tv Bloomberg Markets Americas Bloomberg June 2, 2017 12:30pm-1:01pm EDT
>> from bloomberg world headquarters in new york, here are the top stories on the bloomberg and some around the world we are following. in markets, u.s. stocks at all-time highs, following today's jobs report. the 10 year yield is at its lowest level of the year. --lion or head on manager billionaire hedge fund manager says he will attract more investors. we will have more from his exclusive interview with bloomberg television. and we have the latest from walmart's annual shareholders meeting, where there are more than 40,000 people gathering to discuss the company. the let's get a check of the markets this friday with abigail little. >> the record for the major and the in the u.s.,
nasdaq is solidly higher after a solid trading for the disappointing jobs report on month of may, and the nasdaq is .73%, and all three major averages are on pace for weekly gains. in looking at the fact that major averages were modeled on that jobs report, not a big reaction. we saw the reaction to the 10 year yield hitting a 10 -- eight your low. it is a roundabout 6.8 basis points, and this is dunning is doing some adjusting things to the technical side. of trumphe big break inflation, hope and this range of uncertainty with the fed also raising rates. we now have the 10 year yield well below the range of 2.3%, filling a gap from earlier this year after the election at about 2.1%, but scott margaret guggenheim says
he believes this will go below 2%, maybe even lower to 1.5%. it will be interesting to see what happens. if that does happen, you think it would drag on the bank. that is what happened earlier. we had big declines were some of the big banks, including egg of jpmorgan, morgan stanley. and after the 10 year yield did drop down sharply, the bond rally did drop the between one 2%.t percent -- 1% to losses are a lot less than what they have been before, but this will be an interesting dynamic to pay attention to. the 10 year yield continues to drop, and you think that may have an effect on the jobs report. we have texas on fire. now let's look at another sector dragged today, this is energy and it stands out from the standpoint that president trump has backed out of the paris yesterday.eement the big reaction was in oil. you think it would be up, but
oil actually fell, and we now have oil down about 1%, dragging on some of the e&p games -- games. heard's worst days and said he worry. we have a bright spot that we do have these sectors and one subsector that is climbing -- airlines. falls delta airlines, united, and american all climbing higher. you have to believe as oil drops. >> abigail, thank you for that. the u.s. labor market giving mixed-signals last month. the employment rate fell to 16 year lows, down 4.3%. that wagethe employment growth . investors and economists are weighing in, earlier on bloomberg. >> this is a week to mixed -- this is a week to mixed report.
mixed in terms of where you would expect the labor market to be overall at this stage. >> we brought back close to 200,000 people that were dissatisfied or underemployed, and that to us is a really amazing trend. there are some very, very good news pieces in this report. >> there are some weaker numbers in the market today, but nevertheless, it is like the we are seeing and a 2.2% kind of real economy going forward. the -- im,and ceo of bottom line, what is this jobs report say about the health of the u.s. economy? >> basically, it says we have been stuck in the 2% right, and we continue in that rut to whittle away at what has been battening the u.s. economy and regaining some workers on the sidelines, but at the end of the day we are not going to see the expose of weight growth we would
like to see. i am a little concerned that we have seeing that been seeing millennials being dominant in the workforce, picking up the lower wages that baby boomers have been responsible for, but we are not seeing growth in the manufacturing sector. that is an area where we know there is a huge skills gap, and many manufacturers are telling me they are putting money into training workers as opposed to bidding up, because there are no skilled out there that they have to -- that they can higher. >> that last point you made might be something to look forward to in the future as a good thing. thatabout the idea participation is falling? where is it falling and why? we saw in the mail per dissipation rate, it was uneven across different age groups. it is hard because we have the nonseasonally adjusted data, and this is the time of year when people are the loyalist -- lowest skilled labor workers will join the workforce.
group high school degree saw a increase, but the only other one group was 45-50, and every other else one -- every in their had a decline labor force per dissipation rate. certainly, many people who voted for the president want to reengage that mail trump voter. we are seeing over time that people are starting to work part-time and said a full-time, and seeing the professional hires a still dominate. i think we will see a good professional higher in the month of june. we know this is the best year for new college grads in a decade, and they took a hit on the chin during the crisis and had to catch up, but they at least will finally be catching up and will show up in june. the real question for the fed is when will we have enough weight gain -- wage gains to support inflation or inflation of any sort, and that is where the question will lie in the next meeting, not the june meeting but the next one. >> and let a call another
economist. jp morgan's michael for lee says is part ge -- the fed of the cyclical growth of the economy. the evidence generally suggests that the labor market is tightening and the fed will continue to lean against that. --other words, rates are far higher as far as the eye can see, and winding down that major -- rate hike ine a june. they have already started talking about whether consensus is of 10 billion, -- $10 million, which should allow long-term rates to go up a little bit. should is the operative word. we are in uncharted waters again. the fed has never done this. they are walking on eggshells. there is a desire in the fed to get a roadmap in place as well before chair yellen stern expires-- yellen's term
in 2018. whether they get to that third rate hike, i think they will but it will not be september. i think it will have to wait until later in the year two -- year to do the other rate hike. and even though they are raising rates, rates have come down. 2.152%.0 year is that that might be a reaction to the jobs report, but does the 10-year stay there as well? >> i think it will rise a little bit, but the question is inflation. the main drag on inflation right now is the cellular-phone competitions, now getting unlimited data. you can only do that trick once, but it is lower the overall benchmark for inflation. it has a heavyweight in the consumer price index, and that is where the big movement was with cellular-phone prices, something we all have now and it does impact us. it cheaper data and a quality adjustment to how they measure ,hat lowered the inflation rate
and it will be harder for the fed to get to its 2% target. and there is an idea that we had some symmetry on this target. it likes to go above 2%. we are talking down to back up below 4% unemployment rate there. >> what about what's administration may or may not do in terms of health care, everything from infrastructure, which might impact housing, inflation, shelter costs. and two, the idea of a fiscal stimulus in some way. do you see any of that happening? >> i think certainly the balloon that the market has put on this fiscal stimulus package has stated the idea of being able to carry out health care reform, tax reform, edinburgh infrastructure spending. it is not even in the budget and -- and not infrastructure that spending. it is not even in the budget, and there does not seem to be much consensus and there is a lot of noise in washington now,
damaging their ability to move forward. there are some in the minority that think they can get something done in health care reform this year. that is necessary sequentially to get the tax reform done the way they have structured it, so i think it will be a big disappointment. what i worry about his places on the other side like construction, where immigration played a big role. we are seeing that with the -- pushing up the cost of construction and the ability to build entry-level homes, which we are early severely constrained there. and prices are continuing to escalate much faster than incomes in housing. fightyou see a major about the debt ceiling, or does it get raised? next i do not think -- >> i do not think it gets raised easily. dissidents within the administration and within the republican party, this is where the issue is, and then you have the democrats not agreeing with themselves either. they are also causing interference. fortunately, i think the debt ceiling will be an issue as
well. >> diane skvarla, -- diane's , ceo of dsne swonk economics. here's mark crumpton. >> president trump's decision is mistake."ed an "big speaking along china's premier, it was said that both the eu and china's distant re--- china disagree with trump's move. president trump has taken his travel ban to the supreme court. the justices will be asked to reverse a string of court suit losses for the order that temporarily halted entry into the u.s. from people from six majority muslim countries. is criticized as being created an animus and targeting a center of -- a single religious group. this explosion this week killed at least 80 people and wounded
i've hundred others. -- 500 others. the blast took place in the diplomatic quarter. teargas were is used -- was used to try to disperse the crowd. and new figures show the greek gdp should -- actually rose .4% after shrieking the previous quarter. and meanwhile, exports and investment fell. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. bonnie yeah kobani: thanks. -- bonnie? bonnie: thanks. couponsht capital president david einhorn tells bloomberg why he thinks gm's full potential has yet to be unlocked. have a listen.
>> i think that gm is strong in many areas of its business, and it has made a number of very strategic moves and positions itself very well for the future. there are lots of areas in operating and opera mobile -- in automobile companies, manufacturing, customer support, so forth. but one area where gm is weaken is its capital structure -- week is in its capital structure. it is financially too conservative for the value that is being created in the operations to be unlocked. the company has a market cap of just about $50 billion, $20 billion in cash, and another 13 billion or $14 billion -- $13 billion or $14 billion, and then there is money offshore places like china that is not even counting. with so much of this money being locked in cash, it leaves an efficient capital structure for the company and shareholders have been rewarded their with the lowest multiple in the entire s&p 500.
they traded a huge discount even to ford, where their pe multiple would be 30%, 40% higher. i think that something needs to be done to unlock the value it gm. >> that is the diagnosis, why has management not addressed this? they are concerned about their stock price, they know there is a problem. the ceo has a team around her -- why have they not addressed it? theink they care about stock price but they do not care about the stock price. i could lose that last five pounds, but could i really go through changing my diet and exercise to do that? g.m. similarly would prefer a higher stock price, but they are not willing to do what it takes to make that happen. >> is it possible that they are scarred from the experience of going bankrupt and having to come back into the marketplace? they are saying we need some money for a rainy day, and might they be right about that? >> sure. the company is forever grateful
to the united states were bailing them out and preserving the company through the last recession, and the company has capitalized to make sure that positively never happens again. i think there are several ways to get to that particular thing. you could decide you are fighting a last war and change the balance sheet to make it more conducive to the current system, current cost structure of the company, which is structurally improved, which would require much last quiddity -- liquidity in cash. other terms, you could do something clever, and this proposal we have made allows the company to keep the cash, all of its rainy day money, have its preservation for any future downturn that comes the exact same way they have it right now, but would unlock the value at gm. >> take us through that clever plan. it involves two classes of stock, essentially. what are those? now,u have a stock right and as the owners of gm, you get dividends and all the other values and other ownerships.
the separate the value of the dividends from the other values, you would unlock 30% to 50% increases in the value of the stock. >> so the dividends share and the growth share. and each shareholder gets one of each? >> one of each. you have the same dividends and the same growth you are getting right now, but you could trade one of them or the other, and the result is that people are more interested in dividends get new buyers coming in for those shares, and alternatively, if you are not interested in the dividend but the growth of the ble toy, you would be a buy the other share. bonnie: the annual walmart shareholders meeting has wrapped up in arkansas, with over 14 thing -- 14,000 people gathering to take on the e-commerce giant amazon. and emma, what, did they say about their biggest
online competitor? -- emma: no one actually mentioned amazon by name, it was referred to as be a word or that aher site, amazon was clearly big focus of today's shareholder meeting. they were counting on the fact that e-commerce sales in the up 63%, andr were the number of things that walmart is doing there to compete with amazon online. that'll happened since the of jet.com making $3.3 billion in september last year, and you have seen a number of different things in order to improve the offer online. they have expanded the diversity of products that are available, and also focused on delivery. free delivery to $35, which is coming amazon match to them
on. they are focusing on physical assets, there are 400,000 walmart stores across the u.s., and thinking about ways in which they can use that to add to their online offering to make it aboutonvenient and talk things like ligand collect policies that click and collect policies, -- click and collect policies, and using store employees to go that extra mile. the final line is that they want to protect the organization. bonnie: what are investors saying? what do they want? how to they want amazon to go the extra mile and maybe walmart could meet that? >> they like what they are seeing e-commerce. they think the strategies really paying off. he said it is not all about amazon, amazon does not have to fail for walmart to succeed. almost as important as walmart
are other retailers that may need to see that this creates opportunity for walmart if they are doing poorly. theylked about making sure are cleaner, better organized, higher in stock, which makes all sales of walmart as well. they still want to see traffic increasing in stores and sales increasing. >> and as much as they have come along the last 12 months, there are still headwinds. what did they say about those? >> or are headwinds facing walmart, and other things analysts have brought up with us is that there are other big price cutters who are entering the market, especially here in the u.s.. aldi, a germants
grocery store is planning on expanding. and walmart thought when they enter the u.k. market, they took market share away from walmart up overart was acting in the u.k.. investor wants to know what this will be doing to tackle that headwind as it comes along. and there is a negative retail environment out there right now. a lot of stores are doing poorly, and investors and analysts want to make sure what part of the head curve. bonnie: 40 live there from fayetteville, arkansas. emma chandra reporting live there from fayetteville arkansas. this man was rest -- asked about president trump's decision to exit paris accord. >> my reaction is that global warming is a fact. and by the way, as i said yesterday, i do not know if you saw my tweet.
i'm committed to the strategy, and the strategy was to integrate the warming. why? influencingng is the industry. it is all markets. -- youever will happen know, the global warming issue you have the state, and you have the company. we invest. when i invest in energy, i invest for 20 years. make decisions not because of regulations on it, but because i anticipate this market. in the mental will remain. -- and this will remain. but again, global warming is there, and for me, our strategy will remain permitted to
integrate these global warming ideas in our strategy. >> if you are committed, if bp is committed, if exxon mobil is committed, and so many other companies and other industries are committed, doesn't matter if the u.s. is in or out? >> exactly. would put into the real world and projects, we saw the corporations, the commercial corporations, because we invest. this is medium and long-term. commitment of this, we are more on the regulatory side and could accelerate or decelerate some decisions, but they make -- if i think that in 20 years the gas market will go because the coal market will -- the, the coal market
u.s. might be out, but by the way, i was thinking that european countries may be to know the with that. it is politics here. business. the countries or like the same. i invest in my core business because i think the market will decline. or i am looking at [indiscernible] for growth. and [indiscernible] inhave the gun to invest solar -- we have begun to invest in solar and wind, because it is the evolution of technologies. we cannot do anything without technologies. will trumps the decision -- will trump is a decision in fact any decisions -- will trump's
decision affect any decisions you make investments in the united states? no. the system authority shifted from coal to gas. i would like to see -- >> in other words, he cannot stop that. we take the decision and make the decision. and we will invest today in france for 25 years, because they are the first one to invest in coal. it is more confident to invest in gas. $2 billion investments, and the gas is low-cost, energy costs are low as well. this remains. so i think it is politics and
economics, and the project makes sense in the medium and long term. -- bonnie: let's say the look at some data after this job report out earlier today. we saw stocks rising, but everything else took a different view of that jobs. it was a weak report. to 9.78.down yield,k at his 10 year down to 2.16%. makes the spread 87 basis points. now the spread is 83 basis points. -- ons are seeing some buying -- bonds are seeing some buying's with theooks ahead
comey testimony, and also the busy week that is next week for the u.k., the u.k. election, the ecb decision. stocks in europe were higher as atl, and they were all record highs. the german tenure yield is that 27 basis points. you can catcher, all our interviews on the bloomberg at any time, the function is tv . we will talk to a little bit more about that earlier -- later on this program. this is bloomberg. ♪
drop from the paris accord triggers a wave of condemnation. that back when you threaten his domestic agenda for tax reform to health care. white house press briefing with sean spicer and scott pruitt which will take place later this hour. we will bring that to you as soon as it begins. saysdent trump's -- protecting jobs of the main reason. environmentalists say leaving the agreement will be a rep of the u.s. economy causing the company investment in clean energy and related industries. the fallout from president trump's decision comes as investigations into russia's meddling of the 2016 election are about to escalate. testifymey plans to publicly before the senate intelligence committee next thursday. quite what start nowh