tv Bloomberg Markets Americas Bloomberg June 22, 2017 10:00am-11:01am EDT
♪ >> here of the top stories we are coloring -- covering from the bloomberg and around the world. senate republicans are set to toeil their legislation replace the affordable care act. we take a look at the key differences between the legislations. american airlines is getting a big investment from one of its big investors. how will this impact the ongoing bad blood between u.s. and gulf carriers? and there are reports that some trump administration officials do not want janet yellen to get a second term as fed chair. will any uncertainty affect fed policymaking? and what do markets exactly want aheadhe chair? that's all plus more, we are 30 minutes into the trading day in the u.s..
waiting to see what's in this senate health care bill, among other things? julie: we are not seeing much of a change in the major averages. really adrift into a thursday for all slightly lower major averages. but i want to take a look at health care, not just today, though it is strengthening today. s&p in blue,he health-care stocks and white. they have done the second-best this year behind tech. it's interesting, given this debate, with the rhetoric we have heard over drug rising in nothing hasustry, materialized so it has been sort of study as she goes upwards for this group. it has gained some 15% year to date. movers, weindividual have got oracle trading higher here setting a record of 9%
after the company's earnings came in ahead of estimates. cloud business is up 58% in the fourth order. new software licenses are down 5%. but that's a slower to klein previously. staples according to reuters, they are in advanced talks to i the company, topping $6 billion a to reuters with platform , soialty products as well those shares are up almost 5%. we are also watching oil today after the steep climbs we have seen recently. although still below $43 per barrel, seeing some strengthening in some of these the depth oil names, but the move is relatively modest. finally, looks like an interesting day for warren buffett. home capital, the troubled toronto-based mortgage lender is getting a lifeline from warren buffett. he has become a lender of last
resort for the company, agreeing to buy shares at a deep discount, providing a credit line. something he has done for some of the big financial companies in the united states, but he's buying a big stake for the equivalent of 300 u.s. dollars for the company. some of the shares have been bouncing on that. remember, berkshire hathaway is the largest stakeholder in that company, rising after cutter airways said they were seeking to acquire a stake that would equal his. intending to invest $800 million. those shares up almost 2%. rent: i want to talk about . we are back about $45 per barrel, up 1% on crude, but it is the bear market in wti and brent that has been dominating all markets for the past couple
of days. the stoxx 600 is weaker on the third day, heading for the worst three-day drop in a month. in terms of the worst performers earlier it was the energy stocks. they have been the worst performing this year, financials performing down 8/10 of 1%, utilities falling behind. heading higher, up 1.5%. what's interesting is comparing oil against metals prices. this chart is normalized in the red line there, where you can see the normalization, showing that you could ask whether the aboutin oil is also
concerns in an economic slump, but metals prices would suggest not. you are seeing a lot of gains in industrial metals, with losses for crude. i also wanted to show ,ou their norwegian kroger central banks keeping ranks unchanged, actually scrapping its bias, as it said, oil prices over. finally, just showing you the guilt year builds. we have seen it yield lower, down three basis points, exactly 1% there, dipping below that earlier, vonnie. vonnie: back to u.s. politics, senate leaders getting ready to release their plan to release -- replace the affordable care act.
coming up at 11 a.m. according to abc news. as we await the release of the bill we are joined by kevin cirilli on capitol hill. been drafted in secret by mitch mcconnell and a group of a, but we do have some clues as to what might be in >> i have spoken with some sources who worked on the bill and they told me it would phase out part of the affordable care act medicare expansion while looking to keep parts of the obamacare law that are popular. offering protections to people with pre-existing conditions. democrats already speaking of healthfully, -- heavily, saying that medicaid cuts are simply that, cuts to medicaid. republicans pushing back saying that this is a much more moderate approach than what the house passed. i'm standing outside the senate banking committee hearing.
it's been delayed, i'm told, because republicans are meeting mcconnell,ith mitch who is unveiling the details of the health care and and will later head to the floor, where he will discuss it at rater detail. kevin, this session [no audio] this is going to be really tense, right? not afford to lose any more than two republicans to pass the bill. uphill climb.real more conservative members are saying -- wait a minute, we campaign of the notion of repealing all of obamacare. you have moderates looking at this and saying that their states are more moderate and heading into the 2018 midterm elections how will this impact the politics?
mitch mcconnell is a skilled politician, it will be interesting to see if he can wrangle enough of votes. the up or down vote is being planned for next week. it doesn't give them much time to think about it. vote would only require the vice president:, correct, but if enough oppose it it could be dead on arrival. this is something the white house has been pushing heavily. the president has suggested that he's more in favor of the senate version of the health care proposal that the house. in terms of where this is headed, we have to wait for the nonpartisan cbo score. i asked about that in an interview and was told point-blank despite procedural pickups they could be a way
around the cbo score, he's going to find a way to press his colleagues make sure it happens. want to be don't tied to a policy where they don't understand the specifics. vonnie: even the amendments have to be scored, it will be fascinating. thank you, kevin. emma: brussels today, the could be the first big battle of the brussels -- brexit negotiations. theresa may will outline how the u.k. plans to treat eu citizens after the breakup. it is expected to fall short of expectations. we spoke with the prime minister sweden. >> it's important to know the
kind of relationship they want and then it is up to both of us. emma: may is looking for a way to satisfy eu governments without running into opposition from skeptics at home. in england, 600 high-rise apartment buildings have the same sort of cladding used on the london tower blocks the earned last week. at least 79 people died in the fire. top u.s. banking regulators are ready to roll back roles imposed after his -- after the financial crisis. rethinkre willing to restrictions on trading and want to reduce the annual burden of stress tests to evaluate the ability of a bank to survive economic shock. president trump says immigrants should have to wait five years before getting any welfare benefits. he will be introducing legislation shortly. many legal immigrants are already barred from receiving
welfare benefits for five years or longer. powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you so much. oil, clawing its way back after falling into their market territory, still trading below 43. where does it go from here? that's next. this is bloomberg. ♪
oil recovering today after falling into a bear market amid speculation of rising u.s. out blunting opec led glut. joining us to discuss this further is the chief market strategist, ted siefert -- seifried. i don't have a lot of good fundamental news for crude oil, i'm wondering if we might be in the process of finding a near-term low and looking for a short-term. we could see a bounce to 44.25. if we look at the longer-term downtrend, a bounce to 48 .5 is not out of the question. it could bring in some of your speculative buyers, making it easier for those current laws to stay in position as well. i wonder if we are kind of getting towards the bottom for the moment, but that's just what the chart says. fundamentals, i
don't have much to back that up at the moment. looking at the overall picture, it's still pretty bearish. opec as well, not considering additional production cuts. what does that mean for you in terms how you are positioning? exactly. earlier iran said that they would consider cuts but then we heard news that the overall consensus was that they were not looking for cuts. sometimes the most bearish news in the market is a good time to take a bottom. while we did see a drawdown yesterday, there's still a lot of bearish news in there. 26 above the five-year average. rate counts, higher. look at gas inventories, we saw
a bit of a decline in suggesting that the demand was better out there, we are 10% above the five-year average, so all the way around it's difficult to get bullish on crude oil but you wonder if the worst of the news has been factored in for now and we could get a bounce from where we are right here. nejra: thank you so much. still ahead, janet yellen's future at the fed, looking uncertain as trump advisors reportedly want fresh light at the central bank. what do the markets want? this is bloomberg. ♪
what do the markets want? we are joined now for that and other russians by the head of global interest rates strategy at td securities. before we get the discussion, as there is much to be discussed, let me ask you about the potential unveiling of the senate health bill, why should health care and its future have an impact on rates? huge impact will you what's next. if we can look kind -- we on health care, let's say it doesn't get past but they stop voting on it, the next step will be taxes. and i think the rates mac -- market has priced out for fiscal stimulus. the chance in the market is almost zero. if congress can stop -- start work on taxes, you got the entire fourth order. there's the debt ceiling and the government sharp -- shutdown, maybe the market will say, ok,
we can probably price in a probability of tax cuts. i would argue that it would mean higher rates. house passage or non-passage of the health care bill for equities. when that didn't matt -- pass, that's when the market started pricing out this go stability. it certainly matters for if we have a chance of fiscal stimulus at all. if you are still talking about health care at the end of the year, there's no chance. we will definitely keep an eye on that threat the week. janet yellen, we always knew that there was a? about a second term. it's difficult to continue on the matter who is in the administration. this time might be different, though, and we are hurt -- about there rumblings different types of people that might be in. what would that mean for the orthodoxy of the federal
reserve? worked soew chairs hard to affect credibility and independence. even if not an academic, it's focused on credibility and independence and i think the market can look through the transition. if you get someone who is more dogmatic or driven by policy rules, that's the market we get nervous about. inflation and risk premiums are very low. i think if there is any risk of that, the markets are not pricing in a significant shift in fed policy. it's interesting that you say that. i have the 10 year breakeven chart ready here for you. without getting into how much of this is breakdown in the breakeven, the drop in
commodities, you do think then that the market is actually what's here or what it will do with the balance sheet? certainly there is the commodity aspect to it, but the five year breakeven should not have as much of the recent drop of commodities and it. the fed is making a policy mistake here. the market is calling the fed's bluff here. getting the portfolio runoff hiking this year based on the inflation and growth are slowing down with no chance of fiscal stimulus. the fact that decline is telling you that inflation risk is declining, if you get the fed leadership change used for more hikes, we could have a lot more room to decline.
with the fed that's continuing its hiking cycle. what about how you are positioning yourself along the curve? there's some disagreement here with many going against what you're saying regarding long-duration. i'm short duration here because i think the market is underpricing. the curve has moved massively over the net -- the last week. it's this idea of policy mistake and i think a lot of that has to do with the fed continuing to hike higher, but the army is ok and could withstand a few more hikes. we are not at the end of the cycle here. but look at globally, interest
rates rising with the central bank not being as hawkish as the market was hoping it was point. if you are telling me the german tenure will be at .5 basis is to a lot of that flattening is i think demand from the rest of the world coming into the u.s. but still a high-yield in the developed world. the front-end is moving up because of the fed. the flattening has more room to run. year, if the this army looks like it can handle a rate increase, we have got a few more hikes in here. it's fascinating, the names that have already been bandied about, the fed doesn't believe this lineup, but would there be a change in the number of hikes next year if fisher were to go
along with yellen? really the only voice on that side of things. that if you're talking about the more ideologically hawkish members, it would respond. but if inflation is slowly heading higher, it is possible fed with five new potential voters next year, you could get a shift in what's sent higher. then the market is even more mispriced. if you get someone hawkish, it could push things higher. chart iniya we have a the library that has been inverted over the next several decades over that. typically it's recession, right? but this time i be different than, right? consistent with what you have been saying.
inverted, yes, but we are talking about a spread. you saying it's nothing to worry about? partly. we had the fed using the balance sheet is a big component. you can get an inversion if the balance sheet remains high and global interest rates are low, therefore all the money comes back in. a flat curve really portends recession. td securities, that's a big call. thank you. shares today have begun trading 3164 an opening bid. the shares were priced at $30. this is bloomberg. ♪
now let's check in with our first word news. and much on rough has more. -- emma chandra has more. prosecutor says that the man who ran his car into a police convoy had a huge supply of weapons and have pledged allegiance to the leader of the islamic state. the attacker was killed when his car caught on fire. on capitol hill senate republican leaders release the dan for obamacare, including longer transitions than the bill passed by the house, cutting hundreds of billions of dollars from medicaid over the next decade. the congressional budget office has yet to review the senate bills. the cbs is the house budget would leave 26 million americans without health care by 2026. rules being rollback since the financial crisis, the fed in acting controls over currency today are willing to rethink the volcker rule.
test test the ability of banks to survive turn -- shocked. theresa may and brexit, theresa , discussingussels how the u.k. will handle one of the most contentious issues. >> how do we propose to protect the rights of eu citizens as we leave the european union? emma: there are 4.5 million european and her citizens living in each other's countries. powered by 2700 journalists and analysts in 120 countries. in corporate news, shares of american airlines trading higher today after it announced capital airways was interested in buying a 10% stake. they intend to make a significant investment of $808 million in america and just this
withbloomberg caught up them at the air show. >> we don't get intimidated. we will find new markets. >> new markets indeed. for more on the news, let's bring in mike sasso from atlanta. we are talking about an unsolicited approach. how surprising is this? mike: you can never fully expect this, but the ceo of qatar airways has made no test certainly has been on the record is wanting to make acquisitions. they have made acquisitions in italy, they had a stake in a south american airline. they also have a big stake in british airways. the fact that they reached out to americans, you certainly
couldn't have predicted it. theirin keeping with inquisitive nature. anyone who wants more needs board approval, so i'm wondering if this is a row -- a welcome thing for american. we just got through a bunch of consolidation that helped the big three in the united states. mike: i would say probably not. they certainly pointed out in great detail that this was unsolicited. if americannder really welcomes this. american has been involved, or one of the major players, among the big three u.s. airlines pushing against the growth of qatar and other middle eastern airlines. they accused the middle eastern airlines of flooding the u.s. market with cheap flights and getting ample subsidies from their home governments.
they have certainly been at odds politically. you really have to wonder if this is a welcome attempt by qatar. vonnie: in that case, what sort of response might we get from regulators? >> well, i don't know. it is allowable, and in keeping, foreign interests are allowed to take a 25% stake in the u.s. airline. potentially it could be allowable. the bigger question is whether the board would approve this or not vonnie:. be interestingl to see. they are supposed to vote on shareholder interests, right? and if this helps in terms of international routes, maybe they are moving closer than we think. the ceo is currently the chairman of the task force association.
this that give him extra sway in this matter? say not.ould probably they are influential in pushing their case to world governments. i don't necessarily see it as having a big role or a big influence with the u.s. government. to the extent that they may ask the u.s. government to approve this, certainly not much influence with america's board. vonnie: mike sasso, thank you so much. company that has raise $1.9 billion in its ipo, it just started trading shares at more than 6%, the u.s. arm, of course. formed after the acquisition of cablevision last year. the new yorkis at stock exchange. alex: you just raise $1.9
billion in this, the second-biggest offering of the year. wears this cash going? not going toely is us. our great partners over at cvb iv are selling it down as a part of this and we are looking forward to having this platform to grow. that's the opportunity for us but it's not about raising money today. alex: how soon can we expect you to follow in the footsteps in the egos of your parent company and buy something? >> i don't think there's a timeline. we just are here to be ready and have a currency. time will tell when we were will be able to do something. this industry has been acquisitive across the board. are there things your keeping an eye out for? wireless?
rod band, cable consolidation? cable, we would like the opportunity to have more cable if that was possible, but if it's not we will look at other things. alex: you talked a lot about your plans in cyber. why continue pushing into this capital intensive type of business? >> we think that cyber is the future proof network that's available. technology toter serve the companies -- customers , and in other types of technology there's different types that are available. increasing the customer satisfaction user experience. same paceforesee the in terms of build out historically? >> we never really built out so wehere on the u.s.,
would like to do it as quickly as possible. with that are happy pace and we will see if we accelerate or slow down. was a reporta -- talking about broadband yesterday saying that the pace of growth will inevitably slow. do you believe that? >> the data usage isn't going to slow. the pace of use is not going to slow. the question obviously is people subscribing to new subscribers ultimately will slow, but they will always be looking for morse need, more offers, more types of content to get on there, online. that's a relevant metric. >> thank you for joining us. the stock share is trading at $31.99. back to you, vonnie. vonnie: fantastic interview, thank you for that.
breaking news on the senate health care bill. it's just and released. the text of the bill just has been released. this is the bill we have been waiting for, prepare secrecy by mitch mcconnell and some aid. it's safe to say that some senators are just adding the text of the bill right now. 142 pages. we will go to kevin cirilli with her chief washington
correspondent on capitol hill. kevin, i imagine that senators are hard to find, given that they are probably running through this bill, 142 pages worth. kevin: i just spoke with senator richard shelby. a meeting earlier this morning, all republican senators , led by mitch mcconnell, where they went over this document. the three big takeaways of what's actually in this piece of legislation is that it would phase out parts of the affordable care act or the obamacare medicaid expansion by 2020. that's slower than the 2018 provision in the house provision. republicans in the senate are saying that this is a more moderate, or as president trump said, let's mean version. it would also provide tax credits for people buying individual insurance and provide protections for evil with
pre-existing conditions. republicans led by mcconnell heading to the senate floor by 11:00 to discuss the proposal are suggesting that this is again a more moderate path forward. have to be candid, democrats pouncing on this, united in their opposition, really hammering home not only the andosed changes to medicaid the process. they feel that this was done in secret and not with any committee hearings and are taking a lot of issue with that. frankly, so are some republicans. senate majority leader aims to have a vote next week, but the cbo has to score this before a vote can happen. how long should that take, kevin? kevin: the senate majority leader floated the that would only take a couple of days, but that's a tough decision for republicans, especially those up in battleground states. they would have to make quick turnaround time on a major piece of legislation that democrats
will no doubt used to frame the election. remember here, the republicans won't have a super majority in the upper chamber. no doubt the president is hammering democrats, labeling them as instruction is. but if you look at the polls and moderate states, there are parts of the affordable care act that are definitely still popular. that said, when you look at the market, already seeing market reaction to how this is impacting health care markets with the exchanges. i've got thejra: draft here in front of me. have to say, i haven't managed to read all 142 pages are you been talking. i did a search for medicaid, 63 mentions of it here. you can enjoy that one to stop talking to us. putting this into a larger context, we talked about the fact that there would be a vote next week. walk us through the implications of what happens to other parts of the trump policy depending on
what happens with this bill. that's a great question. first and foremost they had previously suggested that they must address health care before the get to other items like tax reform or the regulatory financial policy. they are already talking about the regulatory financial policy but since this has all gone down they have backed away from that and suggested they might be able to move on to some of their other parts of their financial to do list, like infrastructure. goes, i of where this spoke with a moderate democrat who really, really criticize the process of this. there were no hearings in the senate about this. .here wasn't an open forum they weren't able to negotiate. republicans pushed back on that, saying they tried to work with democrats and that they said no.
the fact of the matter is that this is definitely going to set the stage for the midterm elections. we are hoping to hear that republicans will be negotiating with the senate parliamentarian for an up or down vote. they would only need 50 republican senators, plus mike and's as a swing vote. at that point it might go back to the house. we seem to be putting a lot of hypotheticals. >> the white house operation went into effect. last week i spoke with mark meadows, the republican in the house who is the cultural conservative leader of the conservative wing of the house of representatives. i asked him what he felt and he said he felt that the house but that theytter
really are not necessarily going to dig in in terms of their opposition to what the senate proposes. that said, if you look at the rhetoric coming out from rand paul, a libertarian leaning republican in alliance with the likes of ted cruz and mike lee, it presents a steep challenge as you majority leader looks to move this forward in the next week. vonnie: kevin cirilli is going to have a busy day on capitol hill. he will be back with him in a little bit. market reaction now, julie hyman has been taking a look at things like hospitals, insurers, and so on. >> the biggest reaction that we have seen are those that are medicaid exposed as we have seen a slower phase out. some of the larger insurers here, it takes a leg up, but the largest are not really affected by this. they have already adjusted to the aca and gotten out of a lot of those markets in various
exchanges and states. asy are not as affected those medicaid expansions, as well as the hospitals that tend to feel the burden of medicaid patients that come to them. they end up having to have bigger expenses. you can see here, this is a much bigger reaction when you saw with aetna. more people are coming through their doors with medicaid coverage as opposed to being uncovered. that is going to be more positive for these hospitals. thatcularly the hospitals are geographically in low income areas or areas with folks have a lot of medicaid coverage. the two groups that you are going to see affected here again are the medicaid exposed insurers and the medicaid area exposed hospitals. care as well, a big spike
up in the shares. ,he copy at with all of this this is something we have been talking about all along, we don't know what the final version of the bill is going to be or if it's going to pass. there are still a lot of questions about this but we see that market reaction nonetheless, guys. we will continue to cover the much awaited senate version of the american health care act after this. this is bloomberg.
reaction to the proposed health care changes. we just got the text from the senate version, which is different from the house version. where you are in houston and texas in general, how are things regarding repealing obamacare? need health care. i come from a family where we didn't have private health insurance. we relied on the public health system. you can't remove millions of people from having access to health care. making it affordable for them, it's difficult to learn if you are not feeling well for children. it's fundamental and touches everyone area -- everyone. vonnie: some places in texas voted that way, others didn't. is there a provision to help people who were maybe thrown in theyor turner: i was legislature for 26 years in texas. we lost $300 million a month
because we didn't enroll. many hospitals were closed. hospitals in urban centers and hospitals in rural america were being closed because of the rising cost of health care. they need health care. fundamental and basic, it's something that people rely on. it's such as access. as much as people criticize obamacare, the aca, it wasn't the perfect system and there were ways to improve it without simply eliminating it. if you eliminate it, what are you putting in its place?
it's got to be something that people cannot only access it afford. oil prices and the houston economy have been tumbling. how has that impacted the economy of houston? in the 1980's when those prices were low, the housing market crumbled, unemployment was very high. now, in 2017 the city is much more diverse. we are still a world energy capital, that is true, but we are much more diverse, only about 40% reliant on the energy sector. it has been very sluggish. we have not gone under in terms of employment. in terms of jobs being created
in the city of houston we still have the health care sector. the texas medical center, the largest in the world. so, there are many other sectors that have kicked into gear. sanctuary city issues, how have that -- has that impact the population currently in houston right now? mayor turner: there's a lot of anxiety. we have the third-largest population of immigrants, especially when it comes to undocumented people. the city council, for example, on wednesday decided to sue on that bill, senate bill four. our police officers can ask for papers even if they haven't been arrested. and the police chief can be .ined
if i is the mayor say that we are not going to engage in profile stops, the state attorney general could step in and try to remove me from office. we believe it's unconstitutional. the city has always said that we will abide that any law that is constitutional as long as it is. vonnie: i have to ask you, as a democrat in the compact of mayors, what's the primary goal for you? mayor turner: to have a city that's run financially sound, making sure that we remain very diverse city that we are. vonnie: more markets, next. we continue to follow the release of the senate gop health care bill. ♪
and bolts of the bill. and vonnie quinn in new york. nejra: i'm nejra cehic in london. let's see how investors are digesting the news with a look at the markets here's julia chatterley. julie. julie: thanks so much, nejra. we are watching some of the hospital stocks in particular here. this is an index of health care facilities and hospitals. the h.c.a., excuse me, not the some .a., lifepoint and of the various health care chains and some of them with exposure to geographically areas that have a lot of medicaid patients. if those patients had lost their coverage, that would then put the onus on the hospitals. because if someone comes through the door and needs coverage, the hospitals ethically are required to cover them. and so these are seeing a spike here as this latest version of the bill on the senate side does show perhaps a slower winddown of medicaid expansion. so you see here this group is up by 2.8% and many of the vivid components also spiked