tv Bloomberg Markets Americas Bloomberg June 29, 2017 12:00pm-1:01pm EDT
welcome to "bloomberg markets." ♪ from bloomberg world headquarters in new york, here are the top stories we are following. stocks, chief stress test results opened the way for massive share buybacks. walgreens gives up on its bid to -- rite aid.ht aid and we will have an interview with the creator of apple's ipad, tonyhone and fadell. we are halfway through the thursday trading day. julie hyman? it is a calm and bridges between financials and tech, which abigail will dig more into in about 30 minutes as well, but we have seen losses overall
accelerating. the nasdaq now around the lows of the day. it has broken below its 50-day moving average. if you remember yesterday, it bounced off that level. today, below the s&p and the doubt, also accelerating to the downside. some of the semiconductor makers are getting worse of it percentagewise. the semi equipment makers session.n today's the momentum is affecting them on the downside. as for apple on the senior anniversary of the iphone, the shares are also down, down by nearly 2% in fact. we are looking at the numbers, 1.2 billion iphones have been of time.hat period billion with a b. it is not helping it, at least not today. logic, sky works, corvo.
in terms of the convergence we're looking at, these stocks are down, technology, we have got some strength in the banks today in the wake of the stress tests. a lot of them are capital shareholders. region financial raising of dividends, earmarking $1.47 billion for a buyback. raising by nearly 2% as well. citigroup getting doubled from $.32 to $.16. wells fargo, there was a little bit of trepidation. the scandal, trying to push beyond that. mention, not just results from the stress test and capital return plan, but where we are seeing the bond market as well. we see yields up for the third straight session. that has also been given to feel to the banks, as a group, up for
the fourth straight day. anna: julie, thank you. a more hawkish central bank and all those events. thank you very much, julie hyman. let's talk about financial regulation. to the dividends and share buybacks, we've seen a lot of course. theing us here on set, president and ceo of the securities industry financial market association. good afternoon. let's talk about the stress tests. lessou pushing for a rigorous stress test, and what do you get from the administration about where they want to take that process? guest: what i understand is a more efficient approach. the stress test is important, but there could be a more application,cess, and we think the administration took a good step in the recent treasury report in terms of how they could better effectuate
what they are trying to accomplish. anna: more transparency as in giving more details when someone has not met the mark. kathy: in many -- a very many cases, it is black box approach. had years toanks figure this out, they finally figured it out, and now -- toething like $70 billion $109 billion to shareholders. a good thing in the sense that if you look at the level of bain capital, quality capital is up exponentially from where we were in 2008. short-term funding is down quite dramatically. that is a good thing. the ability to return capital to shareholders is important to get a better return on equity, on capital, fund operations, and help grow the economy. . that is a good thing. the other side of it is the
burden of regulation is such that it can begin to attack the system. vonnie: but they only have to do the be fast part. worthwhile.it is it is an evergreen process. it is appropriate for regulators to look at this and say, "are we doing this in the most efficient manner that we cancel the industries like banks can do what we want them to be doing, which is funding the economy?" anna: janet yellen was asked this week about the risk of financial crises, and she said she hoped it would not happen in her lifetime, but she also said -- shees policymakers said she thinks policymakers have a short memory. selke are we think are at a time of stability and capital strength where we can go back and say -- are these rules doing what we want them to do? are they having unintended
consequences? regulators have said this themselves, there are conflicts among the rules we have in place. vonnie: isn't that what the treasury has been saying? steve mnuchin, donald trump, gary cohn, this is happening because of everything else in washington getting done. worried?ou ken: i am notken: worried. we think with the treasury department came out with in a report the other week was a very good first step come a very middle of the road approach, methodical, saying -- we're not thinking about ripping up or repealing dodd-frank -- in the industry is certainly not in favor of that -- but let's look at the multitude of rules that have been in place. are they working? vonnie: which specific rules would you rather get rid of, and which banks are you talking about -- the 13 largest, the mid-cap? ken: we look at the liquidity coverage ratio and how that is calibrated, let's make it work it way we intended it to, so does not create something counterintuitive.
let's look at the application of these rules. let's look at the volcker rule but regulators on all sides are looking at. wills?hat about living orderly liquidation authority? is that something you want to see pushed back on? there seems to be limited appetite to do that. ken: sure. let's make sure the process is an efficient process. we think that is right. it could be done in a more efficient manner. it has to be done in the repetitive nature is done now. in terms of liquidation authority, certainly bankruptcy is an option that should always failingdered in a institution, but we have to consider the cross-border nature of large financial institutions. not necessarily applicable in other jurisdictions. what tools do regulars have in the toolbox to dissolve large
institutions, like congress tried to do. we think they are doing the right thing, and to come back and say here is what we felt. we think the cross-border aspect is a big part of it. do you have any major complaints? wells seem to be going so far in 2017, including interest rates. ken: the industry has done a lot in two dozen eight with the regulators, new rules, building workingapital basis, through solubility. now is the time to step back and say -- where are we? what is working well, what is not, what is holding back capital and credit allocation that can help drive the economy? anna: what about the priority washington attaches to this? we have seen what has happened the policy care,
story they want to get through, so where are you in order? we are very encouraged by what the treasury department is doing, and this is something i think we will see more of a revision, recalibration. again, that is not for regulators to decide to do, but we are encouraged by the direction we're headed in right now. vonnie: ken bentsen, thank you, sifma president and ceo. here is mark crumpton. biggeste middle east's airline says its flights to the u.s. are operating as normal. newgarden is go in effect for travelers from six mainly muslim nations. says itsed emirates remains "guided by u.s. customs and protections on this matter." the ban takes place tonight. it will give him of these and consulates worldwide enough time works.re out how it house speaker paul ryan says reports of conflicts between president trump and the
republican congress are "fake news." the speaker told the radio program there is no need to have an artificial deadline on obamacare replacement bill, and he says republicans are knee-deep in writing tax reform legislation. in germany, chancellor angela merkel has given him in battle embattled preview of may bext month's vote like. she also took a swipe at president trump's america first rhetoric, saying that protectionism nations are making a serious mistake. moreis said to have made tops -- sent more troops afghanistan. up to 3000 troops will train forces,e afghan in addition to the 4000 forces america is already expected to contribute. the nato increases not mean the alliance will engage in combat
bank of england governor mark carney met with francine lacqua. they discussed public in private sector work on climate change. mr. carney: i think the important thing is a voluntary private sector right now. them to address issues around climate change. we focused on enclosure and asked the private sector to decide how to address it, so mike bloomberg, the head of panel, 30 are people from the private sector him up with recommendations, and 100 plus from india to u.k., europe, and the u.s. and beyond have signed up to control financial assets of more than 20 billion. saying this is the right step to include so the market can function. so the g-20 started this
protest, the private sector has taking the ball and run with it, and created some good products, and demonstrated, as i say, 100 plus of the bill posey leading companies adopting this. but -- : mr. carney: the g-20 leaders will be made aware of the progress made and the momentum behind it. as a member of the g-20, i will be there, but as chair of the ssc, i complement the effort of both mike bloomberg and his team for consistent, high-quality, and ceo's from the world's financial institutions, morgan stanley, hsbc, schroders, beyond standard chartered, b of a, merrill lynch, i cannot mention them all, but through to groups thendia, brazil, she'll in
energy sector, these are leading companies who are saying this is important. this is the right way forward. and they are engaged in working with it to make it better over time because what will happen with this is it will be decided not by the g-20 in some meeting, me, butechnocrats like by the providers and users of capital around the world. anna: that was bank of england governor mark carney sticking with francine lacqua earlier today. we speak with tony fadell, creator of the iphone, why did he leave silicon valley and relocate to paris? that will be one of the questions asked. this is bloomberg. ♪
i am anna edwards. vonnie: and i am vonnie quinn. developing prototypes for the ipods and the iphone. bloomberg's caroline connan as with him in paris. vonnie.: hi, i'm very pleased to be joined by tony fadell, the father of the first iphone and ipad prototypes. tony: it is nice to see you, caroline. what are you doing at station s? tony: i live here with my family. we enjoyed the tech scene. it is a very different place from when we lived here years ago, and this is a manifestation of the incredible movement of startups and technology in
france yet again, and it is wonderful to see such a facility be able to created and so much energy and enthusiasm around it. caroline: we have brexit in the u.k., donald trump in the u.s., macron in france. do you think paris should become the next big leader in the world ? tony: i think all of those events in the mobile digital society, without a doubt, this is the best environment for france to become a leader in the world from technology. i am living here now with my family to be able to feel what we felt back in silicon valley 1990's we0's and 19 eigh want to feel the new energy, the new blood. it is wonderful to have president macri and in office
and what he has been doing -- president macron in office and what he has been doing. they feel really great about the next decade really inside of france because he will be in for two terms, we really feel so. brexit, france's's stereotype, do you think it is a difficult place for business? tony: i am an optimist, and if you are not, the ladder is just not fun. seeing what he has been saying, the moves he has been taking, the conversations with tech leaders continues to tell me this will be an interesting and exciting place and something we need to be involved in for at least the next five, hopefully the next 10 years or diane terribly excited. -- i am terribly excited. caroline: today is officially the 10th anniversary of the iphone. tony: the 10th anniversary, yes. caroline: what do you make of
this?how has evolved over the last 10 years? are you disappointed? have you seen the steps over the last 10 years? tony: let's go back 10 years, with the world looked like. 10 years ago, we had all the brands of cell phones. it is totally different from 10 years ago. 10 years ago, we did not even have 3g networks. now people are talking about 5g and 6g networks. we did not have all the servers and cloud computing 10 years ago -- now it is everywhere. we did not have ridesharing services like lyft. hasything about our world changed in just 10 years since that first iphone. so think about that. just 10 years. what is the next 10 years going like? if you think about why we are here at station f today, station f is here because of the mobile revolution that started 10 years ago. all of the company's here are building on top of that platform that we collectively built a
society on top of these smartphones that are in 2 billion people's hands -- computers for everyone. i am really excited about what else is going to come in 10 years, but yes, we kicked it off 10 years ago, and it is wonderful to be here see where that has created for countries all around the world, including france. caroline: something apple and the iphone may have lost a little bit of its innovative touch. what is your take on this? tony: let's roll the clock back to laptops or computers before that. when we look at laptops, you say tops are stagnated, they are the same as ever, but what did they do? they had internet, you know, all these other applications. look at smartphones. they change every day with the apps you download any services created on top of that platform.
if you were to say laptops stagnated, well, not really, they were just enabling platform for all the other things to be created. the same thing goes for mobile phones and smart phones. we have lots ofif innovations. it is not just about the phone you carry but all the things it can do and literally every day you get a new feature, a new function. caroline: apple's revenues, do you think the company can depend on a single product? tony: i think it is continuing to build other businesses and innovating. for me, new platforms take a time. the last platform before they often was the macintosh, and that was in 1984. that took 20 years. we are just see in the first 10 years of this platform. to create another worldwide sensation like that, it takes time. we are still trying to adapt to the one we just built in 10 years. i think everyone needs to -- i think we are all excited, but it takes a long time to do something really important and impactful. caroline: d you actually believe
that the next iphone could come from a place like this, station f in paris? what will it look like? will it be a smart phone? tony: i do not know what it looks like. i am not a great predictor of the future by any millions -- any means. i could not have told you when the iphone cannot the world would look like what it does today. but i can tell you when we look at these devices and we look at the future, i am really intrigued by what has happened over the last 7, 8 years. if we look at the dna of devices ,re-iphone or pre-android almost all of the software codes, all of the hardware was all locked up. a computer, tote create an operating system, application, was all locked
inside of apple or microsoft or who have you. source both onn the cloud side and the mobile handset side, all the different services, cloud services and the commoditization of the cell phone, if you look at it, now everyone can evolve, around the world, new phones, new cards, and they have the opportunity just like silicon cavalli -- silicon valley to the last 20 years. caroline: tony fadell, thank you so much, from station f. vonnie? vonnie: our thanks to bloomberg's caroline connan with tony fadell. --a twist on the right a deal. e aid deal. this is bloomberg. ♪
i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. vonnie: you are looking at midtown manhattan. bloomberg's world
headquarters in new york. i am vonnie quinn. anna: and i am anna edwards. this is "bloomberg markets." .8%, s&p nowown down .7%. the markets are lower. hawkish policies. let's go to bloomberg's abigail doolittle. anna.l: thanks so much, on paper, the worst day since june 9, the worst day since tech pulled out that we have seen this month. all the big news are participating. time speak to one long leader. he did say you have to remember this is the end of the quarter. some managers are booking products. there has been a big shift in sentiment.
that tech pullout on june 9 has more to go. we do have one chart, at least one chart, that suggests that could be the case. #btv 9306. apple did slice it's a 60-day moving average for the first time since april, but apple did this weeks ago. on june 9, the 60-day moving average for 14 sessions below its 100-day moving average as well. apple went right down to the 200-day moving average and yellow. all of this tells us the recent uncertainty we have seen for technology, the sellers are taking control. the last time it resulted in a 30% drop, a 12% drop some of this chart shows we could see a -- a 7% droppple in apple returning turning to the banks, we can have big games for the -- gains for the banks.
today out of technology, a trader was telling me, and we have a very good chart that shows that sector rotation. helping the banks today, all but capital one, all 34 of the big banks did pass the fed's stress test. the biggest ride since november of last year after the election. what is happening in terms of the sector location out of tech, this is g #btv 569. on the bottom in orange, we have the bank stocks, facebook, alphabet, netflix, down about 4%. up top, we have the bank stocks, the s&p 500 bank index, up about 5%. i was told these bank stocks are still overbought, so we could see selling for a few more weeks yet. we have more life to go, vonnie. vonnie: abigail doolittle, thank
you for that. time now for significant stories to talk about. you walk us through the stories is bloomberg's m&a reporter alex sherman. alex: walgreens had a deal with right aid that has been kicking around through the sec, deciding to they've it will not even wait to hear back from the sec to find out whether or not this deal will go through. instead, they reached a new deal buy friday --- rite aid to 2200 stores for $5 billion. walgreens is getting in front of the regulatory decision by doing this. they pay a $325 million .ermination fee to rite aid most of the stores in the northeast and mid-atlantic region. what happens to rite-aid now is the big story carried they are left with about half their stores and no clear plan forward
here. another company to take a look at today has spread -- a little-known drugstore -- anna: they will no longer get the stores that would have been a part of the provision of stores. alex: exactly. fred's was going to buy up about 1000 of rite-aid stores. it is unclear now where the company has left or where rite-aid is left at this stage because spreads is not going to get -- because fred's is not going to get those stores. it is unclear what would have gone to fred's. it is possible, i suppose, that rite-aid and fred's could come up with a new agreement, but you are left with a diminished rite-aid and a diminished fred's. vonnie: meantime, it continues over it casa murdoch. alex: the news is no news. we were expecting to hear about whether or not this deal
would be approved. this is fox buying 61% of sky. sky already own 31% of toured the decision about whether or not this deal would go forward really being prompted in the year. there is an issue around media plurality, basically the murdoch family has too much influence over u.k. media, essentially. what was being proposed today is basically we need more information. so come back to us with more for mission about why. anna: if you look at the stock charts for the day, you can see about whether he was hearing because stock initially fell, and then rallies maybe 3%. by the end of that day over in london, the stock up just over 3%. the murdoch's have made the argument that they have kept it from social media. interesting to see how this will affect the u.k. scale, the
election before the ending of this review, but you never know. alex: correct, and obviously the election could throw this off. this deal could have been killed today. it was not cured overall, a positive statement as if this deal would in fact go through. they did not specify exactly what else they are looking for. they are looking for more recitations by july 14. that is not a lot of time, by the way, between now and july 14. it will not be eye-opening, earth shattering information there. a decision will be after that, so maybe sometime this fall. anna: there is another deal we need to talk about, and this is staples. tell us the latest in this saga. alex: staples being acquired today by sycamore, a private equity firm, for $6 billion. it is a lot of money for a company in definite decline. i do not know when the last time with you went out and bought a printer cartridge was.
i stand corrected. i do not know who is printing anymore. put it on your ipad or your phone. but look, there is no question that this idea of selling office o supplies from brick-and-mortar is not the wave of the future -- amazon, walmart obviously getting into this business, delivering to your house. the question there is -- what is sycamore going to do with staples? if there is not an obvious buyer on the other ending of this -- when a private equity firm buys a company like this, they usually either turnaround and ipo it or sell it. who is the buyer? vonnie: staples has a lot of leased buildings. alex: correct. you have to imagine that is part of the point here. maybe separate the real estate from the rest of the business. it is possible you can sort of look at that and say ok, maybe this will be appealing to a certain buyer. maybe we need to sell off some of the real estate.
the office supply store, any real estate in the business, they can buy whatever they want. anna: alex, thank you very much. renter, but ie a did not get in on the iphone 10 years ago. that is for sure. long memories. let's get a check on the bloomberg first word news. here is mark crumpton. mark: ladies, thank you. cyberattacks are doing more damage than ever, and our dependence on the internet is leaving modern society increasingly vulnerable. the european union security commissioner, julian king, said today attacks are becoming more strategic, endangering our infrastructure and democratic processes. king's remarks came after more cyberattacks this week disrupted watcher hospitals and banks around the world. the british prime minister
theresa may, has arrived at buckingham palace for a meeting with queen elizabeth. the meeting comes as rich lawmakers were set to vote on whether to approve the conservative government plan for a brexit-dominated parliamentary the shaky minority administration. north korea will be the focus when south korea's new president meets with president trump for the first time today. moon refers dialogue to get pyongyang to drop its nuclear weapons program. todayuse is set to vote on a proposal to russian federal funding for state and local government that has policies restricting offices with immigration. they want to strengthen against so-called sanctuary cities. another measure will increase penalties for those attending to reenter the united states after deportation or if convicted of some felonies. in new york, blasted former
pharmaceutical executive martin shkreli at the start of this trial. they accused him of "telling lies upon lies upon lies." his lawyer called him a genius who make money for investors. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. vonnie? vonnie: mark, thank you. coming up, our next guest says amazon has spread to the consumer world. we break down the value in the consumer sector right now. this is bloomberg. ♪
vonnie: this is "bloomberg markets." i am vonnie quinn. words. am and a wide -- anna edwards. what value is in the consumer sector? i want to bring in tom reynolds. he manages small-cap value funds. great to have you on the program, tom. why does it pose a threat to small caps? is it easy to find companies competing against amazon, or are they all gone? tom: it is very difficult in the small cap landscape to find companies not affected by amazon. a lot of those are affected by the discretionary part of the benchmark, the typical brick-and-mortar stores, brands
that were originally set up to distribute, or brands that were macy's, etc., so there has been a lot of pain, so we try to avoid any pain. vonnie: when you think about amazon, theoretically, a little beenmoney, that consumers spent on other items, maybe not from amazon. tom: i think it is a deflationary force for sure. it is good for the consumer overall, but that does not mean it is good for anyone who is not amazon come in brick-and-mortar stores, overly exposed. november a from great deal of expectation about what trump and fiscal stimulus might mean for the u.s. economy. thinking thiscap would really fuel the economy. some of that trump reflation trade has rewound. you think it is safer than the
big cap? tom: yes. we are trying to invest with downside protection and upside. we do not want to get too caught up in the deflation period. ideasr, we have a few that work regardless of what happens in washington with the agenda but also with benefits to the upside in the event that infrastructure reform does come through. such as u s concrete, ustr, explains the backlog. i was in laguardia the other day. it looks like about four years of readiness cement from jv. they will also be doing a lot of longer-term infrastructure projects around the city around the bay area and in texas. a healthy backlog. anna: speaking of texas, the energymt's in
space, a of people in london have been telling a longtime opec has misunderstood just how efficient the u.s. can be, how quickly they take costs out, how they refinance themselves. they can make businesses more profitable. where do you get excited about emp? emp, the shell companies are getting more efficient. they do so without necessarily paying attention to shareholder returns or return on capital. acreage.do like to buy an energymmoth, company that basically does pressure pumping. so as the shale revolution totinues and it continues stamp production, even at low levels of oil prices, our company is in the small-cap oil services space and the benefit. vonnie: it is a pretty
competitive area you are in, the smaller cap area right now. are in a graphic, you the 81st percentile year to date. what do you intend to do, particularly given that financials make up 20% of your portfolio? part ofks are a large our portfolio. within the banks, again, back to what can be done without worrying about washington. we like that there have already been rate hikes, vonnie, as we have in the model nice deposit franchises, loans that float off of libor, fed funds. vonnie: does it make a difference, the? tom: it does when you are earning 25 basis points on your cash. we have seen significant net income per share. you are not hanging
around, waiting for what washington is going to do on bank regulation? because that could benefit small companies in particular. the largest banks, which would be a more bipartisan everybodyot, and agrees the large banks are a problem on main street, there is a lot of capital to be returned. slowing of the regulatory apparatus, and that should trickle down to small caps. every release, there should not be more regulation. there is always more cost coming. vonnie: will there be more consolidation? it muchhink soap to capital, larger banks will want to buy, which will cause the portfolio to grow. tom reynolds, janice
henderson portfolio manager, thank you. tom: thank you, vonnie, thank you, anna. vonnie: in the u.k., prime minister theresa may is rolling back on rupert murdoch's fox sky entertainment. the country is concerned about media plurality. h&m is forecasting at least way 5% growth in online sales this year. the clothing retailer reported increased estimates. inventories.n they plan to clear out excess by marking down prices this summer more than last summer. ofbnb is planning a new tier vacation rentals -- mansions and penthouses. the rentals will face inspection to maintain quality standards. earlier this year, airbnb
acquired canada's luxury retreats. that is your latest bloomberg business flash. note,and on a programming tune in on july 4, bloomberg july 4, alix steel, carol massar, and matt miller will host live from boston's historic esplanade. i will be back in london by then. i will have to get up in the middle of the night to watch it. this is bloomberg. ♪
u.k. prime minister may wins the vote in parliament for high government programs by 323 votes to 309. her leadership has gone on to another day. fundraising with a plated event. as we go to break, questions have been raised regarding the legality of his properties. let's bring in ben brody, who covers white house white house lobbying. then, you are busy with this. whether he is allowed to use his hotel at all, there are no set rules about how he engages in business as president. ben: exactly. federal law prevents candidates from using campaign funds for personal use. sometimes that is something as simply as going to a business
they own like a hotel. that is ok if it is at the market price, but if they are paying, if the campaign is being the hotel way more and then billing the candidate or against the president's pocket, that is a big problem. if you say well, hey, if the hotel gives the campaign a break, that is a problem, too, because that is an illegal corporate donation to the campaign in-kind contribution essentially. you have all these questions swirling. vonnie: for any particular event, they negotiate, right? how many turn up, with the season is, whether there are other discounts, so forth. is there anything written down that legally would make this a problem? an: i think it is definitely thorny issue that you would probably not be able to get much closure on. we will see how much they spent on the hotel, and we will see campaign disclosures in a couple of months.
they have always said this is based on the occupants, and on a given night, this is based on the number of people, the nature of the event, perhaps the nature of the security. we do not know if they are bringing and subcontractors to make the food. all of the questions really come into play on a day-to-day basis, when the events are coming up. it is not necessarily something that would pop up as an issue, but it is something that was raising questions again and again, and in a way that we have not seen since the campaign. anna: i understand some critics are suggesting holding a campaign event at the hotel promotes the property via his political prominence. i mean, just the very nature of him being president, i guess, promotes all properties. that is happening in the background already i guess. ben: right. as far as i am aware, it is not illegal to be famous. [laughter] ben: but ethics people, people who study ethics and work
on the law, say his behavior has been at least out of step with the ethical norms. we have been dealing with presidents who make up politicians in the past. one said to me the american people have a funny idea that the president is here to serve the people, not to serve his bottom line. vonnie: bloomberg's lobbying reporter ben brody. thank you for that. coming up, we will talk health care. this is bloomberg. ♪
care, bob corker says he expects gop leaders to scrap the division in the bill that would affect wealthier americans. meets in themp white house. the u.s. is expected to press south korea on trade imbalances like cars and steal. yesterday, he sat with the head of the democratic national committee and today, we hear from his republican counterpart. anna: let's talk about health care still dominating headlines. gop members have an closed-door talks on possible changes as they race to have a deal by tomorrow.