tv Bloomberg Markets Americas Bloomberg July 27, 2017 12:00pm-1:00pm EDT
vonnie: from bloomberg world headquarters in new york, here are the top stories from around the world that we are following this hour. inpite political turmoil washington, d.c., u.s. stocks are rising tides. facebook is rallying on the busiest day of earnings. deutsche bank's revenue was the weakest in three years. ceo john cryan wanted to get better, but warning it will get worse. we hear from him this hour. plus, new york city, your chariot awaits. bus service launches in the city. has to see what the ceo say later on. julie hyman is with us. halfway into the trading day and a lot of earnings i guess. julie: the digestion has been a good one, at least if you are
bold in the markets. all three major averages are continuing their run to records. on the strength of those earnings reports, with the nasdaq leading gains. we have those facebook earnings as well as anticipation of the amazon earnings. let's look at some of the movers. some of those we have spoken already, but some have been underneath the radar. facebook are the two adobe have been talking about. verizon had blockbuster revenue growth. facebook shares also gaining quite a bit. 4.6% of that company's numbers beat estimates, and their are a lot of -- in that is a lot of positive sentiment. this retailer coming out of earnings that did not look strong, but investors are shaking it off as partially weather-related. looks like third quarter starting out better.
interest on0% short the stock. that could be contributed to the gains. pimco realty, coming out with rental revenue that be estimates as well as its cash flow coming out ahead of estimates. that is propelling though shares higher by 6%. on the downside on the s&p 500, we have as why networks down seven -- we havesy networks -- we have sy networks down 7%. johnson controls, maker of components for various industries, including the auto industry, that company's numbers missing estimates, as well as whirlpool, cutting its forecast, citing the cost for rob materials and customers find -- citing the costs for raw materials customers finding -- ups as well. revenue per package was a three percent, which is better than
estimated, however, its forecast for adjusted earnings for the full year, the midpoint of that guidance missing average estimates.exports -- ea on the bloomberg is the earnings analysis. right now, we have two hundred 38 the 500 companies in the spa that have reported. there is a surprise tab. the gross tab says we have seen 5% sales earnings growth. that is better than estimated. it is the margin by which they beat estimates. 74% of the companies have reported, beating sales. a better runway that we have seen historically. we will see if we could keep it up for the balance of the season, vonnie. vonnie: julie, thank you for the rundown. that was great. traders have been digesting the latest earnings as well as the
fomc statement, talking about balance sheet normalization starting relatively soon. our next guest says the accelerated growth of the past year will -- joining us now from new jersey is kevin, senior portfolio manager. kevin, a lot to digest. weak economic data followed by stronger economic data. now they are getting positive earnings. hold as you -- why would you not hold what you have, as they say? volatility is incredibly low. economy is doing well. we will be somewhere around 3%, which is above trend at some of the best growth we have seen in a while. the only fly in the ointment is the momentum in that growth rate down with nosimmer
additional acceleration from here. a lot of it is priced in we think, and financial markets. spreads are tight. multiples on the s&p 500 are higher than average. from our point of view, it is better to move from an overweight position to more of a neutral position, so last week, we cut our exposure to equities in our tactical portfolio. vonnie: but you are not flashing warning signals, just saying you have had a good for a while, mrs. pullback here? kevin: we have to see how it evolves from here. we are making a simple case it is either that the returns will be somewhat lower than what we have seen before. from the starting point and risk is likely to ratchet up. seewe would expect to fundamental conditions begin to slow down as we going to the second part of the year. vonnie: couldn't you saw that with a weaker dollar -- can you solve that with a weaker dollar?
kevin: washington's fiscal policy is a wildcard. it was discounted into prices into the last nine months, that we would get some kind of policy shift. maybe some are spinning, maybe tax cuts. that has become more of a gray area. we will have to see how that evil. but even that's, coming late into the cycle, that will impact monetary policy, so if you have something aggressive that came through in terms of fiscal policy, it would change the calculus on monetary policy. the good news from monetary policy is the fed is going to move very slowly, we think. vonnie: police until february until we get a new direction that the fed, might that change with normalization? kevin: it could, but mostly it will be between -- the markets -- it will be more about the data. the balance sheet will become
front and center. year, therento next is to be a lot of change in leadership at the fed. there is going to be lots of analysis both on the political side, and in terms of how the data is progressing, so that does create some additional cloudiness in terms of monetary policy. you have two clouds -- one fiscal, one policy. vonnie: what should we anticipate from here and inflation expectations have been going up, but they are predestined. -- they are pretty dampened. kevin: in terms of what? vonnie: rates. kevin: ok. you will have relatively slow changes in terms of the interest rate. more of the drama has been about the balance sheet and how quickly they get moving on that, we think that happens relatively soon. we are seeing a little pickup in
inflation expectations and we think september is in the cards, as we will have a full statement of september. the fed, when they say they are data-dependent, we believe it. they are looking at the data and see how it proceeds from here. vonnie: kevin, thank you. working hard behind her, tell them to type in tv . [laughter] vonnie: that was kevin. let's check in on the bloomberg first word news with mark crumpton. done.vonnie, nicely senate republicans are varying 40 bare-bones approach in the quest to appeal obamacare. under there's the majority, republican says this week's debate including an all , may amendment of votes ultimately lead to a bill that millie ends the mandate that all americans have insurance or pay a penalty, along with a few other provisions. we will have more health care
coverage ahead here on bloomberg television. the nation's military officer says u.s. policy on transgender individual serving in uniform has not, and will not change. that is until secretary james approves policy direction, and james mattis determines how to implement it. that is according to the general joint chiefs of staff. for now, he says they will treat all of our personnel with respect. a british judges ordered that critically ill infant charlie guard should be moved from a hospital to a hospice well -- where he will die in a short time. after asion was made end of life care plan. minister transport says it is too soon to talk about scrapping the combustion engine after an announcement in
the u.k. about a ban on the sale of new vehicles using gas and diesel starting at 2040. the move comes as the auto industry looks to litigate troubles concerning diesel emissions. global news 24 hours a day powered by more than 27 hundred journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. vonnie: coming up. capitol hill is perfect for a late-night legislative session. you talk about the embattled health care bill next. this is bloomberg. ♪
vonnie: this is "bloomberg markets." i'm vonnie quinn. as the senate considers its proposals to repeal and replace obamacare, legislators maypole an all nighter -- legislators may pull an all nighter. we can -- we know they can go sometime. joining us with the latest is sal. when will all of this start? sal: we are anticipating a late-night. this will go on my. there are many amendments filed by several members, including jeff merkley, a democrat from oregon. , republicans are figuring out what their bases going to be. they have voted down the senate
vote to reject the republican bill to repeal and replace on one hand, and also a cleaner appeal to end the law into years. there are figuring out what the end game is. vonnie: mitch mcconnell has the perfect scenario in his head. what would that be? sahil: the likely scenario at this point is being called here a "skinner pl," essentially repeal,"ff --"skinny essentially lopping off some legislature from obamacare. a number of democrats are in favor of repealing. vonnie: chuck was saying this is a ruse. just to get the two sides talking> if it did go into conference, what would it look like? sahil: to your first point about conference, one of the senators in the chamber said, admitted
that this is a loophole getting a conference into the house. they can have that conversation and the rest of the house means it will be few restrictions to the ultimate agreement will be. this seems like the best option right now. i spoke to several members of the house, including mark meadows yesterday, the chairman of the house freedom caucus, who said there is zero chance that a skinny repeal can pass the house, so no one is making a pretense about it. they said whatever they pass at this point is likely to be a vehicle to get the conference. vonnie: what does the administration one at this point? sahil: pretty much the same thing. they want results. it doesn't matter how they do it. that does not seem to matter what the details of this bill are president trump. they want to get this off the plate, sign it, had a rose garden ceremony, celebrate and claim victory and move on. vonnie: thank you.
chaos over the fate of the health care bill in washington is not phasing investors. health care investors have rallied beating the overall market with an 11% gain. joining me is drew armstrong. remind us what happened when that was celebration after the , being priced in it that point? drew: every time there seems there is a major milestone, republicans pass the to repeal much of obamacare, and it's going to affect you parts of the health care system. i look at the stock charts, and happened. there has been a huge investor fatigue around this boat, trying to figure out what washington do? a lot of people have this sense that it will not affect a lot of these companies and the publicly-traded markets.
areth insurers that publicly traded have largely gotten out of obamacare, so if it gets rolled back, most of them will not be affected in a major way except for a few smaller folks who play in medicaid. the farmer companies, not really a "them. hospital stock, hospitals have bigger problems to worry about in terms of data and everything like that. it is one of these things where the health care stocks have been going up. health insurers have gotten into other programs and doing better. from her is finding its own reasons to do ok. you know, the hospitals have a whole different can of worms. it has been a huge reaction. vonnie: one of our charts shows the hospitals are the glue. but you say they have taken on major debt. drew: listen, this impacts all of these companies, but it is mostly around the margins. where we have seen problems in the hospital sector, companies
like community health care that expanded years and years ago, really building up a ton of hospitals, and now we are seeing patients lungs are dropping because people are moving into cheaper outpatient settings. people aren't staying in hospitals for two days or longer. that means less revenue for them. the fundamentals of care medical practice are affecting these guys way more than anyone in washington. vonnie: is there anything that can happen, if they come to conference and come out something be are happy with it looks different from the affordable care act, will that move health stocks? will be some reaction at some point, but we have got to point where investors -- after some initial, oh my god, we have to act on this, we have got to the point where people really do have a sense of fatigue. they are not trading on every little vote. we are not seeing the reaction in the markets every time something of consequence to the policy process in washington
happens. of let's been a degree take a little -- heading into the criminal discussions. see profitn do we taking and investors saying, this has had a good run, let's rotate? drew: that will depend on what happens with things like tax or form, the sba. there are a lot of fundamental trends that have to play out, drug approvals and things like that, m&a. where there are a number of factors that will play out over a longer period of time, we have to wait and see. vonnie: will you be watching the vote? drew: not the full 36 hours. vonnie: i'm surprised that you. drew armstrong, thank for joining us. look at the bloomberg business flash. proctor and gamble's stronger fourth-quarter numbers could provide fuel against -- --the investor
launch for a board seat this month aiming to improve the company's slow-moving accomplice bureaucracy. the consumer products giant says it is managing its turnaround. martin shkreli's case is nearing its end with both sides resting their case yesterday. shkreli no for inflating the price for a potentially life-saving drug is accused of running a ponzi-like scheme. the former executive and hedge fund trader did not testify during his four week trial. jurors could begin deliberation us to mrs. week. that is your latest business flash. still ahead, are we getting closer to a discovery script merger? our deals report is coming up. this is bloomberg. ♪
reports whereeals we do a little m&a business within sight -- with insight. joining us is alex sherman. talk to us about what is going on today. alex: big news in the media world. discovery and scripts are moving close to announcing a deal. all signs positive for a deal being agreed on, maybe as soon as tomorrow. by come has been in the running to buy scripts up until late last night, at that point, by come was informed they had lost in scripps would move forward with discovery in a one-on-one exclusive negotiation. be overike it will $90 a share. that is above premium were scripps was trading on.
we reported that talks accelerated and scripps jumped yet again. no surprise of hearing a deal that could come as early as tomorrow. scrippsso why did choose discovery over viacom? end, viacom cannot get there on price. ancom had been offering all-cash deal, and there was some concern from the board that that may put viacom and a difficult place financially in order to get the financing and get the deal done, but even so, they offered more than discovery. this deal with discovery for a higher price is also a cash-stock deal. in other words, the scripps family will own a noncontrolling stake in this new company, but they will still be able to have
an upside from a discovery-scripps company considering that the deal goes through, and the new company will be stronger, at least that is what many analysts are saying, then the old scripps just because discovery and scripps enter a world now where if you don't have high performing networks, you are in danger of getting those networks locked out by the cable providers that are increasingly offering skinnier and skinnier bundles. they put together two companies here with a couple of popular networks. ,iscovery owns animal planet hdtv, the crown jewel of scripps. you put them together and you have a stronger company. even if their lower performing companies get will stack even if their lower performing companies get lopped off, they have enough to raise money on the programming. vonnie: thank you, alex, for that update. we'll keep our eyes wide open. coming up, deutsche bank's ceo isn crying is -- john cryan
diamondback ambitions. plans. his turnaround the major averages are higher, but for earnings day, it does not look like there is particular momentum to any of these indices. plans. the dow was up a third of a percent. the nasdaq up for tents. /10. the euro is having a weaker day at 116 50 4 -- add 1.1654. this is bloomberg. ♪
let's get a check on first word news with mark crumpton. mark: a warning for president trump from atop republican senator. south carolina's lindsey graham was blunt in discussing actions the president might take against attorney general jeff sessions, and special counsel robert mueller. >> there will be no confirmation hearing for new attorney general in 2017. if jeff sessions is fired, there pay.be hell to any effort to go over -- any effort to go after robert miller would affect the presidency unless robert mueller did anything wrong. the white house denies report. congress has struck a deal on the bill that can limit the president's power to limit sanctions on russia. they will vote on the house bill that includes sections on north korea. white house communications
chief, anthony scaramucci tell cnn, president trump may sign the bill or veto it. hillary clinton will unveil the title of her new book. shelvesppened?" his september 12. she promises to reveal unprecedented details of her white house campaign. the upcoming memoir was originally built as a book of essays. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm mark barton -- i'm mark crumpton. this is bloomberg. vonnie: deutsche bank reporting its weakest quarterly revenue in three point five years, even after reorganizing its banking units. shares lower in germany after reports. ceo john cryan says the focus will be to revise revenue. bloomberg's matt miller sat down with john cryan in frankfurt, and ask if cost cuts will continue? >> we continue to work on our
costs and you saw that headcount has started to come down. that is a mixture of the work we did to restructure in germany, which is almost complete. but also, we have been internalizing some of our technology particular, but the headcount has come down. that will mean reduce costs in the future. we try to modernize the bank. we want to keep up the investment because we do need 10 move on with the modernization -- because we need to move along with the modernization program. you brought renumeration down to some extent. in the last couple of years -- have you started to turn that around? surely, if you want to get the best talent, you have to pay for it. john: we have come against. in the detail of the numbers, you will see the venerable
compensation, the bonus accrual has gone up a little bit. we are accruing to a bigger number this year. we only make a decision at the end of the year, so we don't know yeah, but yes, we recognize that we have been a bit of an under payer for the last two years and we need to rectify that. reasons that one of the why equity trading revenue and fixed income trading revenue has not only been done -- been down, but has outperformed peers in the u.s.? matt: we are doubtful percent on the trading side -- we are down 12% on the trading side. equities, we lost a bit of market share, but there are underlying factors. we need to invest in more electronic trading. derivatives and castrating is ok. we have seen -- come back. you more potential to make revenues from this. pickup, wety levels
should see an improvement in revenue. matt: how much market share do you expect to take? run the never want to bank chasing after market share. long term is sustainable profitability. we need to measure we are relevant at all times. we need to invest in systems and investing people. trying to build up the numbers. that works under the new list of tools next year. matt: where is your business because of brexit, everyone is wondering is it going be focus-based? matt: on the advisory side -- john: we want to build up our advisory side. there is a lot of global expertise in certain sectors. london will obviously be an important venue for us, but we
will also try to focus a little bit more on europe, and particularly, germany where we have been investing. matt: is it only a little bit more? i can see the idea you are going to move a fifth of the balance sheet from london to frankfurt. what is the headcount that you will be moving from london to frankfurt? sheet,n the balance actually come already in germany, there is this idea of a london branch, but the booking is in -- whether we have an adjustment to where our people are depends on what a brexit looks like, what the rules are. from the perspective of a contingency planning, we need to ensure that we can do in germany in april 2019, pretty much that we can do in london today. we know that means moving, adding at least, some operations
people here in germany. not sure about moving, but certainly from the perspective of making sure the competence stays the same, we do need to build in germany. there is a positive impact here. we do not know what the impact will be in london. we genuinely don't. vonnie: that was deutsche bank's ceo john cryan, speaking with matt miller in germany. a new ridesharing game is in town. a shuttle service is expanding to new york city. trying to fix the city's traffic congestion, next. this is bloomberg. ♪
markets." i'm vonnie quinn. time for our stock of the hour, a tale of two stories of social media companies. facebook is up 4% having if they -- having is best day in over a year. twitter having its worst day of the year. here is abigail doolittle. what is going on? abigail: twitter is having its worst the of the year actually -- of the year after they beat earnings. you would think that would be really positive. daily active users up 12% year-over-year, but the big thing investors are focusing on our monthly active users, which are flat quarter over quarter. with paul sweeney, and he said this is a question of what this company is trying to sell, engagement, the idea that the twitter users are not engage in a platform. facebook has 2 billion users. 320 8 million users,
so a pretty big difference there. it is a matter whether wall street can get the idea that engagement could come from revenue, from video, and that sort of thing. they are trying to get investors engaged. hopped into the bloomberg and look at a chart. facebook down 50% down from its ipo at 2012 but back in a huge way. twitter initially did after its initial ipo. here we see in white, that facebook has been dipping after its ipo, and then trading higher. twitter has been trading higher, and below that ipo price -- the bothion is, the ceos for
of these companies, perhaps jack dorsey can get a turnaround and it revenue growing. vonnie: abigail doolittle, thank you. the bloomberg business flash, look at the biggest stories right now. mastercard posted record revenues. companyic payment handles most nonmonetary payroll. they're developing a faster system for u.s. payment. barclays accidentally shared client information in february of this year. according to people familiar with the metal -- with the matter, they blamed human error. they deleted the data.
surging in that turns the hamsters -- and have turned the hamptons into a seller's market. 7.4%.ty rose that was driven by sales of homes costing $5 million or more. and that is your latest bloomberg business flash. breaking news, bill ackman set to be building a stake in automatic data processing. bill ackman a pershing square, known to have 10 or 11 positions , simply building a stake in automatic data. processing. we will tell you more when we get it. a new ridesharing game in town. chariot is expanding to new york city. the company thinks it can fixed -- the company thinks it can fix the city's congestion problem.
♪ vonnie: this is "bloomberg markets." i'm vonnie quinn. breaking news, bill ackman, the billionaire investor pershing square capital management told a stake in business outsourcing company automatic data processing, according to people familiar with the matter. as we know it, ackman may acquire more through the new for, he filed documents all according to people who asked not to be identified. .hares are up 18% he has a market valuation of $50
billion. let's get to data now midway through the session. the dow jones is shaping up its games of 2/10 of 1%. is your weaker today. a stronger dollar, but below 94 if you look at the dollar index. the spread continuing to whiter, 95 basis points, 10 basis point moving last concessions or so. jeff bezos maybe the richest person in the world, but is he delivering the same value to his shareholders? amazon will report value to its shareholders. for more, spencer joins us on the phone from seattle. bezos thes jeff richest person in the world, or this he not care about richness as he built out -- as he builds out the ultimate store?
spencer: you have not heard anything officially from amazon about him prancing around seattle, slapping high-fives. they will quietly marked the moment, but yeah, they are interested in building his business, a lot of new initiatives underway, as well as his projects that include spacex exploration company blue origin. the latest was whole foods that took the market by surprise, even though it made sense when you thought about it. he maybe even looking at things like health care? spencer: there is speculation on that, and that would make sense, especially if they are opening, if they are going into the grocery store business. many grocery stores and their main rival, walmart, have pharmacy businesses. so that would be a natural progression for them.
another thing is datastorage which is a sticky thing. you don't hear amazon prime service, their subscription includes photo storage. that is another sticky thing. health care records will be another thing if they find a way to get consumers to maintain their health records within amazon. it is another touch point in touch of stickiness. vonnie: where are the the key points -- what are the weak points. ? where do they not have the most in businesses that it needs? a mode: it does not have in brick-and-mortar. foods will be operating 460 grocery stores. -- there is a lot of faith
that amazon will be able to successt -- transfer it from online to retail, but that is the big question. we will not see that in the earnings release. they will probably be guarded since the deal has not closed. the other thing to watch for is simply profitability. there is this push and pull between amazon and investors over their history. up, butk keeps going the time it does think is when investors get a little worried that amazon is spending money to quickly. vonnie: cory johnson is with us in san francisco. what will we hear on a conference call about guidance? cory: guidance is important for the company. what we see is a careful maintenance of the stock, it is important to amazon because they play their -- because they pay their employees and stock, not in salary so much. so they one to lower expectation.
the most interesting thing in spencer touched on this, what is interesting about this business there are two different business models playing at the same time -- the retail business, selling stuff online, selling at or below cost, and a massive profit, a very high operating margin that they run with amazon web services. and although it is smaller than -- although it is smaller, amazon web services is paying for everything in terms of turning profit in, and even generating free cash flow for the business. the full-time to pay retailers has been the cash flow internet amazon. i will be curious to see what the operating margins are for the web services business, which has treated so much profit for the business, as compared to the retail business has lost revenue for the business. vonnie: that is cory johnson in san francisco and spencer silver in seattle were amazon is headquartered.
thanks to you both could afford is taking his first at an entry the ridesharing market. chariot, a crowd sourced shuttle service acquired last september, will roll out in new york city, but can break into an industry dominated by uber and lyft? with ceo ofinto it chariot and founder. had started this business and it was your business before ford bought it, so congratulations. >> thank you. today, we announced our launch in new york city. vonnie: the difference between this and uber, tell us about that because it is often called a uber-ized service. >> it is really for everyday use, twice a day. it is for your commute. because of the affordability and accessibility and productivity, believefi onboard, we
we have created a new industry called micro transit. micro transit is going to be flexible, high octave -- high-octane transit service. vonnie: to put that in lehmans language, you are providing a dynamic bus route, so people can hail a bus and it will go where people are asking it to go, correct? ali: correct. people are crowdsourcing routes. they tell us where they live and work, and whether -- and where there is critical mass, we launch a twice-daily service in the a.m. and p.m. with frequencies of 10 minutes. the of thelar service area continues to go up, we add more chariots to the route. in san francisco, we have routes with frequencies of three minutes. vonnie: it strikes me that there is a peak point after which it becomes really difficult.
if you are in high traffic areas, and you're adding traffic to that, the -- does that become counterintuitive? ali: there was a report that keynes out that. -- there was a report that says cheruiyot takes -- there was a report that said cheruiyot takes 10 cars off the road. sustainable mode of commute, and economically sustainable. vonnie: are you profitable yet? growth-mode right now. there is a lot of investment in chariot. vonnie: when do you anticipate making a profit? ali: we will continue growing and investing. vonnie: you must have a five-year plan? ali: as long as we continue to get the reception of the communities that we enter, we are excited to invest in the business. because it is a high, occupancy
vehicle, we can get to profitability faster. vonnie: the talk about dynamic pricing, depending on where you get on and off, you made pay less or more, like you were healing cap on your smart phone -- hailing a cab on your smart phone. how does this work? could you charge more for longer routes? ali: in san francisco, we have off-peak and on peak pricing that looks at the commuter rail, a two-tiered system during the morning and evening rush hours. the four dollar rate we are providing an offering in new york is an introductory rate. ist is interesting to note it is a transit vehicle that allows people to use their commuter benefits, and pay for chariot rides with her pretax dollars. is $2.5 --ollar fair is to dollars $.50.
vonnie: why isn't anybody doing this? ali: a couple of copycats did this in 2014 and 2015, and they are no longer around. i will tell you that it is not easy. vonnie: but a uber any lyft could add that service easily? ali: release the vehicle from four we higher employee drivers. -- we lease the vehicles from re drivers.d we highe the professionally trained car drivers. vonnie: you are going to have to keep buying competitors out? right now, but perhaps it will be the only micro transit company out there. vonnie: do you need city approval? ali: we are always above board for every center -- with every city the enter.
it is a different approach to other companies. vonnie: thank you and we appreciate your time. chariot founder and ceo. i want to recap at breaking news, bill ackman holding a processes.siness adp has grown and market cap over the last two months, up 18%. bill ackman building his stake in automatic data processing. a new york times bestseller, asking about steve bannon, he is coming up. this is bloomberg.
for what is being called a skinny repeal of the affordable care act. steve bannon promises a higher tax on americans who make more than $5 million a year. have his pitches being received in the white house and on capitol hill. and joshua green, the author of "devil's bargain" on tensions between individuals in the white house as well as between trump and jeff sessions. republicans promised to demolish obamacare but are heading to more of a bare-bones change to eliminate just a few pieces of the law but there is no certainty that the skinny repeal will get enough votes. here now with the latest is margaret talev at the white house. josh green a