tv Bloomberg Markets Americas Bloomberg July 24, 2017 12:00pm-1:00pm EDT
from bloomberg world headquarters in new york here at the top stories on bloomberg and around the world. jared kushner on capitol hill today as concerns grow over a widening probe into possible ties with russia. how will it impact the president's agenda? anat for a -- brace for earnings avalanche. moreook, amazon, and many companies this week. will they continue to outperform this season? bloomberg has learned that at&t is said to be an early talks for a time warner merger. abigail doolittle is here. we're halfway into the trading day already.
>> mixed trading action here. slightly to modestly lower. the nasdaq is fractionally higher. it feels a little bit sleepy on the part of volume. investors are on pause to some degree as earnings get underway once again. there is some drag on the s&p 500 and the dow johnson. microsoft is down for the second day in a row. the stock has been up 19% year to date so perhaps it is a little bit too far, too fast. ge is down 1.7%.
jpmorgan is saying that last week's results and the guidance toward the bottom end of the range may suggest that the fundamentals will be disappointing. we have some weakness for canadian-related companies. goldcorp was cut at national bank. to the point of the bearish tone around these stocks, the short interest has climbed to 38%, a huge short interest telling us thatcanadian-related companies. many investors are bearish. they are down, perhaps in sympathy with the greens. maybe less fertilizer will be used. finally they are rounding it out with a look at that canadian dollar. we would usually look at the dollar against the canadian dollar. this is the canadian dollar against the dollar. we are seeing a bit of a resurgence hitting levels earlier last seen about 14 months ago.
this is investors have less confidence in the economy and the central bank and candidate will be on a tightening path. >> thank you for that run down. president's senior advisor and son of a he has been speaking with the intelligence community in the senate for several hours. we are not sure exactly with who, but we are expecting him to make a statement to the press. that could be this hour. joining us from capitol hill is kevin cirilli. we got the kind of answers he was going to give to these questions. are you hearing anything else coming from that room? >> i am inside the senate office building right outside the senate intelligence committee hearing room, behind me, where jared kushner is expected to walk out here. he will head to the white house
in washington where he will deliver comments. it is unclear if he will take questions from reporters, but he met in what is being described as a closed door meeting with staffers in the u.s. senate and intelligence committee. and all comes as the questions surrounding the russia investigation continue. going to say,is for example, that there were not any wrongdoings. that he did not know what these people would be asking him, and that there was no tie up between his personal dealings and what these russians and others were saying toany wrongdoings. that he did not know what these people would be asking him. will he be exonerated in full? 11-page statement, jared kushner visited not have
any collusion. he fought back against the accusation that he did not put in his disclosure forms accurately. he did not disclose a host of other meetings, including meetings with u.s. allies. he is facing significant questions about the meeting he took with paul manafort, as well as donald trump junior last july with a kremlin-affiliated attorney. in addition to that he is facing questions about the data analytics of the trump campaign. earlier president trump himself is pushing back in a series of tweets questioning why republican-controlled congress as well as his own officials and jeff sessions are not investigating hillary clinton and her connections with russia. much going to continue. there frustrated that it has hindered their ability to pass the policy agenda.
one man has also been subpoenaed because he refused to come before the committee. >> he has said he is that going to be able to testify. at the center of the trump dossier during the campaign that republicans have tried to pin on him a kratz. onhas said he cannot testify wednesday citing a vacation. vonnie: what about the iran sanctions that we are going to see a vote on tomorrow? russian sanctions, i should say. >> the senate has passed unanimously several weeks ago a series of russian sanctions that have since been tweaked by the house of representatives. a bipartisan deal struck over the weekend. a slight tweak. u.s. businesses have a 33%
threshold with regards to the russian business affiliates. handcuffignificantly the white house, should they try to ease back on russian sanctions. congressional leadership would the able to walk that back on their own independently. a newly promoted press secretary to the administration saying on the sunday shows that right now the white house supports it, but both sarah huckabee sanders and anthony scaramucci are stopping short of saying whether or not the president would sign the bill. it would be a choice because the votes are there in congress. this is a fascinating development in the backdrop of a republican-controlled congress that would limit the ability of the president of the united states in their party to walk back russian sanctions.
vonnie: let's check in on the first word news this afternoon. >> president trump is keeping up pressure on senate republicans. he tweeted that they have a last chance to do the right thing on repeal and replace after talking and campaigning on it. earlier he said if they don't repeal and replace, the repercussions will be far greater. atch mcconnell is making last-ditch effort to revive health care legislation. if the bill would repeal or replace the affordable care act. the u.k. secretary liam fox is exiting the block is not mean the end of ties between britain and the european union. >> this will not come at the expense of our european partners. eu ton would like the succeed. there will be no closing off of
relations come a economic or otherwise, and no abdication of our responsibilities. the global -- training environments have cup locations beyond economics. the parents of charlie guard are to enterthe legal bid the united states for experimental treatment. he says too much time has elapsed and now it is time to let charlie go and be with the angels. he suffered from a rare genetic disorder. the philippine president faced off with left-wing protesters at his annual state of the nation address today. he became angry when some heckled him. activists interrupted him several times calling for vstoxx. global news, 24 hours a day powered by more than 2700
will earnings continue to outperform? bloomberg now is the chief equity strategist. itself, 10.1% is great growth. >> at the early start of the season, analysts were expecting a .4%, year on year. we are on track for 10.1% growth. you can expected to be higher than that. dueow much can we quantify to the fact that there were a lot of share buybacks? >> it is very little. we have not gone through the process for doing it in the second quarter yet. we went through that process in the first quarter. it is the ongoing question in the investor's minds. what we found is that even in
the first quarter we had double digit operating growth. in the second quarter, the growth rate should be more pure. excluding buybacks because they have started to slow. companies feed on topline expectations that filter to the bottom line growth. a lot of cost-cutting has helped to aid, continuing margin expansion as well and companies are doing pretty well. >> we should be jumping up and down for joy and expecting capital expenditures. this really interesting cycle that companies have been very skittish. shares,e bought back they have increased dividend. in terms of capital spending it is ready slow. companies that larger beating earnings expectations and producing strong earnings growth. we look at the economic
landscape, they have a lot of uncertainty. vonnie: isn't that laziness? there is going to be uncertainty as far as the eye can see. >> what you are finding is that companies who can leverage innovation are investing. have increased at a rapid pace over the last couple years. for aen perilously low lot of companies that are facing excessive capital available. there is too much capacity out there. i think it is a mix of industries. , it is stilll pretty limited. indebted are companies becoming? are we getting a lot of debt on the balance sheet?
>> you have to a certain degree but a lot of that is because -- that we are seeing earnings -- ratio the debt to is looking better. now we are expecting it to grow less. it is a worrisome trend. it is only worrisome if the price of the debt starts to go higher. benignit has been a climate. the price of the debt has not accelerated very rapidly. companies are in pretty good shape. we are always on guard for that ratio to reverse. >> are we expecting companies that should leadership this quarter and last quarter to continue to show leadership? consistentlyairly like your leadership will be in a bounce back and commodity earnings growth combined with better earnings growth for
financial and technology companies where's the consumer and defensive sectors are generally lagging behind the rest of the index. vonnie: such a pleasure. you can read more from gina's equity team research. m&a of america's global chairman tells us what is coming down the pipeline and what the second half of the year holds for mergers and acquisitions. we are also awaiting jared kushner. he is speaking with the senate intelligence committee now. he has said he will give a press conference at the white house once that is over.
markets." we are waiting for comment from jared kushner, the president's son-in-law and advisor. he had a meeting with members or staff members of the senate intelligence committee. that was happening this morning. down ofan 11-page run what he would talk about in their areas scenarios. that he will give a press conference at the white house when that is done. time for the bloomberg market's report. insight and analysis from the biggest names behind the deals. let's handed over to alex chairman. >> it is a pleasure to be joined by the bank of america-merrill lynch global m&a chairman. you have been in this capacity firs -- for about 18 years. give me a couple of trends.
differe about how things today in the m&a landscape than a few years ago. >> 18 years. time flies when you're having fun. i can think of a few major trends over that time. the market is rewarding growth via m&a. it is not always the case. sometimes you announce a transaction and the price goes up. you announce a good, well structured, strategic deal, stock prices follow the acquire. number two is how m&a deals are being made. completelybe a board-centric process. but itrd is still key, is becoming more shareholder-centric. in the days we didn't like what was going on in a company --
amber three, this u.s. is good destination. for the last year and a half i've worked on deals with blue-chip is coming to the u.s. lastly, hostile transactions versus friendly. friendly are much more en vogue. we look at the biggest 25 unsolicited transactions over the last three years. only four were successful. alex: let me start with a few of these things. one has changed where hostile deals were more en vogue a few years ago. fronton the shareholder
or the regulatory front? >> both of those things come into play. in the past, it is to be a ratio, now it has down a little bit. one, because of regulatory issues. if two management teams are rolling the same direction, it is easier to get regulation approval. down a little bit. one, because of regulatory number three, in terms of the shareholders, shareholders and targets are becoming more aware that the acquirer picks the timing, and they are sometimes opportunistic, and shareholders are pushing back saying now is probably not the right time. it comes back to the shareholder activism point. alex: how about your first point that shareholders are championing the idea of doing m&a when they were not a few years ago. why has that changed? why are we seeing more acquirer stocks rise today than five years ago? >> you are seeing that the
transactions now our strategic. you are seeing transactions of people buying things in their own industries. you are not sing diversification which the market did not like. anddays of fortunes conglomerates have gone the other way. the transactions themselves are of a nature more attuned to the market. the pricing is more appropriate. vonnie: i'm just going to break in. we want to show you pictures of jared kushner leading that hearing room. it is what everyone is concentrated on in washington, d.c. the son-in-law of the president leaving the hearing room where he had been interviewed. not an official hearing, no testimony, just answers to questions. we are not sure who was questioning him, it may have been committee staff for committee members.
we are here because he is going to the white house and has said he will give a press conference. that greatn to interview. alex: we want to get to your pipeline. we had a story earlier saying that at&t and time warner had been starting to talk to you as regulators. are we starting to see some action? we have nothing a lot this year. >> if you would have told me at the beginning of the year, would this be an active year? i would have said, potentially not. there were a lot of factors impacting ceo confidence whether it is health care legislation, brexit, korea, etc. the first half of the year was more active than i would have thought. alex: smaller deals. >> smaller deals, but more meaningful. reckitt, a bunch
of transactions that are meaningful. not the size of at&t, time warner, but meaningful types of transactions. in the last month, i have seen people putting transactions on hold. not stopping transactions, but putting them on pause. off of last year's pace, but last year was a record year. it is still healthy. to alexthank you sherman. we will bring you that live press conference from the white house. jared kushner will be speaking.
he did a couple hours worth of an interview to the senate intelligence committee members. we are not absolutely certain who was in the room, but it was a closed meeting and jared kushner was definitely in there. he would give a statement at the white house and we will bring it to you live. let's give you a check of the stocks with the vix at 9.5 and the dollar index petering out the 94 level. you can see the dow was going nowhere. the s&p 500 down 1/10 of a percent. i said the dow was up, but it meant down. the nasdaq is up at a 10th of 1%. let's get details from abigail doolittle. abigail: one reason s&p 500 is down and the nasdaq is up his hasbro. it's a big loser on the day, down more than 10% and on pace for its worst day since 2000 that's after hasbro missed sales estimates. clearly investors don't like
that. sales from the playskool and super sucker brand lines. mattel trending down in sympathy. something we are not seen for any time is blue apron come up 18%. this is a chart to show the pop after many other investment banks initiated today with a by reading or an equivalent of a by reading. the stock is worth noting that it's down more than 20% from its ipo price of $10. the ratings suggest that $10 is the fair price for the shares. pretty interesting there. turning to snap and pandora. snap is another recently ipo stock that has been having trouble. today it's down once again. it's not clear what's happening there. could be another down day in july. snap has only had two updates, but pandora up 2% after janus partners disclosed a position in
the stock. the size of the position unknown, but shares reacting positively. as for snap and blue apron, both of the stocks well below the ipo price. 2669, itok at g #btv does seem to be par for the course for internet related stocks. this goes back to when pandora first ipo'd. act below its ipo price, but facebook and blue, it initially dipped. down 50% from its ipo price in 2012 and now climbing sky high. the yellow we have square dipping initially after the ipo price. in purple is snap below its ipo price. orange is blue apron. even though today's big one is blue apron, the ipo price is down sharply. perhaps a gives reason for optimism in the future. vonnie: at least the nasdaq is in the green. abigail, thank you for that
rundown . we want to talk about oil because we have seen movements with opec meetings in st. petersburg, russia. crude is rebounded from its funk in june. opec has a grip on supply and demand. i want to bring in the co-lead at the henderson utilities and energy research. how much of a factor in your forward outlook is what comes out of this particular opec meeting? noah: thanks for having me on today. the opec meeting was pretty much a nonevent could we did not get a deepening of production cuts. truth be told, that was a low probability event. we did get talk of future production caps out the at at levels higher than those countries are producing today. in terms of a forward look, there's not a lot i cannot of today's meeting that would impact our outlook for oil
prices. vonnie: we have this wonderful function that i'm sure you know of -- opec go. and know exactly how much of the oil market each country produces. saudi arabia, the total monthly is about 31%. you can see which countries belong and which don't. saudi arabia has pledged to sort of not comply with its own quota. it has exited produced less than it can produce under the agreement. is that the equivalent of a cut? is it like saying if the fed does not tighten, it is easin g? noah: the compliance with production cuts had been running 100%. generally what we really focus on are the big countries that matter so saudi arabia, russia, iraq. ecuador broke from the production cuts. they had budgetary issues where they needed to increase production.
they are relatively small player in the market. for the larger guys, they're committed to the cuts. it was talk of having stronger hand with those member countries that were not fully in compliance. opec and do think saudi are focused on the fundamentals of the global market and they will do what it takes to keep inventory moving down the five-year average . vonnie: let's look at another chart. block hashat the blue that drawdown that is decreasing. as we are getting more of less then u.s. rigs are coming online in making up the difference, how long can that last? how can shale producers get more
money from the banks and drill more and not come into the problem of higher land prices or any land problems? so the usb mp industry historically has never had a problem getting access to capital. i think it was kind of interesting today on halliburton's call this morning that the talked about producers as a group tapping the brakes. you have seen the recount flat now. i think u.s. production is certainly a surprise to the upside, both relative to what opec is expecting but the broader market and what they are expected. production, of 2017 it is effectively locked in because of hedges. a good amount of 2018 production is also locked in. it's hard to see a meaningful pullback in u.s. production at least for the next nine months, but the comments from halliburton to they were interesting. you are seeing some $50 oil
and producers are having to rethink capital plans. vonnie: what will that mean for the u.s.? our shale producers going to be affected? noah: i do not think you will see consolidation. producers are feeling a lot of pain, but relative to what they went through last year, the balance sheets are much better shape. access to capital has not been a problem. they are certainly not thriving at some $50 oil, but they are surviving at some $50 oil. i do not think you will see a big wave of bankruptcies or forced consolidation through the end of the year. $40id see oil pullback sub and that would be a pain point where companies would have to rethink activity levels and the viability of their business models. vonnie: there seems to be at belief that demand will rebound a little bit. where is that believe coming from? noah: demand data has been fairly strong.
this not a push for a deepening of production cuts. i think they're looking at between 1.4 and 1.6 million barrels a day of demand growth. consensus seems to be somewhere around 1.3 or 1.4. one of the best things for demand is lower oil prices at $45. certainly for transportation sector, prices at the pump are accommodating. sub $50 oil prices should be positive for demand. vonnie: what are you telling clients who call janice anderson and say what do we do -- janus henderson? noah: i think we are taking a longer term view. there is a secular headwinds in terms of demand and a lot of chatter about deep oil demand. we think there will be multiple
cycles between that today and that date where energy of the sector will be investable. but we are doing is focusing on companies well-positioned on the cost curve and have company specific attributes that we think are interesting or you make of a catalyst that can help the stock work independent of just a call on higher oil prices. vonnie: noah barrett, great to talk to you. he is co-lead of energy and utilities research joining us from denver. let's get a check on the first word news this afternoon. here's courtney donohoe. tookney: president trump shots at congress, hillary clinton, and attorney general jeff sessions. art theed, "why committees and investigators and our beleaguered ag looking at to crooked hillary's crime and russia relations?" according to people familiar with the matter, the eu's energy supply could be at stake. new sanctions could be announced as early as this week.
they would prohibit u.s. businesses from the eu and include stopping a plant $10 billion natural gas pipeline . the president of poland city will veto part of a judicial overhaul that is threatening the independence of the court system. the legislation has led to eight straight days of antigovernment protests. the president will veto bills from the supreme court and the judicial council that decides which judges are promoted. emmanuel macron's popularity has taken a dive. a new poll shows his approval rating felt percent of the last month to 54%. either confused or unhappy about his plans for the tax system, dispute with the army, or upcoming labor longer forms. global news 24 hours a day powered by toys 700 journalists and analysts in more than 120 countries, i'm courtney donohoe. this is liberty. bloomberg. davidvonnie: they kicked off a k
of hearings. jared kushner talk with the senate intelligence committee. not sure if it was all members or staffers. anyhow, he has left that meeting. we got 11 pages of what he was going to tell that committee. he is going to give a statement at the white house at that podium very shortly. we will bring it to you live. alphabet, reporting second-quarter earnings after the bell. how it could help quell in situ problems -- youtube problems. this is bloomberg. ♪
statement outside the white house following some answers to a senate intelligence committee request that he come in answer questions regarding his ties to russia and meetings that he had with russian people that may or may not have had ties to the kremlin. that testimony or interview is now over. he has left the room and will around 1:15 p.m. or so make a statement at that podium outside the white house. alphabet has planted kickoff tech earnings after the bell today. google's parent company is expected to report strong second quarter results. joining us with a look at what is driving off bets profits is cory johnson live from san francisco. what is driving alphabet's profits? cory: it is advertising sales. the nature of advertising sales has changed a little bit. the things that google gets attention for like self driving cars and blimps that will provide is wireless connectivity
far from wires have been the things that confuse investors. be what morgan stanley to the chief financial officer of when itany and the comes to earnings, i think about the report and the way that she tried to simplify the reporting structure of the company. even though it's a little easier to understand under her administration, it is still driven by ads in revenues driven from those ads. part has to bet going down for potential market share. cory: advertisers like prices going down. what's interesting and here's an odd thing about this. as much as they simple fight the business of the report and reporting structure, they have been somewhat complicated with their offerings for the ads. look at the cost per clicked, they do not actually give us the cost per click.
the reason it is going down is twofold. morerices by going down as and more users are on mobile and advertisers pay less to advertise on mobile. the other interesting thing going on behind the scenes is fightven if they simple the reporting structure of the business, they complicated their offerings in the advertising side. have many more types of advertising for marketers for five years ago. different ads based on geography and customers there giving and type of format on the web whether it's a nap or outside the app or in browsers like crumb and safari. i think what's really interesting is that there's lots of cheaper ads. the cost per ad is going down and the number of ads is going way up. that leads to rising revenue and profits for google. they are taking money off the payroll by offering more and more ads. for marketers, it is complicated. for investors, they see the growth of the results because it's driven by mobile and the
proliferation of the different types of ads available. vonnie: for performance, we cannot discount the impact of currency other. , you see thet pgo united kingdom was responsible for 8.6% of revenue last year. the rest of the world was 44% in the united states 47%. of u.s. dollar is only 47% earnings. listen think we were to carefully about the impact of the eu and the eu sanctions. the business of the eu to be challenged by the way that the eu has come down hard on google and criticized not what they have done in the past but the way they will operate in the future. the way their time is together is matching search with all the services, such as offering up travel and hotels and shopping and favorite that, pushing this to customers ahead of results that might come from other companies. the concern of what that means for growth overseas and growth
in the eu is a pretty big deal going forward. we might expect some questions in the conference call tonight about what that might mean for google and alphabet going forward. vonnie: cory johnson, thank you. cory johnson is live from san francisco and he will be breaking down those numbers a little later on. it is now time for the latest bloomberg business flash, a look at the biggest business stories in the news right now. brexitllout from -- deutsche bank considering moving assets from the balance sheet of its british entity to frankfurt. that's according to a person familiar with the matter. deutsche bank's ceo has told employee about the majority of trade in london moving to germany. at&t and time warner are set to be an early talks with u.s. antitrust officials for approval conditions. competitors and lawmakers have been pressuring the justice department to stop the $85 billion deal on grounds that it will lead to higher prices and fewer choices for consumers.
another possible challenge -- the justice department has allowed new anti-trust truth -- chief. he awaits senate confirmation. -- web website when md m.d. has agreed to sell itself at $2.8 billion. that represents a 20% premium. 75 millionby 7 consumers a month. the macro event to watch this week -- the federal reserve rate decision. that is on wednesday. why the central bank's biggest challenge is not inflation but the balance sheet. this is bloomberg. ♪
he has been speaking with members of the senate intelligence committee on ties to russia and meetings he had with russians during the campaign. we will bring that to you live. thet now, the fed dominates macro rate decisions. the balance sheet is in focus. recent plummets suggest a runoff before rate increases. or more on the upcoming meetings, we have bloomberg reporter gina smiley. we talked about fixed income for some other really matters and how it would impact the economy. the ultimate goal is for the balance sheet to be tapered down to roughly $6 trillion by 2022. is it really going to cost competitions if it starts in october or november or december? gina:. that's a good question. it probably isn't as long as it's well broadcast. most people say the fed has done a masterful job at broadcasting
to markets but they will be doing at the balance sheet. markets are mostly pricing this and already. why are we not seeing rates move them? if we are seeing normalization, shouldn't the treasury market the reacting somehow? jeanna: i have been talking to people about this and one thing that rate strategist will point out again and again is that you have to look at all the stuff as the counterfactual. you would expect more movement, but you don't know what would've happened if we had not gotten this balance sheet plan for rate ane this year and it's important thing to keep in mind when you're looking at movement in the markets this year. vonnie: if you look at g #btv 253 -- actually we will revise that and come back to you. why wait until september? economists that i know say could happen this week. a one in fiveis
chance and that's pretty consistent from what i'm hearing from economists i have talked to. thought people have it's totally possible they can make the announcement in july. the reason that many people say they won't is that janet yellen did not do it during her testimony. she had an opportunity to clearly signal july and she didn't do it. most people think september as a result. vonnie: is there a possibility with installing and the 10 year breakeven rate down that we will get nothing in july and nothing in september because maybe the economy can't take it? jeanna: that's a good question. what we have heard from fed officials is that they want to get going on this. it does not matter what the data looks like and the economy looks like a twin now on september. the economy by a broad number of indicators looks good. just like her most recent speech on this, it almost is not even matter what inflation does.
it will move regardless of whether inflation will move up a higher cap. they sort of may that a non-important factor. vonnie: but have a listen to what fed governor dan tarullo told us this morning. >> it may be that the fed wants to make sure that policy is set on an understandable and certain courts -- course so that if there is a transition to a new chair, the balance sheet adjustments will already have been laid out and thus you do not lay in the lap of a new chair the need to come up with the balance sheet adjustment policy. so in an ideal world, janet young would love to lay all this out for somebody else to take over in february, but she's also conscious of the .conomy if raising rates before new chair comes in would hurt, which you do it anyway? jeanna: when the fed looks at the balance sheet, you're going
to go slow so on this and it's not going to hurt economic growth enough for us to be concerned. rates are hold other thing and you have seen the markets react to that. markets have cut down the odds of a hike by the end of the year and that has been reacting to the slow inflation. thank you. vonnie: i know you will be covering this minutely for us. you are bloomberg's economics reporter and in particular the federal reserve. we are waiting for jared kushner statement that should take place 20 minutes from now outside the white house following answers to members of the senate intelligence committee about meetings with russians during the campaign. this is bloomberg. ♪
we are waiting a statement for jared kushner. he was on capitol hill talking to the senate select committee on intelligence in a closed session. we will bring you his comments from the white house live. democrats and the party members starting a chart to power and what they call a better deal. senate republicans plan a procedural vote to consider health care legislation again. ♪ david: as we await comments from jared kushner, who is expected to address reporters outside the white house, let's get the latest on his appearance before a summit select committee. us who is on joins capitol hill today and kevin whitelock covers congressional coverage from our beer in washington.