tv Bloomberg Markets Americas Bloomberg August 24, 2017 12:00pm-1:00pm EDT
from bloomberg world headquarters in new york, here are the top stories on the bloomberg and around the world we are following in the next hour. hedge funds in the hot seat. we hear from one investor who expensivete structures and even lack of performance, there is still value to be found. jackson hole begins. the janet yellen, mario draghi and central bankers convene in wyoming. we will hear from the kansas city fed president. voicesthe most hawkish saying another rate hike this year despite low target inflation. noteamsung's new galaxy eight restore its reputation and remove the memory of his noteding -- it's exploding
seven. first though, breaking news htc. the smartphone maker has hired advisers to explore strategic options, including taking on new it messman -- new investment or even a sale of the company, possibly. it trades in hong kong, which is not open right now, after midnight. our correspondent is in san francisco with the latest. we have seen this with other mobile phone makers as well, mark. if they do not change with the times, they go away. is that what happening here? mark: very significant escape from our bloomberg field team, excellent story, basically an ode to another smartphone maker falling to samsung and apple, plus new players in china. ago, htc was at
the top of its game. , 10 yearsne point ago, htc was at the top of its game. one of the first android phone makers, bigger displays, better cameras, 3-d cameras, really advanced. basically, we are seeing a downfall due to the increased penetration of the iphone and galaxy. the google pixel phone was not unpopular. what happened there? : htc sold cell phones for the consumer business. they also had a manufacturing business similar to foxconn that manufactured products like the iphone. htc is the manufacturing partner for the google brand pixel phone. they are expected to manufacture some new versions of the google pixel that google plans to
announce in october. intellectual property -- we saw this happen with blackberry over many years. frommight htc learn blackberry, nokia, or any of the other worldwide phone makers that have had to downsize and move into other things when it comes to selling its ip? mark: when it comes to its patent portfolio, htc has a big portfolio because of the success it has had with smartphone innovations over the last decade. try to license technologies, license its brand, which is still very strong in the asian and european markets. they have places to go. according to our story, they are looking at multiple sources, including selling off parts of -- looking atr
multiple options, including selling off parts of the business or the whole business. vonnie: part of the problem is that the whole company does not belong in one place. the whole company would never be acquired by anyone large enough to acquire it. it would have to be acquired in pieces or spun off because the units are so different from one another. mark: that's exactly right. like sam son, htc is such a big conglomerate with so many , htc ist -- samsung such a big conglomerate with so many different units. they have the phone business, tablets. they played in the smart watch industry a few years ago. there are a lot of pieces there. sense to sellake piece by piece to potential acquirers who really need those individual elements to up their own games. thank you. once again, htc, a leading manufacturer of mobile phones based in taiwan is looking at
strategic action according to people familiar with the matter. we are halfway into the trading day. what's going on? >> it's a jittery session for investors. we are looking at declines for the major averages. the dow, s&p 500 and nasdaq all slightly to modestly lower. one thing worth noting is that oil is down about 2%. more than 2%. we will be digging into that. mind, we to keep in have seen entered a volatility. earlier today, the nasdaq had been up about .4%. session lows down .5%. a 1% intraday swing for the nasdaq, disguised by some degree -- to some degree by how small the moves up and down have been. investors are basically on hold ahead of hearing fed chair janet yellen.
some retail winners include guess and abercrombie & fitch. both of those shares are soaring. year, we are seeing underperformance from small caps and mid-caps. take a look at a year to date chart. yellow, the s&p 500, up 9% on the year. middle, thehe mid-cap index, up 3.5%. in white, the russell 2000, up a little more than 1%. at various points in the year going negative. when it underperforms, it could be a signal of bearish action ahead. we saw that back in august and september of 2000 seven. as for what is dragging the most on the nasdaq, we are looking at it technology names including amazon and facebook.
paulke to an analyst, sweeney, who said this is a matter of investors taking profits from the winners this year, not a reflection of the fundamentals. with jitters on the markets overall, uncertainty in d c, plus questions around valuation, paul sweeney says investors are taking profits. finally amazon, yesterday the federal trade commission did approve the acquisition of whole foods. we know amazon has been wildly successful as an internet e-commerce giant, but as a grocer, investors are a little less enthusiastic. the stock is down 4.5%. it will be interesting to see if amazon can change the perception of its fate as a grocery. in addition to everything else it does online. vonnie: thank you. let's check in on first word
news. mark: residents along the gulf coast of texas are bracing for what could be catastrophic flooding. tropical storm harvey could drop as much as 20 inches of rain on the region. harvey is on track to strike texas late friday with hurricane force winds and light flooding from corpus christi to houston. donald trump says raising the debt ceiling could have been so easy but now it's a mess. in a tweet today, he said mitch and paul ryan should attach the measure to the recent veterans affairs bill. because they did not do what the president said, he said they are holding him up. we will have more on this story. china is accusing the u.s. of sabotaging the international trading system and warns it will ifend its interests necessary. the trump administration says it
will determine whether china's actions in areas such as arenology transfer unreasonable or discriminatory. interior secretary ryan zinke he is recommending that none of the 27 national monuments under review by the trump administration are eliminated, recommending changes. he tells the associated press he will recommend boundary adjustments for some monuments. pass --nistration administration's review has conservationists, who worry the protections could be lost for some areas. global news 24 hours a day powered by or than 2700 journalists and analysts in over 120 countries. the s&p 500 up around 9% since the start of the year. our next guest says u.s. stocks will be the best house in
an improving neighborhood in 2017. also joining us is simone foxman. mark, let me start with you. looks more attractive now? >> one shift we have been making is regarding equity markets. we are starting to see good earnings from europe and emerging markets. for the last few years, compared emergingrozone or markets in general, we are evening out. how about private, more liquid assets? >> we are exposed to equity more than any asset class, both public and private. we talk about the common fund model. we have been doing this for 41 years. we think the best way to get good, and are in a portfolio is to have exposure to equity
markets both public and private. >> more private now then in the past or more public? >> we still like private. clientsbeen encouraging to increase allocation to private equity, venture capital. it could be secondary. maybe even a little real estate thrown in. vonnie: does it matter where private equity is investing? infrastructure, for example, or real estate? >> great question. isst and foremost, the key getting access to the best managers. one of the things we have done at the common fund is to identify what we call the liquidity premium, the premium you get from investing in asset classes like private equity and venture capital. we track them on a quarter by quarter basis. just because a liquidity premium exists doesn't mean you get it. there is a catch. bestave to invest with the
managers to collect the liquidity premium. we like smaller managers as , anded to the larger ones we like managers who have a specialty they operate in where they can bring operating value as financial value. funds,reign wealth pensions, families, direct, what is your feeling? mix. see a we have a common fund that is direct as well as part of a larger fund. in our venture capital program, we do that as a fund structure because venture capital is not only an asset class, it is in class. you have to invest with 10 or 12 venture capital partners. quick so you are saying you see better flow if you are investing with good managers so the direct investments are more successful? an adjunct.
it is part of the program we build. we do co-investments, secondaries, single funds, and fund to fund structures for our clients. you are seeing two strains of thinking, some in pensions, and some pulling back entirety. funds.o invest in hedge we like hedge funds. for every one of our clients, we build an individual portfolio. each of our clients is unique. muste: of course, but you have some kind of overall thesis. >> we do. we like them. the range of investments is anywhere from 5%-15%, again depending on circumstances. the key with hedge funds, just as the private equity industry has grown, so has the hedge fund industry. there are more than 14,000 out
there. to be able to get good returns in your portfolio, you need better tools. we have beenls developing in-house to analyze hedge fund managers. this breaks them down into beta bits and determines what is beta and what is alpha. in a recent note, you questioned whether they were an expensive amusement park. >> correct. >> where is this going? is there a time when all the tourists leave the amusement park? vonnie: right after the fireworks. one thing you learn at the amusement park is be very best rides have the longest lines. we are trying to determine the best rides in amusement hedge fund land before the lines get long. that's how we earn our keep. vonnie: are you liking any particular strategies at the
moment? i am sure you have philosophies about their philosophies. >> our hedge fund program is built to take up all the beta bits. equity market data, bond data, credit data. the we are left with is skill of hedge fund managers. when we look forward in the economic cycle, we are nine years into a growth cycle. macro managersal that have good risk portfolios. one manager we like very much that we hired about a year ago is a currency trading manager based out of london. a global macro manager. we took their portfolio, deconstructed it into our 14 beta bits, and could not find any of those beta bits in our portfolio. we correlated the alpha stream with our other managers and found it was fully uncorrelated.
that's someone we want to bring in for our clients. vonnie: got it. macro has been a tough place. >> it is. vonnie: thanks to both of you. reporter,r investment and mark anson, common fund's chief investment officer, thanks for coming in today. coming up, drama over the debt ceiling. unity.trump attempts he blames senators for the potential government shutdown. this is bloomberg. ♪
shutdown, donald trump is blaming the debt ceiling on gop members of congress. this morning, he wrote -- joining us from washington is bloomberg's senior white house correspondent, margaret talev. the president has suggested something absolutely unpalatable to republicans. they will never agree on this among themselves, right? >> this gets sort of, located, but let's try to unpack it. did the white house try to tie the debt ceiling increase to the va bill?--
yes. was it a slam and unanimous path forward? no. is this a hugely contentious issue inside the republican caucus because some of the conservatives the president considers crucial to his legislative path in the fall wanted to attach spending cuts to a debt ceiling increase? yes. there are two storylines to watch. what is the president's desire on the debt ceiling? how does he want to proceed? on with theg fighting inside the republican party, particularly the fights the president has been picking with republican leadership? that tweet not the only one this morning. onlymorning he said the with mitchhad mcconnell is that after hearing repeal and replace for seven years, he failed.
vonnie: that relationship is not going too well right now, at least on paper, and from what we are hearing behind the scenes as well. what is the potential path forward for the gop? vonnie: here is -- >> here are the things that are about to happen in roughly this order. august recess ends. after laborme back day. they have until the end of september 2 of her a government shutdown unless the president is determined to have -- two of art a government shutdown unless the president is determined to have vert a government shutdown, unless the president is determined to have a government shutdown. and then a little thing called tax reform, which republicans believe and have said publicly is crucial to both their health
vonnie: this is bloomberg markets. i'm vonnie quinn. automakers around the world look and chrysler for potential for much more. chrysler is forecasting sales of believes theps and brand could eventually deliver 7 theion units a year as demand for suv's rises around the globe. we want to bring in our auto reporter, jamie butters, who joins me from detroit.
does the brand intend for this to happen? jamie: he feels that jeep is such a strong brand, identified worldwide with the suv crossover movement that has become so he could haveinks 20% market share in with all the competition and sees it growing to maybe a third of global volume, 30, 30 3, 30 5 million utilities a year. 33, 35 million utilities a year. what seems to be going on, as my great colleague reported, it looks like they are probably going to spin off alfa romeo, maybe spin off the components business, the parts business,
and then have a skinnier, less debt laden fiat chrysler that its centerjeep at and be a standalone company or be attractive to merge with somebody. it seems like they have given up on merging with gm, but they have big players and less big players. one to watch and a great story. coming up, the kansas city fed president all the way from wyoming. her calls on inflation rates and takeaways, next. this is bloomberg. ♪
river. this is bloomberg markets. let's get a quick check of the major averages. whether it is late august or perhaps jackson hole jitters, we are not seeing too much movement in the equity markets. s&p down three, nasdaq down almost 20 points, dow down 11. more movement for the dollar. .p a fraction there the 10 year yield at 2.18%. mike regan put it -- who turned the risk switch off? year is mark crumpton. margolin the you -- mark: the u.s. navy is calling off the search for sailors after the collision between a destroyer and a tanker. 10 sailors went missing and five others were injured in the mondayt, which occurred as the uss john mccain was heading to singapore for what officials say was a routine port
call. hasmigration to the u.k. fallen to a three year low in the wake of the brexit vote. arrivals outnumbered up archers by 246,000 in the year that byed in march -- departures 246,000 in the year that ended in march. jared kushner has begun a push to renew middle east peace talks. he met with israel's prime minister, benjamin netanyahu, and his meeting with palestinian authority muck apostate a. and is alsoians -- meeting with palestinian authority mahmoud abbas today. speaking in moscow today, the russian foreign minister u.s. strategy for afghanistan puts the emphasis on force. trump has announced he is sending additional u.s. forces
to the country. local news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. esther george has been calling for higher interest rates for years to head off inflation, but there is not enough inflation, at least not the target of 2%. michael mckee is an jackson hole for the kansas city fed's annual economic symposium. esther george if this was premature. i think about inflation, i think about our mandate, which is price stability. relative to an economy that is growing at 2% and adding jobs, i think we are in a good place and we still have very accommodative monetary policy. that tells me we should begin have indicated,
gradually begin to remove accommodation, as long as reports indicate we are moving in the right direction, which i think we are. indicate another rate increase this year. >> that was my last forecast. each time we put that together is a new opportunity to look at the data. we will be looking at the data and seeing whether that still makes sense. based on what i have seen today, i think there is still an opportunity to do that. of the year,end not necessarily by september. consider a breakdown a commitment. i think it is a general sense of where rates should go. >> is the phillips curve broken or is nehru lower than it has been in the past? what has happened to inflation? >> i don't know that i am going to have a good answer for you there.
many people are studying that very issue. ofple look at the price goods. that has been falling. maybe that is due to technology. when you look at services, which is two thirds, you see those rates are staying at 2% and higher. in the context of the economy we have today, we have to be careful getting too focused on a point estimate as opposed to a broader trend in the expectations out there. speaking of expectations, with inflation not rising in five months of disappointment, market expectations are falling. is that a problem for a fed that has always said expectations are key to keeping prices stable. >> i think you have to pay careful attention to that and i would include myself there. know what have to drives expectations, and that is the challenge. that is what might be reflected
in those numbers, as opposed to overreacting to some specific point estimate that you see. of talk aboutlot financial stability. janet yellen is going to speak about it on friday. tock prices continue to rise new records. is that a reason to continue raising interest rates? do you have a concern about the level of asset prices? >> i think the kiwi that was undertaken over the last 10 that wased -- qe undertaken over the last 10 years aimed at asset prices. financial conditions have eased. ideai think points to the that we need to adjust the balance sheet. that's a tool we have not had experience with, and i think that's an important step. ask you about the balance sheet, but let me quickly ask, are investors too
complacent these days? >> i don't know. but when you set conditions that have easy monetary policy for a long time, the incentive to reach for yield, the signal that it will be gradual could feed into that. acid valuesose carefully, but i am not sure there is anything you can target -- asset values carefully, but i am not sure there is anything you can target specifically. >> wall street is betting you are going to announce. any reason they would be wrong? in favor of doing this for some time. the estimates suggest the economy is in a good place to do that. i look forward to the discussion in september about that opportunity. >> do you have any estimate of the impact on financial markets, particularly yields, and whether it will amount to a de facto tightening? >> i have seen various
estimates. it is hard to know, again, because we don't have experience doing this. you would expect because of the duration of the assets that as you begin to shriek the balance sheet -- i hope it does get reflected in the -- shrink the balance sheet, i hope it does get reflected in the yield curve. we are always taking into account whether it alters the path of policy. asset pricesnk deflate as you shrink the balance sheet the way they inflated when you blew up the balance sheet? >> i don't know. i have heard various views on that. again, i wish i had some experience to draw on. the aim was to boost back values. i think we have seen that. whether that ends up happening, a symmetric reaction on the other side, i think we have to wait and see. again, a very gradual approach is being taken that
gives the committee time and markets time to understand where the balance sheet is headed. >> one thing you have not told investors is how big the balance sheet is ultimately going to be in that depends on what monetary system you end up using. are you in favor of staying with the current system of using reserves, or would you do back to strictly setting a fed funds target? >> it's appealing to go back because we know how that looks, but we are where we are today, and i think it makes sense to judge as we move forward how we see the economy unfold. you could get hit with a shock at any time and have another set of decisions to make. the ultimate operating framework is not something the committee has opined on yet. it has talked about it. there has been analysis underway. but i think for now, we have to use where we are, use the overnight repo tools as part of how we begin to form policy. >> as part of the reasoning for
why you want to do this now and why you want to raise rates, is it because you need some cushions and tools should the economy turned down? >> that would obviously be attractive, but i would not say it's my primary motivation. what you're trying to do is make sure the economy is going to benefit from the ability to grow in a sustained fashion. where is an employment? how is inflation performing? do those suggest you need to have interest rates reflect that? that's my motivation. whether that gives you all the ammunition you need at the time decide back, to would be an added benefit. vonnie: that was kansas city fed president esther george from jackson hole. the month-long
vonnie: this is bloomberg markets. i'm vonnie quinn. revenue gains at hp are moving the stock today, making it the stock of the hour. shares are up the most since april. , is here with more behind the emma is here with more behind the move. >> just keep in mind that hp is the computer side of hewlett-packard. a strong earnings report
yesterday after the bell. take a look at my terminal. a look at revenue. it was at 9.87 the last quarter. been steadily has climbing over the last few quarters as well. sales topped analyst estimates. printing revenue accelerated. of ink ands cartridges that we all have to buy occasionally. those climbed as well. those sorts of older things still haven't gone away. we have to buy printer ink from time to time in a year. how is hp ink doing in comparison with hpe? >> it's interesting, because when they split up in 2015, hpe, which is an enterprise, i.t. solutions company, was sort of the favorite child. it got meg whitman as the
primary carer. what if you take a look at this chart and compare both year to date for hp ink and enterprise, hp is doing a lot better, whereas hpe has failed to meet sales projections and is doing worse. an interesting turn around. vonnie: we were not expecting that. >> we hadn't been. and if you go back to when they did split up, hbe is due -- hpe is doing slightly better. chandra, thank you. samsung has unveiled its new note eight and hopes consumers may forget the previous models exploding battery fiasco. samsung also hopes to keep pressure on competitor, apple, before the release of three new iphone models next month.
we are joined by our tech reporter. what we know about the new samsung and its reception? well, samsung released the note eight yesterday. you might recall year ago we were talking about the note 7 and it's unfortunate proclivity to explode in people's hands and homes. the note eight is an interesting phone. it's one of the few differentiated phones out there. it has a stylus. but it's a relatively small part the globalhare in smartphone market. it appeals to professionals like doctors and educators, but it is visible. it's the most expensive phone. small part of the portfolio, but samsung places a lot of emphasis on it. it's amazingly symbolic of samsung's resilience that a phone we were warned not to take on airplanes is back. vonnie: and if you don't do it fast, you are poached, right?
look at htc. we will get to that to a moment -- in a moment. comes out a few days before hand, could that make a dent in sales for samsung or is it -- does it really matter? much smaller product than the iphone. is alreadys eight available in some countries. that's a competitor to the iphone. is a purcell. google is coming out with the pixel. there are three models -- htc is putting itself up for sale. google is coming out with the pixel. ofre are three models iphone. vonnie: it is pretty impressive that within 12 months, the whole problem that seemed to go on forever is right behind us. >> what is really powering the right now isation the semi conductor business. the commodity business where
those chips are now commanding a .remium it has propelled samsung at a very difficult time for the company to be the most profitable company in the world, probably much more influential than the smart phone market -- in the smart phone market. top after back on what was really a disastrous 2016. vonnie: let's get to the verdict. this is fascinating. to witnessare going the judge reading his decision in korea. ?hat might happen could he returned to samsung? >> i think so. he has been in prison for six months in a case that has transfixed south korea. trying tosed of facilitate a merger of two samsung group affiliates.
prosecutors are seeking a 12 year jail sentence. they have not really produced a smoking gun. there has been quid pro quo. his father is currently sicken out of sight. of sight.d out he was convicted of bribery in 2008, never served today imprisoning, was pardoned by the president. i suspect if he is found guilty we will get a suspended sentence and see him come back, will buy this whole process. it has been a political process. there is an element of society that once to extract a pound of flesh from this company. vonnie: it really is a behemoth. let me ask you about the headline that came out earlier. a story by bloomberg about htc looking at potential options. it might break up and sell itself off. this is a real turnaround as
well. for a once great technology brand. 10 years ago, htc was making the first-ever android phone. it was viciously competitive at the high-end of the market. google it self with the pixel wants to compete with samsung and apple. do you know what the htc smartphone brand is? i had to look it up and now i can't remember what it is. they haven't established themselves. on the low end, they are getting crushed by chinese manufacturers. there is not a lot of room there . the vr product has had limited traction. we might see them sold off for parts. we might see them try to leverage their patent portfolio. vonnie: remember blackberry and the good old days of nokia as well. thoseyou for covering stories for us. it's time for the latest bloomberg business flash, a look at some of the biggest business
stories in the news right now. state street is advocating for greater disclosure on companies carbon pricing. following bank of england governor mark carney's recommendation last month. the group includes barclays and citigroup and will spend more $7 trillion. -- in 2016, hedge billion dollars in withdrawals. that's today's bloomberg business flash. coming up, how disney is using the pokemon go craze that gripped fans last year to promote its new star wars film. this is bloomberg. ♪
bloombergis is markets. i am vonnie quinn. disney is harnessing all its media might to make the next star wars movie the biggest film of the year. a new marketing rollout will feature an augmented reality treasure hunt using the's are wars at -- using the star wars app. friday is becoming a thing untilhe first friday september 1. we are going to have three days of people wandering around my zombies trying to kill each other with laser beams, right? >> hopefully not, but they will whereited to stores disney will be whirling out its latest toys. 20,000 stores in 30 countries around the world. last year, they did a sort of
live -- unbxing oxing live on youtube. people can go into a store with a smart phone and use augmented technology to interact with new and existing characters from the last jet imovie, which is coming out later this year. engages really trying to its audience using new virtual technology and also getting a share of social media. studious pull audiences all the time about the actual movie. they will have pulled an audience and know that this work. to spenddo they have on an augmented reality campaign to add to the bottom line? how much will it add to the bottom line? >> they are not posting any numbers, but we know with the tentpole films disney does you
can expect tens of millions to be done marketing the film. this is for toys and last year, 2015, they did the first force friday in the month of september and they had a sevenfold increase in sales. to sell theign toys, but it's months ahead of release, engaging people to go to the movies, which is a tough ask these days. attendance in the u.s. has declined. maybe making crisis cheaper might work. but that's for another discussion. work,ces cheaper might but that's for another discussion. talk about the technology novo has made. vonnie: that -- withat might go on sale this range of toys. they have new technology they
will be rolling out with this array of toys. they have not disclosed what they are. earlier this year, they did created they have headsets with lenovo that you originalgames from the star wars, like a chessboard of life creatures. a headsetu have already, don't you? know toot, but i do much about it. the headsets are expensive. we will see how that rolls out. vonnie: i will borrow it when you do get one. talk with former minnesota governor tim pol anti-. be sure to check out tv on your bloomberg. ♪
we are watching this hour. drama over the debt ceiling. donald trump calling out mitch mcconnell and paul ryan on twitter for the latest mess. growingpeak about the divide between the president and republicans with warmer minnesota governor tim pawlenty. he is now the ceo of the financial services roundtable. wall street serves from deficit panic to cheering for tax cuts. how the conversation changed following the november election. president trump today attacking the legislative leaders of his own party on twitter, writing -- of course, it was just fast for easy approval. they did not