tv Bloomberg Markets Americas Bloomberg June 6, 2017 12:00pm-1:01pm EDT
vonnie: from new york, the top stories from the bloomberg and around the world. caution is raining -- the ecb meeting to the u.k. election, the u.s. stocks are retreating while havens such as gold, the yen come in u.s. treasuries going up. more from our interview with tim cook, he explains what took apple so long to come up with homepod. later this hour, speaking with the role of-- public-private partnership. halfway through the trading day this tuesday. well into june and julie hyman, looking red. ulie: a tight trading range
that has characterized recent action or lack of action on the major averages and all three major averages near records but the stall continues for a second day. the two worst performing groups are consumer discretionary and financials. let's take the second first although the first is not in consumer discretionary but staples but consumer related shares doing poorly today all walmart is falling on one of the things that may be affecting it is an announcement by amazon it will offer lower-priced prime membership to people who receive government assistance. they will be able to pay $5.99 per month instead of the $10.99 or month that prime customers currently pay. as for disney, unclear what is going on, may have something to do with the lawsuit against abc characterization of a south dakota meat processors ground beef products whichk slime with --
trial is expected to go on for eight weeks. sharply lowered and macy's in an investor meeting talking about its gross margins, saying it cannot expand gross margin on its apparel side overtime but cannot say when it .s beauty margin will grow the cautious comment sending shares lower and other department stores also taking a hit. financials are being affected by the treasury market with on,inuing -- what is going the 10 year yield down eight basis points, 2.14% the handle on the 10-year note. one of the stories affecting that is the bloomberg news scoop reporting that china is interested in raising its holdings of treasuries. already a rebound in holdings this year. we are looking at chinese holdings of treasuries and belgian holdings of treasuries because belgium is seen as a
place that houses some of china's investments in u.s. treasury. we had seen a decline in 2016 and a little bit of an uptick, only ghost of march, this data but the story today reported that there is a continued effort to potentially raise the holdings. vonnie: thank you for that market update. as you were finishing, i want to point out that macy's investors day has ended and stock down 7%. during the investor day, a couple of headlines were that, macy's is considering using the upper floor of the herald store and the rooftop of the store to explore alternative uses. our next guest may have something to say about macy's -- he istself into a injured in an rates and investors are fitted to safety events, the risk u.k. election, the ecb policy meeting and james comey's
congressional testimony on thursday. how should investors be positioned? you are the lead portfolio high incomethe tcw equities and the global reach funds. on macy's, it is in the news this minute and shares down 7%, does it need to become a race entirely? optionhould explore that , macy's is a traditional retail company, outside of the scope of what we invest in. that strategy has been followed by other countries -- companies and is liable. vonnie: why rates? are your portfolio made up of those two types of investments? >> not necessarily, we focus on high dividend space.
also lots in the market -- any dividend oras a 2% higher. utilities, telecom, consumer stasis -- staples. vonnie: when you go into -- do you buy specific names are the -- ordesk or the index the index? >> we are asset managers, we have a thorough process based on fundamental research and analysis. we will evaluate the company's prospects and model out it's operational metrics, occupancy, vacancy rates. we will vet the management team. the short answer is that we are active managers. vonnie: are you looking in the
u.s. or real estate in europe? >> we look at risk globally, the mutual fund i manage focus is a mutual fund and a broad market fund called high dividend equities and in that one weekend on the entire set of sectors. opinionwhere in your are -- where are you finding the most opportunities? >> across the board in both spaces. reets have underperformed over the last year and since the election but part of that is because of the interest rate which has negative interest rate. thoughtto what people would be the outcome of the trump victory. we think that unearths value in the names that have been been blindly sold off -- i would point to norstar, a top holding
of ours. , the norstar is the conglomeration of colony and norstar, which also had equity built in as part of the platform. you have a dozen -- diversified , wes focus on equities think the company trades at a significant discount because of the complexity of the joint format. vonnie: you have confidence in the u.s. consumer and in the health of the real estate industry in general? , we think the selloff in the space has been overdone. we are quite cautious in a broader market outlook. we are aware of the prizes -- positives, the housing market is doing well and unemployment is low and the prospect for a trump pro business agenda, deregulation, corporate tax reform, potential infrastructure
spending, we are sensitive to the fact that they could be major positives but, with the s&p up 40% since the election, we have to wonder whether that has already been priced in and for us, most telling, the fact that the credit markets are showing an unambiguous signature of late stage dynamics. to us, that is a major harbinger of caution. vonnie: the other fund, what are you liking, you can look at anything? >>bdc is an area of an interest to us. another top holdings is ares capital, one of the largest bdc s. in financingrole or lending to the middle market. the u.s. middle market is huge, companies from $10 million to $1 billion in annual revenue. the world's fifth largest
economy ahead of germany standing alone. that sector of the economy has needs -- vonnie:economy ahead of germany standing alone. did you believe the president will alleviate these needs by undoing bank rate relation and allowing middle sized businesses and small businesses to thrive and prosper? he will try but i am not sure to the extent he will be successful. even if you allow for deregulation, we think that the lending opportunities are lucrative enough for banks to get back into it. vonnie: what do you like best? ourres capital corporation top holding and tbg specialty lending. we have owned triple point venture growth, a tech focused bdc company. vonnie: a fascinating conversation, thank you, the managing director of high income equities at tcw. let's get to the first word
news. >> police in paris say the situation under control and notre dame cathedral, a man shot and wounded after attacking officers with a hammer. the associated press says a union official said the alleged attacker went after police who were patrolling the esplanade in front of a group -- people and the assault in front of paris police headquarters comes four days after a terrorist attack on london bridge in the u.k. capital which killed seven people and left dozens injured or missing. the paris prosecutor has opened a terror probe in relation to the attack. british police has named the third london bridge attacker, identified as 22-year-old youssef zaghba. he is believed to be in a tie in national of moroccan descent who lived in east london. the other two attackers were named monday. all three were wearing fake suicide vests and were shot dead
late saturday after ramming a van into pedestrians on london bridge and slashing and stabbing people in a nearby market, seven dead and dozens more were wounded. the mayor of london says he does not care about the repeated insults he has received run the president of the united states. he said today that he could not be bothered about what donald trump tweets. made history as the first muslim leader has repeatedly been targeted by donald trump on twitter. after the saturday attack, mr. the mayor by telling the public there was no reason to be alarmed by the atrocity, the mayor was referring to the presence of police officers on the capitol street. president trump maybe adding pressure on qatar, he said that middle east leaders he met last month accused qatar of financing extremism, the saudis, united arab it emirates, bahrain, egypt
has cut off air and sea transport and have closed qatar's only land border but they deny reports. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. vonnie: thank you. coming up, apple enters the ring, debuting the homepod yesterday, more from our exclusive interview with tim cook on what he is betting on a voice controlled speakers. and taking on tough competition. this is bloomberg. ♪
markets. his first major new product in two years at the center of a growing home tech empire. the homepod speaker is the latest effort to keep customers in its ecosystem. and an interview with tim cook, our emily chang this does the future of the tech giant and why can cook is challenging amazon and google. mr. cook: we have tried to build something that is a breakthrough speaker first. music is deep in our dna. dating back from itunes and ipod. we wanted something that sounded unbelievable. i think, when people listen to it, they will be shocked over the quality of the sound. of course, it does a lot of other things. all those are important.
wanted a high quality audio experience. emily: you are focused on how this could reinvent music at the home, what about other things, can i make a phone car, ali car, order groceries --? mr. cook: you can do a lot. one of the damages is that there are a lot of things siri can do from the phone and we will start with a patch of those, as we showed her in the keynote. emily: talk about e-commerce which is important to these devices, i can order paper towels on amazon at go, does this say something about your aspirations and retail? mr. cook: i would not read into it in that regard, apple deeply cares about music and wants to deliver a great audio experience in the home.
we feel like we reinvented it any portable player area and we think we can reinvented in the home. we know that people want a speaker now to do more than that. obviously, we want a speaker to do more than that. we are combining what has been thought of to be two different things until now. i think people will love it. i am a user. i think they will be blown away with the experience. emily: how long have you been working on this? mr. cook: multiple years. the underlying technology in here is something to behold. to get the experience that we wanted at the quality we wanted, you know, like apple products in general take multiple years to do, starting from the core
technology and building up to the project. mr. cook: you have people --emily: you have people saying finally, what took so long? mr. cook: for us, it has never been about being first. if you think back, we did not have the first mp3 player or first smartphone. not the first tablet. there was a tablet a decade before but very few people used it. arguably, we shipped the first modern mp3 player and the first modern smartphone and the first modern tablet but not first in those. for us, not about being first but being the best. and giving the user an experienced that delights them every time. we do not get -- we do not let inpatients resulted in shipping something not great. vonnie: the apple ceo tim cook speaking exclusively with emily chang. time for the bloomberg business
flash. goldman sachs ceo lloyd blankfein has highlighted the need for infrastructure spending in the u.s. he says that he is impressed with the condition of their airports and roads and stress the need to keep up. his sentiment echoes calls from j.p. morgan chase's jamie dimon. china has told the u.s. to stay out of its affairs in relation to a probe into 3-d thingies who went missing last month -- three detainees who in missing last month, they were investigating labor conditions at a factory that made shoes. the activists have been detained under a new law for illegal eavesdropping. starbucks selling meals from snap kitchen at a stores in houston, snap didn't let by the former weight watchers ceo and focuses on healthy ingredients. starbucks is trying to compete with chains like mcdonald's.
♪ this is bloomberg markets, i am vonnie quinn. takes ag m&a reporter closer look at the potential merger between sprint and t-mobile. he has some exclusive reporting and will tell us what kinds of terms are being talked about. is too early to know if sprint and t-mobile will attempt a merger. according to several sources i have spoken to, they have kicked around deal structure ideas. one idea that has been talk about may make some investors or
wall street banks unhappy. this is a stock for stock merger, all stock merger, where the sides would set an exchange ratio, giving deutsche telekom a slightly higher interest in the combined company then softbank. deutsche telekom owns about 65% of t-mobile and softbank owns more than 80% of sprint. in the structure, georgia telecom would want to consolidate the combined holdings of the companies to make their earnings on their balance sheet and allowed go to telecom to control the entity -- deutsche telekom to control the entity and president of softbank would not be the controlling owner anymore. deutsche telekom to do this would get a folding company and earn within 50% of the company with softbank being the minority holder. an idea, not necessarily the structure and no deal may take place. talks are very early and both
sides are exploring other options in addition to a merger. vonnie: can you repeat this? i am kidding. banks haveall street spent a lot of time on this, why wouldn't they like this? >> because there are no financing fees. in other words, in a typical acquisition, the idea would be, you would have a buyer and a seller. you would use cash to finance at least part of the deal. jumpstreet banks typically onto these deals and raise their hand and say, i am willing to lend because the price that can be $20 billion, $30 billion, $40 billion in debt but in this field, and all stock, stock for stock deal and no need for financing. because of that, the likely scenario would be that the companies involved would use far andr wall street banks
there would be zero lending fees. vonnie: why would investors not like this, typically no debt is a good thing? >> it depends on what side you are on but typically in an acquisition for him, there is a premium associated with a deal and in this case some exchange ratio set but no premium. i have been told by sources that georgia telecom does not want to pay a premium to sprint, they feel like the m&a premium, if you look at sprint, soft performance over the past year, you can see that sprint has really risen from about three dollars per share to $8.85 now and the same goes for t-mobile. their stock has risen, more performance than sprint but in addition to the fact that investors are thinking that a deal may take place. one investor i spoke with said, if you are in the stock, he the --ck, the reason you are in
either stock, the reason you are in because you will feel a combined company will have so many synergies you want to be in there for a deal but not feel like a deal premium may give you a wake surge in profit. vonnie: anybody else in their? >> maybe the cable companies, dish network, maybe other mystery parties. vonnie: you will tell us when you find out. our intrepid m&a reporter with our deals report. --ing up, i will speak with his thoughts on the president infrastructure plan and the public of -- the role of public-private partnership. this is bloomberg. ♪
down 22 point. or the s&p 500. bank stocks, the one of the more interesting sectors, let's get to abigail doolittle. >> the banking sector today, the financials, one of the worst help students when what we do on the small declines. have the bigger banks trading lower. jpmorgan is managing to put green and morgan stanley is down a half a percent very this is familiar team. we have the s&p 500 bank index down. seven out of the last nine trading days. particularly the assets, we have a decent haven bid today. we have four basis points near level around levels come at
levels, in fact, since the election. bonds move up in yields and has reversed itself. the inflation trade coming up there. the week move down -- the move helping the yen. this is a big haven bid on the day. as is consistent with what we have seen on the year. certainly not consistent with the reflation trade, though. it has been reversing sometime. this is jihadis check metv. -- at the beginning of veer, the bloomberg dollar index has started to decline since the election taking the 10 year yield with it. the two are trading in tandem at this point. stocks or near all-time highs. perhaps something has to give. something is giving within the sector composition. something in the reflation rally.
. we see out of the election a big pop. especially with united rentals. since the inauguration, all the stocks are down on a percentage basis. we don't have details of a potential infrastructure spending plan. investors hope for $1 trillion. the devil, they say vonnie, is in the details. abigail, we are keeping our eye on infrastructure during this week. on that's notes, president dollar one train campaign promise -- $1 trillion plan has been a campaign promise. tax. is also even apple ceo, tim cook, said a lot to be repatriated and he
told us how they could help. >> and our view. a required tax. you're not asking the people that have had earnings from their international subsidiaries if they would like to bring back money, you are saying that you must pay the government extra -- x percent now or over a certain. of time. my own advice would be that the u.s. use that money for a significant infrastructure spend in the u.s.. it creates jobs. vonnie: turning me now to discuss the researcher plan and the role of the private sector is jim, the ceo of milstein and company. it is came out with a 30 page recipe for how this could be done. right? >> yes. vonnie: let's talk about the
ideas. when the repatriation tax, the president is calling for a $200 million to have eight men that's $809 more come online -- to have 0 million more to come online. >> everybody has a shopping list but is unwilling to use a credit card or don't have one. the budgetary disputes between lower taxes, higher spending, ught infrastructure spending up in it and it has been a loser. has aderal government percentage of gdp and is spending less today than it has ever spent in the postwar. . period.ar vonnie: you would think that every congressman or
congresswoman or every sensor and every state would have something good to say about infrastructure spending. it's really how to get it done. what to do prescribe and your 30 pages? >> what we have outlined is that there are ways to facilitate private funding of infrastructure. it starts with who owns what. united states, for example, airports are owned by state governments largely. or municipal governments. as long as they on them, they are obligated to fund them. , similar to that of the federal government at state level, the state budgets are constrained. whether new york state is prepared to raise general taxation, to rebuild kennedy airport, or impose user fees on passengers who go through the airport. either way, nothing is for free. somebody will have to pay for the stuff and question is, do we do it on the budget to the state and go -- looking government,
the we do it on the budget of the federal government? three s users to pay for the services they enjoy? vonnie: the trouble is with each of these, something is wrong. rural tollroad that no one ends up paying for. >> these are balancing acts. you would hope congress could resolve them with leadership from the white house. the truth is, the last 15 years, they have not been able to resolve. >> what do you think of the president's plans of our? with air traffic control. you can't say that is a bad thing. is $200 billion attracting it hundred billion dollars more true? does he need to be talking about tax changes to missable law? let's review. the federal government has direct spending up about $100 billion year, right now. it also subsidizes state and
local municipal bonds making ax exempt.n those tex $150,000about $150 -- that pales inn in comparison to what he's been on social security, medicare, and these are the kind of investments in the future editor of economic growth, and we are spending less and less at the federal level. what we have suggested is that if the federal government, the federal budget is not going to be resolved anytime soon, divisions between republicans over tax rates and tax levels and between the democrats are other spending priorities, entitlement programs, then we will have to find a way to get more private capital involved. in order to get more of that, the states and municipalities need to own water systems and weight water to some -- water
treatment systems. things we are praying for his users, we have to get those off of their balance sheets and into the private sector. went to encourage privatization to find the funding to do this. vonnie: had he gets that across the board? it's finally new york state. -- it's fine in new york state. president proposed to spend $200 billion more a year? less than half of 1% of the federal budget and that is his kick for infrastructure. it is less than half of 1% of the federal budget of the year. let's assume he is serious about spending that much more. you could encourage the states and municipalities to privatize their assets by giving them a financial incentive. you $20 billion a year to get to assetstes to sell their
that they are under investing in. the airports in america, the water systems in america, gets them to sell them. funds as an incentive. if you so you want to system, with $50l provide you million to upgrade euros. vonnie: sure they do you upgrade a system where known with to buy flint but everyone wants to buy new york. >> the people of flint are paying user fees for the use of water. they're are paying for their water. there are politicians that do a horrible job investing in the upgrade of those systems. replacing the lead pipes. vonnie: give you like repatriation has a better chance than what you're suggesting? >> address the people on the hill that there is a hundred billion dollars coming in from corporate profits soaring abroad, what would you do?
you have 535 opinions on where to spend it. it is just one tax source. federal congress has to decide whether or not they want to use general tax revenues to fund infrastructure spending, or whether they want to encourage user fees for people who are using the highways, airports, what are as a source of funding. bination ofm both. jim milstein, thank you for joining us. founder of milstein and company. let's get a check on the first word news with mark crumpton. >> a man was shot at north an the joe after attacking officers with a hammer. ae associated press signed union official that said the alleged attacker went after .olice
the result in front of the paris headquarters comes just four days after that terrorist attack on london bridge. dead and seven people a dozen more injured or missing. over thecutor has terror probe to the attack. tim cook says the company has helped british officials investigate terror attacks. took called my colleague emily chang, that he couldn't go into detail but he said that when apple has of information and authorities have lovely requested a, the company that have promptly requested it, -- has promptly requested a, they have went along with it. the national security reports that was what was on yesterday said russian voter intelligence agency said that sent spearfishing emails to
officials. a spokesman for but a mere put and deny the allegation saying they didn't see any evidence to prove this information is true. force got onian offensive to capture the northern city of raqqa. american commanders said the battle will be a long and difficult operation. operation activists say yes u.s.s -- fighters -- say backed fighters were fighting. global news, 24 hours a day, powered by more than 2700 in oversts and analysts 100 20 countries. i'm mark repton, this is bloomberg. bonnie? -- vonnie? vonnie: mark, thank you very we'll take a look at new features next this is bloomberg.
this is bloomberg markets. i vonnie quinn. a slew of new features for the apple watch at the annual developers conference yesterday. as we heard earlier, the tech giant unveiled the smart speaker as well. now fromson joins us san francisco for more. cory,not only those two but we also have poor china, google home, and i think we should at amazon echo. -- and i think we said amazon echo. does apple have a lot to contend with here?
we think of wearables such as .itbit >> it is a different notion of computing. i think you see all of these companies pursuing ideas along those lines. what else did apple reveal yesterday that might have gotten the eye of shoppers. looking at the tech blogs, they were beside themselves with excitement. there were talking about the mesh wrap, macro, cute little thing. the view -- the reviews are ridiculous. cory: yeah, i thought it looked like a cantaloupe to me.
it is really about software that makes things work. i think that is what the coverage is so important yesterday that reaching out to developers, trying to invite -- inspired them to write software, make the ios platform and macintosh platform more successful. you certainly so that in the of max they announced with the imac and macbook. it is a revamp of line. it puts really talking chips into the machines. that's something apple missed last time around. i'm proud to see that as it was needed. i'm coming out spring and strong with the new devices. you've also seen apple, and we talked about this yesterday, increasing its share. the rest of the pc world has been shrinking. they have been gaining on the success of the massive business that is the iphone. vonnie: most of its revenue,
could we see mac revenue increase given it is now unveiled a fourth series of new macs? cory: i think what is more likely is a retraction and of revenue from those coming years because, some of the macs will be out until the end of the year. i think that is why the stock has been uneven since the announcement. it's my their problem for them in the short-term. what apple is really going after, is an audience that is so important for so long, and they -- ted to it could happen with these new macs. ,onnie: there's a $5,000 mac the most expensive product ever. is it worth it? coming out and christmas time, just in time for something under the tree. vonnie: you're not getting one, cory.
not for me. [laughter] darn. really ahis device is bright device. cory johnson, bloomberg news. thank you. it is time for a bloomberg business flash. sit flagship has returned. on the half this 5.5% extends the company rebound. they are of 5% last year. has like the s&p overall during the same. seller for brands like a bunker trump and so on his soaring today. jittery boosted its forecast for
the fiscal year ending january canthat raises optimism g3 absorb the brand. the company is weathering the scrutiny when it comes to selling the evocative trump line. the largest your discoveries are optimistic about second-quarter sales. according to the business roundtable, economic outlook index, that optimism raised index to the highs of 13 years encouraged by legislation that will increase legislation and spur growth. says it wille ceo delay hiring and spending. he is the chairman of the roundtable. that is your bloomberg business flash update. coming up, a shakeup with j.crew. we sit down with the ceo on the looming restructuring for j.crew. this is bloomberg. ♪
vonnie: this is bloomberg markets. i am vonnie quinn. long-time j.crew treat is stepping down as ceo. ofgoing replaced by the head the home furnishing chain westbound. this comes as restructuring deals are happening. joining us now, senior creditor and list. his obviously lived and breathed three tell his whole life and he has been entirely successful at everything has done, for the most part, so why this shakeup now? he not be the right person to bring j.crew through this? answer for that is his experience with cap and 95. he ran it through 2002. this introductory which is invigorating, driving a lot of
stuff into the brand, but's the passion component alienated the constituency. you need to bring in a new management to shake up the core. let's also not forget, mickey is in his 70's such might be a function of collecting with h millennial's. vonnie: what about the new guy? it's coming from a home furnishing chain and is not knowing about the same demographic is catering to. i can imagine many millennial's from a cell. >> it will be very interesting to watch. you have to go -- you have a lot of of people down the chain in terms of both the creative side and that management side. i think it is a whole new
vision. let's not forget that mickey is chairman so he will be able to pull the strings a little bit and control with this goes. vonnie: yes, and overseer. he has a lot of retail experience. how are the creditors viewing this? anyway ae not doing it particular because it think they have a lot of other issues on the side they are trying to deal with. not to get into the details, but they are trying to get to see something like move the intellectual property outside of the collateral full that's guarantees the bank lenders contesting that. fort of the bond pricing its now is waiting on that event relative to anything that is happening in management. vonnie: what can a relationship does drexler have and what about
brett? >> given his roles, he would've been dealing with creditors that she wanted seven dealing with creditors percent. juniorostly in a management role versus etsy a post week or so the like that. if i'm creditor and i'm looking from the outside in, i'm encouraged by the changes they are trying to undertake. i'm also encouraged by the fact that q4, he saw a positive trends emerging in the great group of banner. noah, thank you for joining us. still ahead, democratic us can drives is at 1 p.m. and, as always, watch everything on tv . ♪
that's the lawmakers at the white house today. health careward on and tax reform is on the agenda. the testimony from james comey threatens to distract from all that. push forlong cincinnati is tomorrow. i will speak with the infrastructure investment group. you'll have more from our exclusive interview from tm cook -- tim cook and why he is not on any councils. -- advisory councils. president trump kicked off what tocalled a researcher week monetize and privatize the air traffic control system. he focuses on legislation