, it's an outrage and spiking the football. what changed? what i said: yesterday is what changes when you walk out of the negotiation. we are little more happy than we to makethey are trying it look like they pulled one over on the president and i will stand for it. i would rather they be truthful.
thatu were saying earlier the obamacare subsidies are not part of this bill. does that mean this administration is going to stop aying -- mr. mulvaney: the payments are due the 20th or 21st of every single month and we have not made any decisions on may. >> what do you say to members of your own party who say this negotiation did not network they wanted. mike huckabee even tweeted something out earlier. they are not happy with it. now, ivaney: until right don't think anybody heard anything about this. >> about the deal itself. mulvaney: i would be happy to convince anyone on the right that this was a great deal. >> they have obviously seen it. mr. mulvaney: my guess is they reading the washington
post and i'm here today to let the other side in the middle. >> why doesn't he just wait until the fall? think we are i giving it a chance to work and show we can govern. we can do it effectively and fund our priorities, which this does. whenould you shut it down you cut a fairly good deal for the american people and funded the priorities? what you heard is his sense of frustration over how he's being treated by the democrats on a bipartisan piece of legislation. >> the president today talked about a potential shutdown and you say democrats want to do what they did. we have heard the term shut down a lot and i think there's probably some folks at home saying we are barely 100 days into this. what does that mean for tax reform or an infrastructure bill? say about the tone?
mr. mulvaney: i think the tone is to have a president who can run the place. you made president who can work with democrats and republicans. about howisappointed the democrats have acted after deal was put together. there are people who are convinced that we were going to have a government shutdown and i think the message we are sending is that we are competent, we know what we are doing and i think this goes to prove it. that.ant to follow up on i'm a little confused. you said the democrats wanted a shutdown. whos the president himself tweeted our country needs a good shutdown in timber. can you explain that and if there is a shutdown, wouldn't it be the president's fault?
use the one calling for it. mr. mulvaney: 18 budget comes up in september. you have infrastructure and there's a lot of things to deal with between now and september. what you heard the president expresses frustration as far as how he was treated in the negotiation. i think there are a lot of things that would happen between now and then that will let us know if we are moving in the right direction. i think it was a little bit reported there was a great deal of disagreement within the house democrats over this deal that mrs. pelosi was convinced when we said we wanted money for the wall that we would shut it down. flabbergasted and stuck in a circumstance where they were facing possibly shutting the government down and my guess is their bases not going to be happy to know we are holding this. we are taking their taxpayer money to the old does.
that's the deal and my guess is that's not going to sell very well with some folks on the left. this bill andbout the president seems to be floating this idea of doing away with the legislative filibuster. is that a good idea? it --rly you don't need would the results be even better or would there be less animosity ? maybe. i know there has been some discussion over the last couple of years for limiting the filibuster when it comes to appropriations bills. one of the reasons we are here and one of the reasons we have the discussion about a shutdown is the appropriations process is broken. one of the reasons is passing a bill on a topic like military construction and the senate passing a bill and going to i don'tce committee --
think that has functioned in the last decade. i've been here since 2011 and it has never worked. we want to go back to that process but the reason we can't is the senate is requiring 60 every single appropriations bill and that's forcing this discussion about continuing resolutions, which is a bad way to run the government. president --the how does the president define a good shutdown? mr. mulvaney: i don't know. i think a good shutdown, i've said this before, it's not a goal. it is not a negotiating tool, but to the extent the president advocated one today, it's one that drives the message back home that was as rogan when they voted for donald trump and if that is what is necessary to do, if that is what is necessary to fix washington, d.c., that would be good.
800,000 federal employees were for load and 1.3 million were required to continue working without knowing when they were getting paid. is that good -- mr. mulvaney: i've been through a shutdown before. everyone got paid. --ing the temporary lapses that's why i say it is not desirable. a good one would be something that fixes washington, d.c. permanently. meetingu walked into a -- what happened to between that meeting? mr. delaney: that meeting took lace in early march. i got put in this office february 17 in the first weekend in march, we were meeting with appropriators on the hill about the president's priorities. we want to defend increases, border security including the
ball, targeted reductions in spending and sanctuary cities. we had to give up on the last two because that's what you do in a negotiation. list.n't on our first of as the nature back-and-forth negotiation. we got a tremendous deal. >> you said in your statement that the president delivered on his promises and on his priorities. that is not true. he didn't get the border wall, no funding for the border wall. no funding for a new wall, planned parenthood -- mr. mulvaney: when you heard about the deal yesterday -- i won't jump to another person. you've seen me do this for.
as far as the priorities you say are funded, the border wall, no new border wall along the southern border. fat -- planned parenthood was not defunded. another priority of the president was not carried through and that the sanctuary cities. explain how you say what you said before with the actual reality as far as the funding is concerned. mr. mulvaney: learning ask you a question. when you heard in the last 48 hours about the deal, did you think we could hold this? i bet you didn't. is it a replacement for an existing wall? this is what is out there right now and this is what will be put in as a result of this bill. that's utter border security. you can call it a new wall, call it whatever you want, the president's priority was to
secure the southern border and that is what this does. let me finish your thing. land parenthood -- it's a fair question. we had a good discussion and after talking to some of our most pro-life supporters on the hill, this president made his case fairly strongly for his pro-life position. pencew vice president having to break the tie on that vote. on the states with the medicaid funding. you've seen the executive orders. this bill includes all the traditional protections of the pro-life movement. and we decided if you want to stake vote on the hill to out your position on planned parenthood, do it on health care bill. the outside groups agreed with us. if you want to prove to the
folks back home that you are pro-life, vote for the planned aaron had bill. i've already talked about century cities. it's something we gave up in the negotiations. but here's how i look you in the face -- more money for the military, more money for southern border security. those are the same exact whenities i talked about we laid out the budget. that's how i can tell you i'm absolutely satisfied we funded our priorities. >> the new one along the southern border looks like that border wall right there? mr. mulvaney: the other photo we cannot get up is the levees. short term fix? >> that is not a temporary, short-term fix.
>> where is that at how many miles are you going to get out of it? mr. mulvaney: i'd don't know where it's going to be built. i think $347 million. is more expensive to build a wall in certain places, so this is going to be a replacement. if it's cheaper to build a new wall because we have land acquisition here, there are probably roads out there to service it. you have to build the infrastructure just to get the teams out there to build. we haven't done the math on how we miles we can build. we do have hundreds of millions of dollars to do it. when can we see construction and when will you go put up a wall? i don't know
exactly, but this wall is being installed on the southern border today. >> when it comes to the budget for the wall, it is very expensive. that's one piece of the immigration issue. about the larger piece of the immigration issue? are you have people who overstaying their the says, that is more of an immigration issue now,in the past and even just dealing with the southern border, have immigrants from all countries coming here versus just the southern border. mr. mullaney: it's a fair question and let me answer it two ways. first, this is a pure funding bill. there are certain policies wrapped up into about both parties would push back if you try to tie something as large as immigration reform to a funding bill.
they will tell you they are not supposed to authorize. it is a one year funding will. it's not supposed to be a carrier for a long-term policy change. they really don't like to do that on hill. that's the technical answer, but to the larger discussion about why do this and ignore the other topics, this is not just rhetoric, i believe this and i have them through this as a member of congress, it's difficult to have a conversation about immigration until the southern border is secured. many of you know the examples and ronald reagan when he did the amnesty and never got the wall. a lot of folks say fool me once, shame on you. until we secure the southern border, we don't think it is productive to have a larger conversation about it.
>> the conversation has basically just been focused on the southern wall and it is just not there in the conversation from the white house. no one is dealing with the bigger issue. i'm wondering why is there not talk about it? mulvaney: i think the administration needs to have credibility on this before we start talking about immigration with anybody. no one will take us seriously until we have satisfied the southern border. you have to go out and secure the southern border first. >> i have to get it when i can get it. is it more about the numbers or the issues when it comes to
these possible waivers and the issues of substance abuse, taking the substance abuse component out of the aca? i'm asking that because this current president who ran on the issue of fixing the opioid addiction and heroin addiction, that canave this piece possibly take the substance abuse or program out of aca. how do you justify that when these republican candidates ran on this. mulvaney: i will speak to the philosophy, which is i believe the states will do it better than we will. commitment this administration has to opioid abuse and i think there may be funding in this bill that we approve of. we are committed to that but i think we recognize the reality nimble and are more
tuned to their local populations. state legislature in south carolina and i would have loved on many different levels to simply have the federal government write us a check and say here, go help these folks we want you to help because we would have done a better job. that is the philosophy behind all of these waivers. the federal one-size-fits-all may not be the best solution. earlierentioned president trump was upset about how the democrats portrayed field. is it right to shut down the government because of how something is portrayed? mr. mulvaney: i think what he is foreshadowing is this place has to change. we have to do something. we cannot simply muddle along using the same models the previous illustration has used. down, that isshut
several months away. >> a follow-up on the notion of a good shutdown -- wouldn't most americans agree shutdowns are bad? further to that point, it seems you may have answered your own questions about the government shutdown. >> both sides are not getting everything they want. >> isn't that what the american people want? sending both sides can agree on? how can a shutdown be good? >> that is exactly what we want and that's what we have given them with the agreement. my response was the president wants to see washington better, change the way it does business. frustratingt is so
because the democrats can go out and say we won and they lost. that's on a bipartisan way to approach things. i can't imagine ronald reagan and tip o'neill having that discussion. >> i wanted to ask you about republicans. on the house side, there have been budget bills that simply can't get enough republican support to have on their own. do you think it is possible to do a republican budget will with republican votes alone? mr. mulvaney: i do. there are many more appropriation bills that passed with just republican support that people don't realize. you don't hear about them because they die and the senate is incapable of passing a bill they cannot pass in the house because they have to pass the 60 vote rush holt. i think you are selling the
republicans short, your selling the leadership -- let them speak their mind and their voices be heard in the next appropriations process, which starts today. this puts 17 to an end, but the discussion about the 18 funding begins right now and we very much want to see the ordinary appropriations process function. anything we can do at the white house to encourage that to happen, we will do it because we do not want to be here again. one of the things you asked about as far as changing washington -- if the appropriations process is still not working by september, that is a bad thing for the country and a bad thing for the congress, by the way. one of the things we like as members of the government, not talking about members of the administration, the proper for the proper
functioning of the constitution of the government. the house and senate are supposed to use the power of the person with a do not do appropriation bills, their constituent voices are not heard. we hope very much it comes back as part of the process. any follow-up questions you can always contact us. thank you again and thank you for letting me have a shine -- a shout out to my wife. john: a long -- david: a long questioningal their. a lot responding to two tweets -- the reason the plan negotiated was at least 60 votes in the senate which are not there. we do elect more republican senators or change the rules to 51%. the headline, our country needs a good shutdown in september 2 do it. our white house reporter joins us now. it was a question there where
the reporter asked about a change in tone in terms of how the story has been covered and how the white house has approached the funding of this bill. what has changed here? that is absolutely right. we've seen director mulvaney three times in the last 24 hours come out and talk about this edge deal and he has used a different tone in each appearance. that this was a great deal and a sign of bipartisanship between republicans and democrats talking about how the white house got a lot of its priorities into this bill. this most recent briefing was his most incendiary and active. he raised his voice, saying the democrats tried to take credit for a win and he would not stand for that. he tried to use some props to show the border wall is going to be somewhat funded even though there's explicit
language that there is no border wall money in the bill, so we are seeing some spin on both sides but director mulvaney definitely and think his rhetoric in this most recent victory, saying the president one in this negotiation and the border wall will be something that is funded in part by this budget deal. david: a lot of people having a problem that good and shutdown were paired there. is it a change to a simple majority? we have seen as the president tries to mark's 100 days in office that he is frustrated with the way washington works in terms of how difficult it is to get legislation through and you typically need bipartisan support because majorities are not large enough to get to the filibuster. the president has talked about how that is an archaic system and how he wants to change the
system, so that may be what he was referring to. thank you. our bloomberg white house reporter. news crossing the bloomberg right now. hma has increased its deutsche bank's -- it's deutsche bank tote -- deutsche bank stake almost 10%. coming up, more coverage from the milken institute conference. colleagues are there. that's coming up here on bloomberg television. this is bloomberg. ♪
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call today. comcast business. built for business. hey you've gotta see this. cno.n. alright, see you down there. mmm, fine. okay, what do we got? okay, watch this. do the thing we talked about. what do we say? it's going to be great. watch. remember what we were just saying? go irish! see that? yes! i'm gonna just go back to doing what i was doing. find your awesome with the xfinity x1 voice remote. scarlet: from bloomberg world headquarters in manhattan, i'm julie hyman. julia: u.s. majors still
flirting with record highs. relatively unchanged. ahead of some key pieces of data this week, notwithstanding the fact that earnings season, the best earnings season we've seen in eight years. put out theted to moves we are seeing an oil at this hour. we'll trending lower at the day and then took a sharp leg lower just a little while ago. below $48 a barrel. a couple of headlines crossing which traders they may be affecting oil. libya's rivals are agreeing to dissolve malicious. also, a saudi prince giving an interview sing the saudi budget to visit narrowed more than expected. nonoil revenue exceeded expectations and therefore, perhaps there's less urgency to prop up the price. let's go to beverly hills.
michael milken is leading a discussion. erik schatzker joins us now with one of the leading investors who will be part of that session. thank you very much. crescentwith mark from capital. good to see you. from micken hearing mulvaney. there's a great deal of interest in tax policy and you are a credit investor. how important is tax policy and the discussion around tax reform to what you do? mark: i think it is not as important for credit investors as it is for equity investors. ultimately, it ripples through. a coherent tax policy, a lowering of tax rates will lead to growth. especially if there is corporate tax reduction, it mathematically
brings down the math -- the equity markets. the equity market as value today is cheap and that would ripple through fixed income, particularly in things like credit risk like high-yield. you should sayng that because many people feel even with the prospect of tax return and the other things the trump tax return might do, the market is fully, if not overvalued. atk: folks have not looked valuation for a while. butmore of a credit person something the equity markets tend to support his valuations and if companies are paying lower corporate tax, they will the rater earnings and so pe that portrays that might
effectively be 60 now. will this legislation people to be had? erik: that is a question i'm afraid you and i cannot answer. the stance the credit markets have taken have been very much risk on. there has been issuance by metals and mining companies. is that a red flag to you? in the first instance, no, a the second, it might be warning flag. we see a lot of issuance with signs of health in the market and we've had it both in the equity market and high and yield market. as is issuance skew toward and a lot of the new
issue markets this year, there's been an energy name. that would be something you look at. we recently had a deal -- they bets, notually good to say this one wouldn't be, but much the same way in baseball, right-handed high school pitchers are not good bets mathematically. typically these are not good bets. this one may be a great one. some financing -- this is the leonard green deal. that is being done by goldman sachs. -- you are a participant in the high-yield market and the private credit market.
on the one hand, there is certainly rate risk you have to undertake and in the lending market, you are protected by the growing rates. which is better right now? mark: the two large thematic risks, i worked for mike in the 1980's and we had much higher companyand it was more specific. roughly 5.6%. as recently as one month ago, there was a risk of two or three rate hikes. ninet risk being pretty because there was a default scenario of 2% rejected for this year. now, everyone is setting economic indicators in the way we did not used to and we are looking at gdp growth.
we are looking at employment taxers and whether legislation will be affected. moment, thet the treasury market has backed up a little bit. rateoks like interest increases are less likely and even more so, that forces people to focus on the chance to take credit risk because if rate stay low, will have a continuation of the economic cycle. erik: that is what the market is suggesting. we try to invest for all seasons and put the credit first interest rate not because we were prognosticating interest rates, but if there was a rise in interest rates, there would be a lot of repricing in the bank loan market that would ring
the floating rate down. libor would get repriced which is in fact what happened in that round. we were believers in credit then bad,ow, so we made that but when it becomes is a grind it out market where you are paying attention and what comprises the names of the benchmark, what industry is waiting to have an trying to make sure you get every basis point because in a market like this, every basis point count. erik: great to see you and thank you very much. he happens to, own most of the milwaukee brewers. julie: thank you very much.
we will have more from the milliken cons -- milken conference. scarlet will be speaking to someone who said they were expecting a correction late this summer. we will ask if he has changed the outlook. let's get a check on headlines from the bloomberg first word news. mark: house leader kevin mccarthy told a close don't -- closed door leading of republicans that now is the time to repeal obamacare. he said house members should be ready to vote tomorrow or thursday on the parties health care bill. that's after a senior member of the house vote counting team claimed they are about five votes away. bloomberg news found at least 21 members are opposed to the latest version. upse republicans are taking a bill that would allow companies to offer comp time for overtime rather than time and a half pay. that would be an overhaul of legislation from the new deal era.
supporters say it would enhance workers scheduling options and opponents say it would erode protection. say they in greece reached an agreement with creditors on restarting bailout payments after months of tough negotiations. the deal is needed to unfreeze the bailout program and avoid a default the summer so that it leaves greeks facing years more of austerity and hardship. times have changed in appalachia. america's coal country, miners are getting pay hikes and signing notices of as much as a thousand dollars. give credit to three global sources -- china, curbing its , presidention trump's anti-regulatory policies and investor bets that have in the last year doubled the market value of a buckley traded coal companies here in the united states. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries.
i'm mark crumpton. this is bloomberg. get back to to the milken institute conference in beverly hills where leaders from politics, business some entertainment and sports have gathered. take it away. i'm here with scott from his time and based on what the white house has said, i want to get your confidence level in terms of how the of ministration could move toward with tax returns. scott: i don't think they have the deal they want to get done yet. scarlet: someone called a term sheet. scott someone called a term sheet. scott i give credit to the administration that coming to is probably not a good
strategy, so they've given congress a lot of wiggle room. scarlet: it is something that will take the next couple of months would bear out. scott: i think secretary magician -- could we get by august or september, certainly by october. if we don't get it by the end of the summer recess, i think the markets are going to start questioning how effective the administration will be at eating a plan through. scarlet: what would that mean for infrastructure? scott: it is interesting. i think infrastructure is the easy one to do and i am surprised we are taking it in this order. it is clearly a bipartisan interest and it will be interesting to see if the tax plan search to stall out, if
they introduce something on infrastructure to get that through. if we could get the tax plan through by september or october, i think we have a good chance at getting infrastructure done. scarlet: is it too early to go in now? scott: absolutely not. we are going to get an infrastructure bill and a lot of infrastructure stocks have had a good mood -- good move. now is probably a great time to add to your portfolio. howlet: you talked about spreads are tight and you don't want to get caught up in high yields. why is there [inaudible] is a common pattern we see in the late part of the cycle. just because earnings continue to improve and there's a lot of confidence in the economy, the as it ages, people see
corporations piling on a lot of debt and we have a lot of debt on the balance sheets right now. as interest rates charged to rise, we will run into issues about free cash flow. i heardedman was on and him talking about the same thing. let's put it this way. for investment grade corporate debt, we are within 40 basis ,oints of the all time high compared to where we were in 2009. we are late in the cycle for debt. i think the upside is somewhat limited but for stocks, we have some good momentum in earnings. scarlet: last time you spoke with us in april, you said uses -- you expect a significant correction in stocks in summer or early fall. ?s that where you stand now
scott: i think so. we probably have more upside for stocks and the rally could go through late summer or august. we know that september and october are different and if we don't see good progress on the tax lan, that could be a bad indicator for the stock market. but having said all of this, i'm of the line from baron von rothschild when asked the secret of his great wealth, he said i sold early. it may be time to start taking money off the table. taken all the money out of our accounts where we have discretion, but as each day goes and we make new highs in stocks like facebook, it is an opportunity to lighten up and take some cash off. scarlet: paul tudor jones has said that market is getting
frothy and risk parity funds could be the trigger. with: i tend to agree paul. i was with him at the federal reserve where this was his number one topic and we had an opportunity to debate it. i think the one opportunity paul's view on the severity of the correction, i don't inc. we are going to have a bear market. we are not going to get a 20% decline. i think hall and i would disagree about the timing and severity, but on balance, i think he's right. scarlet: there's also some debate about how much risk parity funds are in the markets. the interesting thing is the concepts are easily if you talk to
me, what i say we are a risk parity firm? the are not, but there are elements that people have embraced. when the correlations breakdown exit,eryone heads to the risk parity tends to not do so well. so it probably would be a tough time. we talk about risk parity being a catalyst for market correction and we have the second round of french elections. what moves are you making ahead of the second round? that: i'm pretty confident marine le pen will not get elected. we are still in risk on. we were in risk on prior to the first round. we get more concerned about getting up into the german election in parliamentary elections in france.
focus. energy is the sector we are keenly watching. julie: we are keenly watching energy because we see oil prices fall. oil down after an interview with the saudi prince aired talking the nonoil revenue in the first quarter was higher than to beted, which seems decreasing the urgency of saudi arabia to pop up the oil price. energy is the worst performing sector, down about .8%. thea: let's get back to milken institute conference where we find jason kelly of bloomberg news talking to another titan of the private equity industry. great to see you. jason: we are here in beverly hills. it is lunch time and everyone is buzzing around.
i'm here with the president of aries management. buzz here and one of the things people are buzzing about our comments the president made to bloomberg around breaking up thanks. you are a veteran of wall street. how does that play through? mike: that's not really news. that has been part of the administration's platform since the beginning of the campaign. speaks to where we are in the world. there are two sides to every story. a big part in the narrative of the growth of our business is we have replaced the banks, so we get questions about what the current administration's plans are regarding the rollback of dodd-frank and vulgar. on the one hand, we have an administration talking about simplifying the banking structure and at the same time, talking about a rollback of regulations to make the banks
more competitive in certain parts of the market. up wall street is probably good for business. have i think it's good to more in the banking system that will ultimately be good for our system. jason: one thing people are talking about a lot is geopolitical risk, whether it's north korea or brexit or the german elections, how does that manifests itself in the credit markets right now? mike: the credit markets create certainty. as someone who is a lifelong credit practitioner, we are that andinking about there's so much uncertainty. i spent two years in france as a younger man and never would we be talking about elections in austria and france with this level of specificity. the connection to the global
market is key. we look at the rise of populism. it obviously has short term stimulative effect, but if not done well, it could be long-term deflationary for the credit markets and we have to make sure we strike the right talents. geopolitical conflict in places like the gulf and north korea could produce a significant jolt where the structure of the market is changing. jason: generally speaking, credit markets, healthy, real healthy? nearly healthy. they could run a super marathon. we last spoke i think six months ago and people talk about a bubble in the credit markets. i would not say that because the credit markets are quite rational. is a healthy yield
market right now. i think demand for credit is very healthy. liquidity in the market is very strong. valuations are rational. valuations rational? that's not a lot of what we have heard. : i think the markets have grown accustomed to thinking about them in relation to other asset classes. asset business and we've seen valuations and the private equity market elevated we have seen leverage go up and seen spreads tighten in the credit market. jason: coming back quickly to wall street, washington and the intersection there, how do you see regulation playing out in the next few minutes?
>> i think there's one thing we have learned -- regulations will enter the market slowly. some of the euphoria is wearing off and we're getting to rest tax about implementing and what that would look like. i think a lot of policies the put out by the administration should be good and stimulative for the economy, progrowth and good for transparency in the markets. jason: is there a single thing that would be good for your business? mike: i'd just want certainty. can get visibility we into tax policy and fiscal policy, the better equipped we will be to navigate the markets. jason: sporting the l.a. look with no tie. see you back in new york.
i'm going to throw it back to you in new york. julie: julie chatterley and i -- julia: we apologize for the brief interaction there. apple shares have been on quite a run. but will they continue post the earnings report? after the close, we've got the numbers you need to know, next. this is bloomberg. ♪
>> we're alive at bloomberg had -- world headquarters in new york in the next hour. plus, washington and london. the headlines around the world. dayhour left in the trading . not much changed. technology shares ahead of apple's earnings. the yen falls to a six-week low, below $48 per barrel. pressure on apple to deliver when it reports on earnings after the bell. the shares are up 25% this year, up an all-time high. plus, do not miss erik schatzker's con -- conversation. one hour from the close of trading.
a focus on earnings, individual earners. unchanged allges day long. nasdaq, evernd the so slightly lower. decision.e fed beneath that, a lot of big -- big movers. shares on stage further -- on pace for their best day, also to close at a record high after the company beat earnings, more than 30%, sales by more than 10%, $4.6 billion in revenue. by construction and mining. turning to immense and aggregate companies, trading higher on the ay, they beat earnings by significant amount, by 50%.
we have health care along with community health care trading -- they put off a smaller than expected community health. , very strongm line updates. investors clearly liking it. it's best day since 2010. a quick look at bloomberg. let's take a look at it or to nine. report, the big apple what we have here is earnings growth of more -- up more than 13% so far for the march quarter. right now, the earnings season is really shaping up to be a strong one. mentioned men -- on
apple. heavily dependent on the iphone, it has not yet entered new like ai. microsoft has -- could convert some mac loyalists. and earnings after the bell, fromweb, and he joins us san francisco. great to have you on the show. what is the bare minimum the company needs today to keep investors happy? >> everyone is expecting them to fall from the previous quarter. the extent of the fall is what is interesting. new customers, are they still winning shares with samsung and others? stellar performance of apple this quarter or even the
next quarter, how much of an improvement that product is, but really the performance in the months and years to come. >> i get that the bread and butter for the company's iphone. they can promise this would be a fortune 100, science of a fortune 100 company by the end of the year. what are we expecting there? >> the expectation is growth will continue essentially. that is interesting and important, but fundamentally, it is a tiny sliver of what apple does. it is a high-margin business and apple wants to be valued as a services company. it is probably going to be a 50 billion business in 2021 and apple does close to 200 billion
in iphone revenue. services, as you mentioned, is a higher margin business. one of the concerns among analysts is the product miss will not -- product list will not be as high-margin. apple is known for its high margins. are you hearing around what margins will look like? >> it is worth looking at how apple's r&d spending increased. a lot of people think it has to do with new products. a significant -- cigna of your part of that is bringing the -- developing things like chips. it helps their margins. even if they come underpricing areser -- pressure, they able to squeeze more out of what they make. they are able to broadly continue. >> a quick question on the dividends. this ramp up in the stock price the we have seen has put dividend yield write-down. not competitive with the rest of the s&p 500.
are they going to do something to make that look a bit more exciting? >> it is hard to predict what they do on dividends and a quarter basis. announcements, how they put that in dividends and buy back, those are comments people will listen for on the call. i'm sure the question will come up and what the reaction is to that will have a big impact. ahead to the iphone eight, will we actually get anything on that today? will there be any hints? >> they often make very vague comments about having new products and we are expecting to blow everyone away. be interested to see if they make any comments on the carpet or they had to make filings earlier this year which admitted for the first time in public that they are working on .utonomous technology
an autonomous platform, not actually building a car itself. any comments on that will be interesting. alix from san francisco. >> let's get a check of the headlines on the first word news with mark crumpton. mark: president trump and russian president vladimir putin spoke iphone today. call is being described as a very good one and that terrorism, north korea, and syria were among the topics covered. as for the syrian civil war, the white house says both just -- both agree the sufferer has gone on for far too long and the united states will send a representative to cease-fire talks at kaz extend this week. a $1ryan is endorsing trillion spending bill. he said today the budget increases for border security make the u.s. a safer country. paul ryan: i want to highlight important things with the
funding bill this week. this puts more boots on the ground to bolster border security. this is the biggest increase in border security funding in a decade. says, spy ryan president trump today about the nation needing a government shutdown have not sabotage ongoing efforts to repeal or replace obamacare. ceo of united airlines is apologizing again today for an incident in which a passenger was forcibly removed from a flight. better as heo do and other airline executives -- he said the way the passenger was treated was both -- was a mistake of epic portions. >> we had a horrible failure three weeks ago. it is not who we are and it is not this company and it is not as industry. we had many successes and it is important to note those.
the dr. was dragged off a fight after refusing to give up his seat and settled with united for an undisclosed sum last month. united has taken a series of steps to reduce booking on flights since the april 9 incident didn't and will raise $10,000, a limit on payments for customers who give up seats on oversold flights. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. this is bloomberg. julie: coming up, back to beverly hills for the conference or we will speak with paul, the global head of ficc, fixed income currencies and commodities. from new york, this is bloomberg. ♪
>> this is bloomberg markets. head back to the global conference in beverly hills where erik schatzker is waiting with a special guest. quite thank you. i'm here with paul hamill, who runs fixed income at one of the .argest liquidity drivers you are here to talk about the future of finance, with google, no less. >> it is fascinating just to learn who was on the panel. we are talking the future of finance. banking institutions up there talking about it, this time, it was google. fascinating just to see the different mix.
the key takeaway was the opportunity had become interesting enough that people like google will start turning their firm attention to the challenges and that will be interesting. >> how do they think about a topic like that, the future of finance? how do you see financial markets evolving such that you have to think about the medium term or even the long-term, the distant future? good at know we are risk. we also know we need strong partners to achieve the ambitions we have. we have the ambition to be a global market maker. the summary word of the future is about partnerships, leveraging and creating through partnerships, traditional players and technology.
interests me.t maybe not the easiest thing but the obvious route would be to partner with a firm already in the financial services business. there is ats to me least as great a likelihood of partnering with a firm that is not actually in the financial services this list. >> it will depend on which problem we are trying to solve. at the core of what we are analysis and correlation between global assets and income prices, it is a hugely important component. just as important is distribution. we create a lot of liquidity and we need to get that into the system. any traditional banking partners we have worked with have strong distribution networks. that as muchverage as possible and be efficient as to how we get liquidity in the market. thing people are talking about the conference is the potential for bank
reregulation. president trump talked about it with an interview of two collies of mine. your boss told me he loves the idea, a new glass-steagall separating commercial and banking from each other. if such a bill were to be drafted and ultimately passed, separating commercial and investment banking, what kind of impact with that half on fixed income markets? i think the most obvious and profound impact would be it would significantly change the game around competition p we would see a lot more competition overall. there would be new players in the market that do more and enable that kind of competition. what we see is if there is -- when there is more competition, .inancial markets work better as you can see, we are not afraid of competing or competition. we enter some of the most closed fixed income markets in the
world and we have succeeded in becoming irrelevant player. so we welcome the competition. >> is saying we would welcome more competition the same as saying there is not enough today? >> i think it is a reasonably fair statement to make. we continue to see a lot of concentration and a few players and a lot of big markets. there are structural reasons that is occurring, including, we have seen certain tier to enter three players step back from the markets. wehave seen some big banks compete with compete harder and stronger and building opportunities. big u.s. banks are very strong now. aggressive competitors. room for more competition and less. >> if there is not enough competition, what do we lose? aul: it is really hard to put member on. it is obvious we are entering into a financial -- where there will and more
volatility, not less. until we are in that situation, that is when the real cost matters. hard to say what that would be right now. the environment would suggest we need as much competition as possible and as much globally available liquidity in the system as possible. business update with you if you don't mind. last time we spoke, you the biggestat priority for city dell in fixed income is expanding on what you had done in treasury issues. how is that going? paul: we are pleased with the progress we have made there. you think you know how stuff will go but it is not until you're in the ring that you find out. we see already, several hundred new institutional clients on board -- it has been a
phenomenal reaction we hope to achieve. the demographic, it is amazing. the ability to demonstrate not -- weo we have the best have a full-service model and we can transfer the risk when it matters. >> there is competition and not just from the banks. competition from open door. going back to what you were saying, more competition, the better? open door is the platform and not necessarily a competitor. are multiple platforms, some dominance in a couple of platforms. those kinds ofme initiatives. what we have not seen is what problem they are necessarily solving. but yes, the opportunity to create a little more access in liquidity and allow more people to put liquidity into the treasury market, that is definitely something we will need.
what are some things you are thinking about if you have not decided to do it? paul: we have another of -- a number of initiatives. we are big build to doing very well but we have to go very deep in the products and very broad to really get success. that is what we built last year in europe. gross to become more impactful. we were thrilled to open an office to expand european markets. we have a number of initiatives we continue to grow in the equity side. several areas. for me in particular, deepening , relevant in the products we trade, and really providing value and quality x .ould -- execution >> always great to see you. thank you.
he runs aul hamill, fixed income at citadel securities. much more coming here in beverly hills, california. for now, to you in new york city. >> thank you. as he mentioned, we will have much more. >> still ahead, quite a run this year. will the big gains continue post the earnings report? to trade today's options insight. this is bloomberg. ♪
getting closer to 10. that is an important level historically. it has not been often that it has gone below it. >> there has only been nine times where the vix has closed below 10. the 1990,f times in late 2006 and early 2007 and 1994. what is significant about this time with being around 10 is we are seeing it happen because sector correlations have broken down from 90% before the election to about 55 or 60%. you are having sickles and non-cyclicals counteract each other when it comes to volatility. one thing you need to look at is the earnings coming out this weekend will drive the market here it is technology. technology has a 93% correlation to the market. that is what has driven the returns this year. as technology goes, so does the market. annoying, it is really watching them focus just on vix. if you look at 2000, it is 15.8,
a 50% premium. this is one data point investors should look at. volatility, vix, the russell 2000, so you can get better information by that. the vix is only a 30 day outlook . >> i want to get to apple. when you look at other indicators, are they also showing complacency and low volatility or are they showing higher? it is showing is the market now is not concerned about the rest of the earnings season. you are seeing the vix below the average. you are seeing overall the market is pretty content with the way financials have reported so far, and the rest of the market has reported what they will do going out. >> let's get to apple after the close of trading. what are you looking for from apple and your trade today, especially looking further out?
>> a lot of people are worried because they missed the move and apple. in one way, you do a risk reversal where you sell future volatilities so the 135, you want to fill that out in september. to reduce your cost by the 150 call. it costs you about three dollars. this helps you do a long trade into what people are looking policy in the catalyst, sales guidance, so if you missed it, you can see the risk reward here. the most you can lose is three dollars and $.10 until it gets to the 135 level where you want to be a buyer because the natural buyers have got so much cash on the balance sheets, this is a very conservative way to play earnings now into september. >> conservative because 150 of september of -- implies there is not a lot of upside. >> what is interesting is this earnings season is actually, volatility is compressed and you are not paying up for the
earnings report. typically about a 40% move, we are 3% in the options market. been baked in. everyone knows the new iphone eight possibly coming out, earnings, everything is baked into the cake. a cheap way to get the exposure you did not have before. >> thank you so much. kevin kelly of recon capital. >> thanks. still ahead, more including the chief investment officer of caltrans, the nation's's second-largest pension fund. stay with us. you are watching bloomberg. ♪
interference, and questionable decisions by the fbi also played roles. during onstage interview for the women international's annual luncheon for new york, secretary clinton said she was on the way to winning. a combination of events in the letter to congress, resurrection -- resurrecting questions about imo passes and wikileaks repeated leaks, that she says scared off people. the bipartisan spending bill during a white house briefing, mulvaney said democrats were making false claims and saying the president looked -- making the president look bad. >> democrats have tried to claim victory on this, a strange way to look at a bipartisan discussion. in a bipartisan meeting, it is unusual for one group to walk out and spike the football and say hey, we have one. it d