tv Bloomberg Daybreak Americas Bloomberg October 3, 2017 7:00am-10:00am EDT
reform. it's torn between addressing a hurricane ravaged puerto rico and a tragedy in las vegas. separatists in catalonia push forward independence claims. leaders on the continent drowning in domestic politics. jamie dimon's views on bitcoin look isolated in wall street. from new york city, good morning. welcome to bloomberg daybreak: europe i'm jonathan ferro alongside david westin. alix steel is off today. let's get you up to speed on some of the market action. a five-day winning streak on the s&p 500. we come into tuesday with futures a little bit firmer by a single digit. euro dollar bounces off the lows we saw yesterday after a significant 24 hours of dollar strength. 236 on the u.s. 10 year. onid: let's get an update
what's making headlines outside of the business world. gunman in the las vegas shooting had a huge arsenal in the hotel room he used as a sniper's current. stephen paddock's body was found with 23 guns. found two gun stocks that would have allowed a shooter to fully replicate automatic fire and at his home they found a further 19 guns, explosives and thousands of rounds of ammunition. the death toll has risen to 59. the white house is ruling out talks with north korea over its nuclear weapons days after secretary of state rex tillerson said the u.s. was talking to north korea directly through our own channels. a white house spokeswoman said now is not the time to talk. the european union wants more details about the uk's brexit divisions before talk on a future trade deal. john claude uecker says theresa may's speech was conciliatory
but speeches are not negotiating positions. the eu wants clarity on citizens rights. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm emma chandra. this is bloomberg. president trump travels to puerto rico to view the devastation from hurricane maria. in the on to las vegas wake of the tragic shooting in that city. here is our chief washington correspondent kevin cirilli. what does he hope to accomplish in puerto rico and then move on to las vegas? he will receive a briefing in puerto rico with those on the ground in his administration working on the island as well as government and local officials. he will meet with puerto rico's governor and he will meet with governor kevin -- tennis map --
kenneth map of the british virgin islands. he is facing intense criticism from democrats and republicans. back on those criticisms and has aligned himself with the governor of puerto rico. then go on to las vegas in the wake of the tragic shooting. what is the president's agenda? details of what he will be doing in las vegas are still being worked out. i can tell you this tragedy has reignited the gun control debate here in washington. we are hearing from top democrats including potential includingnders senator chris murphy the democrat from connecticut. all coming forward and really calling on this to read new
calls for gun control legislation. yesterday on capitol hill gabby giffords and her husband mark kelly from the tucson tragedy were on capitol hill giving a briefing as well. toid: every president comes office with his own agenda and then has things such as hurricanes they have to deal with. what is the plan for this administration to keep moving forward with its agenda even as it deals with these awful instances? >> lawmakers are set to return today to have full schedules of hearings and whatnot and developments on a host of initiative such as tax reform are likely to continue. you are absolutely right. is without question perhaps the most of finding moment we have seen them president trump's first term. how he chooses to respond today and tomorrow will have deep impact on whether or not he is able to restore trust within the as well ase movement
trying to unify a very hurting country. the dollar briefly touching a fresh six-week high. the prospect of tax reform also spurred gains in the greenback. optimism on the economy has pushed records another close. the potential for a december rate hike is more aggressive than anticipated. i want to talk about the action in the fx market. how much oxygen might be left in this bounce back in the u.s. dollar. it's a big short position. the ftc positioning is anything to go by. >> that's a pretty good
representation of what's out there. themarket was very bold of dollar at the beginning of the year. we saw that in the data and it contributed to the magnitude of the selloff which was pretty serious this year and i think we've gotten to the point over the summer and early fall where any of this and for the dollar really dissipated. when you get extreme positioning and changes in expectations .hat's when you get big moves that's another 3% to 5% upside. jonathan: does the data support that for you as well? >> i think it does. the markets got ahead of themselves on the ecb action. i think they probably will at the end of october announced a having of their excellent -- asset purchase program next year. boj continues to be very aggressive in their policy and the bank of england i am a little surprised. i think there's more weakness in
the u.k. economy and the bank of england may not follow through also. as we get to the end of the year we will see a much different of expert patients for relative monetary policy and a short position i think is going to get pretty squeezed through the rest of the year. jonathan: i imagine some guys on the mpc are confused as well. rosner, also fiscal stimulus and fiscal policy has come front and center over the last week. hope of people are writing that this is going to go through. do you see this going through smoothly? >> no. we are a little bit less optimistic and honestly i'm surprised at how the market is getting old up again. on there so many things president's agenda. the puerto rico disaster is just
another very controversial issue that's going to take time. we think there are a lot of partisan divides. we haven't baked in much fiscal impulse into our forecast for next year and we think more generally the problem of low inflation is really going to tie a lot of global central bank's hands. rate hike. the fed we expect of some point the ecb to start nudging back at stimulus but how far can they really get when inflation generally globally is starting to slow on a core basis? almost nothing goes through congress smoothly. do you think anything will go through on tax reform and how much has to go through to support the sort of reaction the market have had? >> we are factoring in some hurricane relief. the estimates are 100 billion for the combination of three hurricanes. that should at some fiscal impulse.
on the corporate tax side we could get moderate cuts. in general the evidence is mixed regarding what impact that has on the economy. if we get that kind of relief obviously corporate profits are going to benefit. going to do for the broader economy. we have seen wage growth staggering for the last couple of years. consumer spending continues to be moderate. is this the type of fiscal stimulus that's really going to change the outlook for the economy? we are a little bit more pessimistic. ,avid: robert sinche repatriation seems to be something almost everyone can agree on. withu can get repatriation some modest cuts in early 2018 what effect would that have on the markets? >> in terms of the currency markets probably not a lot. we have seen most of the assets held overseas are in dollars anyway so there's not a big effect.
there could be a small effect. if it goes through and you have big short positions and those who are fearing it might have an effect would have to cover those shorts. it's a net positive for the dollar. on the corporate side you get a consumer tax cut and things happen pretty quickly. on the corporate side it takes economichile for those flows to adjust. capital flows can adjust a bit more quickly and one of the reasons the dollar got as weak as it did this year is there was very little reason for capital to flow into the u.s. and i have argued the dollar has actually underperformed its cyclical hasn't hadause it these capital flows. if you suddenly get a rising set of expectations about future growth in the u.s. and profit improvement you could get those capital flows coming back and
>> a big strike in place. the blocked he areas, businesses taking part across the region and very key highways and roads. we don't know when they are going to be cleared. this is very important when it comes to possible moves. the police were allowed to use rather excessive use of force. how is this going to continue? >> has gone quiet. of implementing 155 has gone down a little bit. saying, we are dealing with an administration that has gone rogue and violence is not the right way to do it. it's not an easy thing we are dealing with.
trying to talk to foreign media and present an alternative version of what has happened. imminent 155his ban implemented has really quieted. jonathan: what is going to be the thing that can actually settle this dispute? >> that's a big unknown. we know the catalonian regional government is determined to implement this result. for them the referendum was valid and they want to enact the law that will create an independent republic within 48 hours. talk of that has really gone quiet. the day to watch out for is friday. the day when a declaration of independence was made before the civil war. that. gone quiet on jonathan: maria tadeo joining us from spain. still with us robert sinche and laura rosner.
supportctant to remove quickly. that seems to have changed over the last week. another sign of these ongoing strains between the wealthier and global institutions. i think what we are seeing in catalonia is not all that different from what we saw in the brexit vote and what we are seeing in the u.s. withdrawing from some multilateral institutions. the lasthink this is one of these we're going to see globally. it shows up in different places around the world. jonathan: what a lot of people hoped for europe is they would push forward with the reforms. germany increasingly the agenda is to mystic. in italy they are set to have an election in the 12 months. do they need to get anything
done to justify some of the euphoria on the continent right now? >> sometimes you win by not losing and that's really where europe is right now. if they can avoid backtracking in this environment that's probably about as good as they can get. macron has a great vision but i think the probability of moving forward on further integration are very's limb. really looking at negotiating something with the which i think reinforces the view that you really don't want to withdraw. that's the one thing catalonian's haven't faced. the eu looks like they're going to take a pretty hard stance on this also. it's generally understood that both the fed and the ecb are headed or normalization. if you are mario draghi does this sort of political turmoil in spain affect your decision about cutting back on your bond
purchases? probably not. i'm sure he is watching financial conditions quite carefully. his priority is on defending and maintaining this really nice economic recovery we have seen so far in europe. it's really critical that they protect that. there are substantial political challenges ahead. economic challenges that will come to the fore. and potentially slow the ecb down. jonathan: have we seen the height for the euro-dollar yet? >> same answer as last time. yes. david: thank you very much laura rosner. robert sinche will be staying with us. at 10:00, larry fink this morning eastern time. from new york, this is bloomberg. ♪
>> this is bloomberg daybreak him i'm emma chandra with your bloomberg business flash. uber is trying to save its business in its largest european market. the new ceo is in london today to meet with regulators who want to ban the service. fight unhappy drivers and a key regional manager who announced he's leaving the company. ubs may employ 30% fewer people. ceo tells bloomberg that technological advances will change banking. jobs that are left will be the ones where human contact is crucial to the delivery of service. goldman sachs is exploring a bitcoin trading venture. in talks with cryptocurrency experts. it has yet to develop a business plan. all they will say publicly that it's exploring how clients are
interested in digital currencies. everyone seems like has an opinion on bitcoin these days. everyone from christine lagarde to bank ceos. cryptocurrencies may give existing currencies a run for their money. i have special concerns about virtual currencies partially because of the secrecy factor. we worry about large cash transactions because large cash transactions can be used for bad purchases. you create something that makes it easy to do that and it has those same characteristics. if bitcoin last. if it's a bubble or not. i don't see it as a credible competitor to the dollar because there's only one dollar. >> this is going to be the largest bubble of our lifetimes. bubbles happen around things that fundamentally change the way we live.
the railroad bubble fundamentally changed the way we live. trade that i would fire them in the second. for two reasons. it's against our rules and they are stupid. a fascinating development which is certainly something more than just a fad. privacying for the protections it gives people and what does it say to the central banking system about controlling that. still with us is robert sinche. he would fireid anyone who dealt in this. we have lloyd blankfein saying he wants to get in this. what's the answer? >> it depends on what question we are really asking. is it a trading vehicle, clearly it is. it's a very volatile. big moves up and down.
volatility world it's got a lot of volatility and that provides opportunity for gains and losses. it's a fairly illiquid market so the spreads are pretty wide. you have market makers that want to participate because you can make some money in it. is is thiside of it really a viable alternative on a widespread basis for people to conduct transactions and that's where i think it's not viable in terms of what we normally considered to be a currency. david: the yellow line is the volatility of bitcoin. the blue line is the volatility of the s&p. if you are a traitor that looks pretty good. ofnot only the volatility price but the spread in price. that's one of the criticisms that have come up recently about bitcoin. while it used to be very inexpensive to send transactions it is now becoming pretty expensive.
with growthbenefits are beginning to dissipate in terms of cheap transactions. i think it's a very portable goal. the knocks on using goal for transaction. it's pretty heavy to carry around. from a government point of view the biggest concern is the lack of visibility and not being able to track who is doing what. there's a lot of people doing bad things with a lot of money around the world. jonathan: is this just about facilitating client needs? the clients want to trade this stuff. is it any surprise that goldman would look do the same thing in a more significant way? >> i don't think it's a surprise at all. we trade lots of things in this world. is one more asset to trade around. i think that's much different from widespread usage and the
kind of things christine lagarde was talking about. culligan the biggest bubble in history. what is your view on the price of it? infrastructure and what comes behind. what do you make of the price of bitcoin? we can see and markets that are very limited in supply that as more people become involved the price can get to extreme levels. there is a question about how high this could go if people get overly enthusiastic about it could also reverse. jonathan: from new york, you're watching bloomberg tv. ♪
futures up about 28 points. in europe a sick resources -- basic resources outperforming. the bond market yields continue to grind higher by a single basis point. oft month we were just north two percentage points. in the fx market significant dollar strength yesterday against the euro. today, sterling weakness. we had a pmi out of the u.k. today. construction data. that's the economic story in the u.k.. boris is falling in line on brexit. he says he is behind every syllable of theresa may's brexit plan. there were calls for her to fire him.
edwards joins us now. johnson really fallen in line and what are the other members of the parties thing about the issue? seems he has at least in part fallen in line. a number of with mps who said he has realized that maybe he is upsetting some the people that he might rely on if he wants to launch a bid for the leadership in the future. there could be something in it for him to back down at least in the short term. we have been asking what people think about whether he should or shouldn't the in the cabinet. a huge social media following.
he's a key brexit supporter. something that many people look to as potentially leader of the party in the future. what does he think about boris johnson in the cabinet? >> he is absolutely essential to the conservative party. he is a supporter of the dust boris. has been for a very long time. inis johnson backing down the short term. theleads this party into future is very much the french conversation in manchester. feel sorryf you ever for fed chair janet yellen, feel for governor mark carney who has to face a grilling in front of the treasured terry -- treasury select committee.
comparing it to last week. so many people have come out and said it's depressing. the labour party conference was jubilant. it feelse about what like down there in manchester. the >> many people did say that about the brighton conference. it was a carnival atmosphere as if they had one and they didn't. only rulesarty that because they have made an agreement with another smaller party. even though the conservative party are in government doesn't ase the same euphoric field it did last year when we were at the conference. the mood is very much more subdued. there's not a great deal of policy being talked about. the chancellor speaking yesterday wasn't really talking about brexit policy. he was talking a lot about the labour party. putting the case for free market economics in the u.k. and talking about the labour party as dinosaurs of a bygone age.
really underlining how nervous the ascendantt labour party. the confident labour party that many people witnessed down in brighton. jonathan: walk us through the next 24 hours if you can. we could hear some more detail on brexit. we haven't had a lot of detail on policies in the last few days. in terms of the brexit speakers we will hear from the three s, key members of the cabinet. they were all on the pre-brexit side. they will be speaking over the next few hours. tomorrow the premise to herself takes the stage. anna edwards joining us from manchester. still with us is robert sinche.
brexit politics front and center but now it's not even on the fringes. we have a socialist economic philosophy at the forefront of u.k. politics that actually is leading in the polls. does that strike you as a little bit odd? >> it's interesting that the conservative party which was behind the brexit process and some of those leaders can't capitalize in terms of bringing it forward. a backlash. facing a lot of criticism of theresa may calling the snap election and in many ways it was a political setback. thing it did was it restarted the clock. they've got five years reasonably in power before they have to call an election. she may have extended their leadership for a while. they are really finding out that breaking up is hard to do.
we are six months into this process now. i think they would like to have it done six months before the of-year process is up triggering article 50. they are one third through and they are still feeling each other out. it's like a boxing match and we have gone five rounds and nobody has landed a punch yet. the eu negotiators are now areas of disconnect within the conservative party. it's really in a bit of disarray as to where they are actually going and how the process is going to work out. that makes it easy for the opposition to government and sound better. jonathan: what would you more at the brexit policies that are set to go on for years or the fact that socialist ideas are at the forefront of political philosophy in the u.k. right now?
>> they both work to the issue of capital flows. the u.k. is another economy that has a deficit. the question is who's going to bring new capital into the u.k. if you got on the one hand uncertainty about how this process works and whether you want capital to be invested in the u.k. on a long-term basis and the alternative to the brexit process is something that is a bit more of a socialist forcy stance which is good long-term capital investment either. we have difficulties ahead. the pound is likely to head down from here. they are not going to see capital inflows. u.k. needs to have a fair amount of capital because of their current deficit. why would anyone invest in the u.k. right now? best case to say now is the time to go and invest in the u.k.? good question.
no answer. if anything you are seeing capital moving out of the u.k. with major financial institutions saying we've got to start looking at putting their capital somewhere else. i think it's a difficult situation. that brexitfeeling was going to unleash all of these regulations and make it a great place to invest and grow. that might be the case 10 years from now. it doesn't look like it's going to be the case in the next one to three years. give you anwant to update on what's making headlines outside the business world. president trump heads to puerto rico to take a look at hurricane relief efforts. the trip gives him a chance to show his commitment to rebuilding the u.s. commonwealth that remains almost completely without power. the president has been criticized for the government's response to the disaster. the mass killing on the las vegas strip is likely to rekindle the debate in congress over gun control. democratic senator chris murphy of connecticut says he will
reintroduce the bill requiring background checks for gun purchases. democrats failed to win senate passage of a similar manager -- measure after the sandy cook -- sandy hook shooting. the trump administration alaska cuba to reduce the size of its embassy staff in washington by 60%. itsu.s. is cutting back embassy in havana by the same amount after mysterious health attacks on u.s. workers that have affected their here in -- hearing, balance and vision. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm emma chandra. this is bloomberg. to tomyou can tune in keene and david gura on the radio. bloomberg surveillance can be heard in new york, washington, and, boston, the bay area all across the united states on
>> this is bloomberg daybreak. i'm emma chandra. coming up on bloomberg markets at 10:00 eastern time. this is bloomberg. david: i'm david westin. president trump came to office with two overarching goals. more economic growth and more jobs. achievehe wants to those is to a comprehensive tax plan. the outlines of that plan are with the congress.
joining us from our washington bureau is maggie gage, credit suisse head of washington research. robert sinche is still with us. give us your best take on where we are with the tax plan. there are some important milestones from 17 that we have seen this week and will continue to see as litmus tests throughout 17. the first being the tax reform plan that we saw unveiled. the next will be whether they can get a budget resolution passed that will allow for tax reform. we are actually optimistic right now. we think the fact that the tea party kind of came out in and theof the framework path forward for a budget resolution as well as the meetings the president has been holding at the white house is pretty informative that there is a lot of legwork being done that
gives the bill of real probability of getting over the finish line. david: there's talk of introducing it this week on the floor. why is that so critical to whether tax reform will happen? >> the budget resolution would allow congress an expedited path to which they could consider tax reform. this is important in the senate because it will allow the threshold to be 50 votes rather than other senate procedure which would require 60 votes. you mentioned the fact that the freedom caucus has given something of a pass to the president to go forward. is it a complete tasks. said we aresically willing to put up with deficits in the short term for long-term growth. are there things that could still be sticking points for them? >> absolutely.
i don't think anybody would be calling this a slamdunk. i think they are willing to listen to see how the conversation regresses to see how the details come out of the committee process and give some deference to the president to move one of their big legislative agendas. there could be debates on what and how to pay for this bill. that is of course going to be the most difficult part of this process. the fact they are willing to even be an listening mode to begin with is a good signal. david: maggie gage, you're going to stay with us in washington. investors are already thinking about who the big winners and not so big winners are likely to be. joining us is michael mckee. give us a sense of what you think of as the winners and not so big winners. i'm not sure there are real losers. >> it's just an outline so far.
winners fairly obvious from a territorial tax system. longer be taxed on their repatriated dollars. the big companies pay a much lower effective tax rate. banks and insurance companies get a win. the idea of immediate expensing should help manufacturing and construction companies. people who make a lot of expensive equipment up front. investors have already priced all of this into the markets. the indexes for those have really gone up. those areas are already getting a bump in the markets. the losers a little bit harder to nail down. anybody who is a loser is going to be lobbying hard not to stay there.
because of the way their tax withms are set up regulated utilities, some of those who might be affected by this. it hurts realtors and speculative grade companies because what they pay is going to change in terms of the interest rate they have to pay. that's where a lot of the lobbyists come into play. companies and shareholders will do really well. what about the people actually spending the money out in the real world on main street? >> that will be the argument the administration will have to make. it's the shareholders who really game. -- repatriation money brought a lot of money back to the united states. the joint committee on taxation tax policy center have all study this and they say shareholders 70% of all the benefit that comes from lower tax rates like
this. only 30% goes to labor. the treasury department did a study and said exactly the same thing. past week that study was taken off the treasury website. the only time that has happened according to people who work at treasury. steve mnuchin has been making the case that it's the other way around. the sundayhing shows, all the heroes are middle class. corporate tax reform will only be for the middle class if you own shares. works is not going to be a direct benefit to people which is why they want to do individual tax cuts so that people see something in their own paychecks. jonathan: a stumbling block that is the federal taxed adduction. gary cohn says it's negotiable.
this is the one revenue rate they've got. >> there's going to be a lot that's negotiable. with state and local tax reform is they only have a 24 vote margin in the house. are 28 republicans in california and new york and new jersey. if their constituents say vote no the deal will lose. you can imagine there's going to be some horsetrading. david: thank you for joining us today. if you have a bloomberg terminal you can check out tv . interact with us directly. just go to tv on your terminal. live from new york, this is bloomberg. ♪
of reaching mainstream consumers. the electric car maker struggled to produce its newest model shortly after its debut. the company billed only 260 model threes in the third quarter. of itsless than a fifth forecast. tesla blames unspecified bottleneck. general electrics jeff immelt is leaving the country three months ahead of schedule. he is retiring as chairman and leaving the board. the new chairman will be john slattery who took over in august. g says jeff immelt left after deciding that the transition went smoothly. in manhattan the price of resale homes hit a record in the third quarter. sellers shouldn't get too bullish. owners cut only 7% of their asking prices and that led to a flurry of sales. equifax: the former seeing you will testify in front
subcommitteeenergy into the security breach that led to the theft of more than 140 million americans personal data. joining us is bloomberg's congressional committee report. maggie gage is still with us. the timeline is going to be the subject of intense interrogation. but we expect that -- what are we expecting? >> this is going to be the first of three very long days for the ceo of equifax. he has four different panels he will be in front of in the next three days. what we have seen from his testimony is he is going to try to lay out a chronology of who knew what when and one of the biggest revelations we have learned is that the company admitted that there were mistakes that happened. there should have been -- there
were vulnerabilities found in march. staff at the company were directed to fix those vulnerabilities. it didn't happen and that is why so much data was stolen. he is going to face really tough questions from republicans and democrats. foremost ast and chance to hold him accountable. what is the reason they are giving for why they sat on the information for so long before disclosing it to the general public? >> that is a great question and one that would will probably hear repeated. they have outlined their protocols and internal procedures for how they first learned about an incident. how that escalates. how they notified the ceo. then notified the board. question as toa why it did take a month for that information to be public. one of the central questions is whether or not there were rules
in place that were not followed or whether or not there should be new rules in place for when companies are required to report publicly those types of breaches. jonathan: this has given birth to other investigations around this as well. the stock selling of some of those individuals after we found out the security beach happen. they wereof people looking into those stock issues and thinking what was going on. breaking news right now. berkshire hathaway has acquired a 38.6% stake in pilot flying j. this is a series of truck stops across the country. to 80% laterp up on. jordan is now on the phone with more is ed hammond. think truck stops
are no big deal. this is 27,000 employees and $20 billion in revenue. of the biggest privately owned american companies out there. i think it's in the top 25 in terms of revenue. it has a network of truck stops across the country. this is a business with very strong potential for growth in the future. this investment will also lead to a bigger increase in his position in 2023 when he becomes the majority owner of this company. management about the of the company? is that going to change? >> it stays as is. i spoke to the chairman of this company on the phone last night and the management is something he is very keen on. that is going to stay in place. the family is going to remain in place and even when mr. buffett
goes on to be majority owner they will keep a substantial stake in the company. this feels like a warren buffett kind of deal. the family knows the management. i'm sure it's a cash business. how does it fit with other strategic investments he has made? trucking is at the heart of the american infrastructure and american industrial backbone. he thinks this is a business that has done tremendously well. by acquiring smaller chains or individual truck stops across the country i did ask if we would see more of buffet type businesses in some of these truck stops. he said that is not something he
would be making decisions on. he would applaud whatever the management decide to do. david: we know that warren buffett has been interested in car dealerships. are there other truck stop that might be likely candidates? they both made it fairly clear they see growth being doething they could either organically or through a series of smaller acquisitions rather than going out and buying some other major rival. you think this is something can put together in a piecemeal type way. this is obviously a play on the commercial auto industry. i asked him about trying for list trucks -- driverless trucks. he said it was not something that was keeping him awake at night. potentially something that could happen long out in the future.
david: give us a sense of the nature of this business. do these truck stops have mode's -- moatsy proverbially? >> it has a bigger network than anyone else. quite difficult for someone to put one very close by. if you have better franchises in years and people know that's where the truck stop they go to is it makes it harder for someone else to compete. if you are a small truckstop owner and you are going to sell its obvious that you would want to sell into a bigger network like the one the pilot has. jonathan: thank you for joining us. this is bloomberg. ♪
jonathan: the president is looking to push through tax reform but is torn between hurricane ravaged puerto rico and tragedy hit las vegas. richard smith heads to d.c. for a grilling by lawmakers after confirming major mistakes that led to way to store it hack. jamie dimon's views on bitcoin look isolated on wall street. from new york city, for our viewers worldwide, good morning. is bloomberg daybreak, jonathan ferro alongside david westin. , a recordrek -- check high and futures firmer by 1/10 of 1% on the s&p. treasury yields keep grinding higher, up one more basis point to 2.35%.
1.17, positive about 1/10 of 1%. onid: let's get an update what is making headlines outside the business world. emma: the gunman and the lost vegas shooting had a huge arsenal in the hotel room he used. stephen paddock's body was found with 23 guns and two gun stocks to allow him to fully replicate automatic fire. at his home they found 19 guns, explosives, and thousands of rounds of ammunition. the death toll now at 59, 527 injured. president trump heads to puerto rico to take a look at hurricane relief efforts, to give a chance to show his efforts to rebuilding the u.s. commonwealth that remains almost completely without power. he has been criticized for the response to the disaster. the european union was more details about the uk's brexit
position before talks on a trade deal. jean claude juncker said theresa may's speech in italy was conciliatory, but speeches are not negotiating positions. the e.u. wants clarity on citizens' rights and the u.k. financial settlement. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. chandra. this is bloomberg. president donald trump is heading to puerto rico to see firsthand the devastation from hurricane maria. hear from a preview -- for a .review is marty schenker what does the president hope to accomplish? empathetic.he is that is rippling through the media, his inability to show empathy on a human terms. vegas, he has to
show compassion and that he appreciates the struggles they are going through. david: how behind is he on this game? he has come under criticism for being slow and harsh. marty: this weekend was not a great weekend for him when he went after the mayor of san juan. even his own administration acknowledged there were some hesitancy in the first few days. one of them even commented, i wish we had those days back. it is a real problem for outside observers to make a definitive judgment on how he has done. you can take snapshots of real problems and snapshots of heroic so making an absolute assessment is not easy to do. there are some setbacks, but this was an unprecedented storm. you think about what would happen if it was hawaii or how difficult the logistics would be . it is an island nation and the ports were devastated. david: you have seen presidents
handle this before. how does a president handle a puerto rico and a las vegas at the same time, and move forward with his agenda in washington? marty: actually, it is very interesting how disciplined donald trump has been in messaging the last two days. he has not tweeted off message and has stayed strictly on the tragedies themselves. i think that is a first step in showing real human caring about what is going on, and that is what obama did brilliantly. david: marty, thank you so much. jonathan: the complexities in the world of politics, in markets it is simple. spurredata has increases in the dollar. as the economy continues to show signs of strengthening, the potential for a december rate hike is more aggressive than anticipated. joining us is michael shaol.
great to have you with us. let's begin with dollar dynamics and what we have seen in the fx market is a much stronger dollar on the back of some very .ggressive short positioning how much snapback is left for you? deal, maybe a great a percent or two. i think the dollar was overvalued and u.s. assets were over relative to global assets, and the loss of the dollar has been justified. jonathan: the gains over the last few weeks, have they been justified? bigael: you took out a support level at 92 and it went soft and it went back up. you could have more of a short squeeze. the dollar could be range bound for the rest of the year, but it put in a very big feet at the end of 2016. jonathan: positioning monetary policy and the third wheel, it
is fiscal stimulus, potentially tax cuts on the table as well. that is been a driving force for the long dollar. is that justified? michael: i do not know. i do not know that there has been a massive reaction to the news of a tax plan, and i would not overstate how this rebalance has been. you got that 50% of a decline this year. it is something. i do not think currency markets will care about how the tax playing gets done. i think what matters is whether the u.s. is alone in having an approving desk improving economy -- improving economy or whether we have a global improvement. the u.s. is ok, but the rest of the world is accelerating. bigink it is more about a reallocation of global portfolios. i do not hate the u.s., the s&p has been a great index down, but others have done better. jonathan: when you net out
global synchronized growth you get is a weaker dollar? yes, and this particular situation because of the way people were positioned going into it. they did not own global equities and owned u.s. equities. david: do you want to go in europe? michael: i love asia. it is still doing well. earning in will find the economically sensitive parts of the u.s., but this year on a dollar instruments has really helped. it has made a difference to u.s. portfolios and i think will continue for the fourth quarter. david: to what extent is china driving the reflation around the world? michael: it is huge. people have not believed the chinese economy is getting better and getting better sustainably. there is an image -- imminent debt crisis and the housing market is not about to fall apart.
they have a fairly traditional loose monetary policy. i think china really has been the motive for a lot going on this year. david: when you say they have a loose monetary policy, they are creating credit faster than their rate of growth. at some point that has to come into correction, doesn't it? michael: yes, but it can take an awfully long time to happen. if you have a lot of credit creation the time to worry is when i central bank gets tough. david: michael shaoul will be staying with us. brad setser will be joining us here live in new york. this is bloomberg. ♪
♪ emma: this is bloomberg daybreak. warren buffett has back desk is back in the business of big deals. 39% staked to buy a in the owner of the pilot flying j truck stop. buffett will increase his stake to 80% by 2023. electric --t to ask retiring as chairman and leaving the board. the new chairman will be john flannery who took over in august. a decade from now, ubs may employ 30% fewer people. that is the assessment of the ceo, who tells bloomberg
technological advances will change banking and the jobs that are left will be those are the crucial upons service. jonathan: in spain, separatist activists taking into the street of barcelona to press home their demands for independence after winning an illegal referendum over the weekend. stunning scenes in barcelona, there are live pictures on your screen now. joining us from the city is maria taddeo, covering the process i am pleased to say she joins us now. incredible things coming from barcelona. walk us through the latest. maria: this is a big strike. it is not just taking place in barcelona. they blocked key areas including the government office and also highways and roads. this is crucial, all of that is blocked. strikes are taking place all over catalonia.
jonathan: the imagery, the problems for the prime minister, what is his strategy now given for many it was a huge strategic mistake the way this played out over the weekend? quiet butoy has gone i have a bit of breaking news. the deputy prime minister has come out and said they will not accept what she describes as massive tactics after a group told hotel managers you have to -- she saidnish they will not accept this and take measured to make sure they are being taken care of. breaking news, interior minister's say police forces will stay in catalonia longer. of spanishhis is 20% gdp, that is what catalonia accounts for. the spanish bull market has made a bit of a move, higher once again. for spain, it is critical they
address these political issues but i wonder how they can find resolution given the way the two sides are currently. maria: jonathan, to be quite honest, it has been two days and they have not spoken. barcelona and madrid are not speaking. the catalogues were hoping the e.u. would interfere. -- the catalogs were hoping the e.u. would interfere. the e.u. saying, they are treating it as a domestic affair. it is very unclear what the solution is. we have been telling our viewers this is a day to watch out, special day for cattle on separatists. we are expect -- catalan separatists. jonathan: given that the law is on the prime minister side
because the referendum in the eyes of the courts was illegal, what does it mean to declare independence on friday if in fact they do? maria: in the eyes of the court and central government and the european union, this referendum did not go ahead as it should. it seems to violate the constitution. what we expect is if the original president preferred to do this, the justice system would have to step in and say this person would have to be dismissed from office. there would be chaos. 155 suspends a region from its autonomy and metro takes over. this is a nuclear option. it is like brexit, article 55 was never meant to be triggered but that is a nuclear option -- article 50, excuse me. jonathan: some stunning pictures coming from spain and europe. buy europe.
on better economic data and ecb reluctant to pull away stimulus too soon, and a more constructive political backdrop, at least for a few months. still with us as michael shaoul. on the fringes of that debate, it seems to have changed. has it changed for you? michael: not because of catalonia. jonathan: because of germany? ofhael: i think the story the last 18 months, two years has been constant political chaos against the global economic backdrop. has to gets extraordinarily extreme to really interfere. people really have to feel there is an economic fallout. jonathan: is it a coincidence that the market peaked after emmanuel macron won the french election? no.ael: the french market,
i think investors respond to bang much to u.s. event -- tupelo -- too much to political events. i think these political events can provoke investment capital. many markets bottomed just after brexit. that was a tremendous buying opportunity in a lot of assets. they were liquidated in that 48 hour period. these political events can have great impact on markets over the short-term, but it is really the economic cycles and the cause of cycles going on behind the scenes. david: what about the fundamentals? is europe doing well because it is doing better than it was, because it was doing very badly, or are the fundamentals they are for growth? michael: i think it is actually growing. unemployment rates are still horrifically high, that they are pretty low in european terms.
a number of key economies have low unemployment than they had at their best point in 2006/2007. the pace at which employment is growing is fairly quick, like a late 1990's case. that is a sign that something is happening on the ground, not just equity markets going wild. i think every region has judged against this historic activity, and the bar is low in europe. david: how much of that economic growth is being driven by germany, where there were employment firms quick -- reforms? clearly themany is strongest economy on continental europe by a mile, and it does help the region. a country like spain, if they can get through this crisis, has had a pretty good employment cycle. it really does not look so bad today. a country that has done nothing like italy at least has the unemployment rate moving in the right direction, so there is a
powerful cycle. jonathan: unemployment in spain is 27.9. i will go through the numbers in a moment but they are incredibly high. use unemployment as well. does the labor market situation -- has the labor market situation been addressed in spain? michael: i look at where we were and where we are going. with a measure like unemployment, people focus too much on the number and not the direction it is moving. people just focus on unemployment being too high. if i was a sociologist that is what i would focus on, or a politician. as a personal investor in markets, markets are sensed to economic data and what expectations were. economic data is much better than people thought it would be two years ago. jonathan: the spanish unemployment rate, 17%.
it is incredible. is impressiveange but politically speaking, 17% has got to be a problem. michael: i agree, but investors do not have the same problems. david: historically in spain it has been the young people not getting jobs. michael shaoul will be staying with us. ceoer equifax richard -- richard smith will testify about the cyber breach. the top democrat holding the hearing, jan czajkowski joins us. -- jan schakowsky joins us. ♪
the stock plummeted, the ceo was replaced and the former ceo is summoned to capitol hill. one person asking the questions is democratic representative jan schakowsky, a member of the house committee on energy and commerce and a ranking member of the subcommittee on digital -- good to have you here. we have heard a fair amount from the testimony of mr. smith, the former ceo. what do you still want to know, what don't you understand? janice: there is a lot of things . we will hear a lot of apologies for mr. smith today, one for the massive hack itself, 145 million americans who had their personal and financial data exposed. and also apologies for the itaster, the response to which absolutely was insufficient and totally incompetent. we want to know, of course we
want to know what happened, but we want to know what is going to happen going forward and mr. smith has resigned now from the company. i think resigned really in shame , taking some responsibility for what happened. it taketo know why did so long? why was it so massive? this is not the first breach. this is the third in two years from equifax, and the american people who have no choice about these credit reporting agencies want to know the facts. david: just for a moment, we have president trump talking about puerto rico. >> i am not talking about gun laws as this time goes by, but i do have to say how quickly the police department was able to get in when it is really very much of a miracle. they have done an amazing job. i think she has come back a long way.
i think it is now acknowledged what a great job we have done, and people are looking at that. in texas and florida we get an a plus, and i think we have done just as good in puerto rico in a much tougher situation. now, the roads are clear it, communication is starting to come back. we need their truck drivers. their drivers have to start driving trucks so on a local level, they have to give us more help. the first responders, the military, fema, they have done an incredible job in puerto rico and whether it is her or anybody else, they are all starting to say it. i appreciate very much the governor and his comments. he has said we have done an incredible job and that is the truth. he was a sick man, a demented
man, a lot of problems i guess, and we are looking into him very seriously, but we are dealing with a very sick individual. thank you. thank you very much. david: congresswoman jan czajkowski from illinois, i apologize for the interruption. at joint just landing air base andrews. i want to say, this illustrates the difficulty of what you do in washington because we have these dual tragedies of puerto rico and las vegas at all of us are consumed with. at the same time, the nation's business has to go forward and he will be holding hearings today at equifax because we have to keep going forward as a country. where we were talking about the delays that equifax had and i was going to say, as i understand the facts it was roughly two months between the time it had noticed it might be
a problem and the first hack happened, and more than two months before they realized the first hack had happened. four months between the first notice and getting their arms running. how can that be? janice: we certainly need more regulation. these companies, including equifax are pretty much unregulated right now. i have a bill that i introduced in advance of this hearing, the secure and protect americans' data that would require more consumers.relief for none of that exists. to participate in today's modern economy, we rely on these companies that we did not give any permission to have all of our data. any people are really unaware they have all this information and yet, to get a loan, to get a credit card, to get maybe even a job, those credit reports are
very important. we have to have much more regulation. the consumer financial protection bureau says there should be embedded within these credit reporting agencies, to have regulators inside that are watching them. .hey charge us they have all of our information and ask us to pay for getting it back. there is also an investigation going on, david, how is it before the public was notified and after the breach was discovered, the top executives sold over $1 million worth of stock question mark that really does not smell good at all. the fbi is doing an investigation into that as well. david: there is a criminal investigation, but finally, in this day and age given the climate of the country is it realistic to ask for more regulation?
the tendency is for less. janice: equifax is lobbying the house financial services committee right now to protect them from class-action suits. we have to stand up for the millions and millions of evenmers who unknowingly had any relationship with equifax, and now find themselves with their personal information in jeopardy. david: democratic congresswoman jan schakowsky. but you are watching is donald trump going to air force one as he is about to leave washington for puerto rico. hour for just over an the cash open of new york. another record close on monday into tuesday. futures farmer, up two points on the s&p 500, 32 on the dow. the story of the fx market yesterday, which is pure dollar
strength, today a little bit more nuanced. a move higher by about 1/10 of 1%. the cable rate, weakness for sterling, 1.3233. construction pmi and the u.k. unexpectedly dropping into contraction territory. that is your cross asset story. let's get you up to speed on your headlines outside of the business world. emma: the mass killing on the vegas strip is likely to rekindle discussion of the gun control. they will reintroduce a bill requiring background checks of gun purchasers. similar measures were introduced in 2012 after the shooting at sandy hill. the u.k. is trying to attack public -- those who continue to watch terrorist content online
can get up to 15 years in prison. stateast year, islamic supporters have supported almost 67,000 propaganda tweets in english. there have been five terror attack in britain over the last 12 months. mourning the death of hall of fame rocker tom petty after suffering cardiac -- cardiac arrest. they had just completed the 40th anniversary tour. tom petty was 66. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. jonathan: thank you. everyone seems to have an opinion on bitcoin this days, from christine lagarde too chief executive officers taking sides. might givecurrencies existing currencies and monetary policy a run for their money. >> i have special concerns about
virtual currencies, partly because of the secrecy factor. we worry about large cash transactions as large cash transactions can be used for bad purposes. you create something that makes it easy to do that and it has the same characteristics. lasts,ill see if bitcoin if it is a bubble or not. i do not see it as a credible competitor to the dollar because there is only one dollar. largestwill be the bubble of our lifetime but bubbles happen around things that fundamentally change the way we live. traded,ay traders have traders at bitcoin would have fired them in a second, for two reasons. it is against our rules and they are stupid. >> a fascinating development, served late -- certainly something more than a fad. what does it say to the central
banking system about controlling that? jonathan: joining us is joe weisenthal. hours,s of the last 24 goldman sachs considering a new operation dedicated to buying and selling digital currency. making jamie dimon look a little bit isolated on wall street. joe: i did think the comment from jack lew was interesting, the primary use for these currencies is in unregulated transactions. the type of payment you are not supposed to do, whether that is ill legal or other things you want to keep on the gray market. you have to wonder to what extent can these regulative entities get into this asset class whose entire purpose is to avoid them? it is a real tension they will have to grapple with. jonathan: it is a double edged sword but if you look at the views of --, it is the biggest bubble in history. makeeverybody wants to
money and if you see a line going straight up, of course people will want to buy in. there is all kinds of issues with custody and exchange hacks and theft when it comes to cryptocurrencies, so perhaps a bank like goldman is thinking, we can make it simple for investors to get into without having to worry about this. jonathan: jamie dimon says it is fraud. another says it is a bubble and he is buying it has it will become bigger. what do you say? michael: it looks like it is here to stay. as i think about this and watch it, my guess is that bitcoin is here to stay but it will be some kind of a -- it is going to migrate from being this weird thing for people who want to do nefarious activities or avoid taxes into something which is more regulatory friendly. it may not be regulated but will take place on an exchange which has some visibility to it.
i think you are seeing people like goldman and other firms will find ways for their customers to get involved. it, if it price of becomes a legitimate financial asset it is subject to the same rules as anything else. it can go up a hell of a lot or go down a hell of a lot. wherever the peak was last week, or two or three times higher last week i would not know. a weirdt it was just thing to the side a few years ago, but it looks to have made the transition. i think it has enough momentum that it will be here to stay even if it crushes people. "?vid: what is "it is it bitcoin, blockchain? it needs to be friendly to regulators. we do not want islamic state using it, drug dealers.
can you have bitcoin the way it is configured and not have that? joe: i would say the entire idea behind it is that it is censorship free, so there is no centralized database of who owns them. you do not need to go through many trusted third parties to transact. i can pay you for something in bitcoin without any third party entity being aware. if you somehow create a version of it where regulators were able to see who was on both sides or there was some third-party database, i do not think there would be much interest. as these banks that more and more interested, and as michael said, it is pretty clear why they are interested. this is a real tension they will have to navigate. jonathan: a concern for people who are not in it, if it is a bubble. additionally when we talk about big bubbles, they can generate risk elsewhere. things: one of the
people on wall street talk to me about his bitcoin. it has entered the conversation. the guy who runs my local pizza parlor bought his first bitcoin a few days ago. it is in the public consciousness. it, able talkbout about gold and its lack of transportability but you could think of something like diamonds that are transportable and have been used to fund illegal activity and have been used in regulation but have become a acceptable store as well, we macy's more the battle between regulators and bitcoin. more the battle between regulators and bitcoin. we have taken a more laissez-faire view at the moment. there is a must two stories, what is the currency and its future and the one frankly i like to watch is what is the price?
they are two very different stories. david: bloomberg's joe weisenthal, thank you for being here. michael shaoul will be staying with us. you can tune in to tom keene and david gura on the radio. surveillance can be heard in d.c. and all over the bay area and heard on the sirius xm radio. this is bloomberg. ♪
blackrock's chairman and ceo. david: president trump is traveling to puerto rico to see firsthand the devastation of the island, with half the population still without water, supplies, or electricity two weeks after the storm hit. you give us a sense of the damage and what it will take to recover is brad setser. he has written detailed reports on the situation in puerto rico and we have puerto rico's own jordan hohmann. we have heard just how extension the devastation is. tell us where the rescue efforts are. jordan: it is still in a rescue and recovery stage. about 60% of the gas stations are open but it still means long lines. 95% of people still do not have
power. david: you are breaking up a little bit. is the problem getting supplies into the country, puerto rico, or distributing them? jordyn: right now it is about distributing to people in different parts on the mountainous terrains, where some of the roads are on passable. to get people the essential items like food and water that they need. david: what about fuel? 69% of gas stations are open but this still means there are long lines. people wait hours in line for fuel but say it is not as long as eight hours last week. david: i want to bring in brad setser, you wrote a piece for newsweek that went through the extent of the damage in puerto rico and it is pretty sobering. was a devastating almost category five hurricane that went right through the island, and the infrastructure was not strong to begin with.
the core of the electrical system is out and is going to stay out for a month, at least. without electricity a lot of other components of modern life that we take for granted tend to become difficult. the water system and backup , the water system requires access to the electric grid, and it just goes on and on. it is possible to get generators in place, keep some essential services flowing, although that took too long. a lot of what we take for granted as sort of the basis of day-to-day life simply is not available now in puerto rico and probably will not be for several weeks. david: as you say it took too long and probably everyone would agree. are those essential services getting to everyone? brad: not everywhere. majority of the population now has access to clean water but not everyone does.
most of the hospitals are up and running but not all. it is still spotty and there is more work to be done. david: puerto rico was not in great shape long before maria hit, the infrastructure was not there but it was in bankruptcy essentially. who will pay for this and how much will it cost? brad: i do not think we know fully the answer to either of those questions. the reconstruction i think we'll be in the tens of billions of dollars and the majority will be paid for at of federal funding. i am worried it will take more than just federal funding to get puerto rico back up and running. federal funding for reconstruction. there need to be some fundamental changes in the federal treatment of puerto rico to create a viable situation. david: i want to call up a graph , puerto rico's general obligation debt to see how far it has trailed up. it has been challenged for some
time. while there have to be debt forgiveness to get puerto rico on its feet? brad: yes, there is no doubt about that. that is why the general obligation bonds are trading below $.50 on the dollar. in the near term will be no money for debt service. even if you zero out debt service, puerto rico will not be collecting enough tax revenue over the next several months to cover the basics of governance. there needs to be some special federal fund. jonathan: what about the next five to 10 years? what a country struggles with, and japan experiences a declining population. how many people are expected to leave puerto rico and not coming back? big problem, eroding demographic trends that could affect the future of this economy? brad: absolutely. before maria on average about 2% of the population has been
leaving. over 50,000. i would expect that to rise, double, triple, probably more than that this year. the question is if a quarter million, half million people take shelter to get electricity with their family and relatives in the u.s., how many come back? and if the economy does not pick up, how many will eventually, even if they come back in the short run, not stay in the long run? this needs to be incorporated into calculations of the long-term payment capacity. jonathan: you need to fold that into that release. that is pretty complex. brad: it is, and one component of that -- i think the oversight board understands -- existing fiscal plans will need to be rethought. there will need to be some what the bond world likes to call optionality's, some dependence on outcomes in the final payout on the bonds. david: jordan hohmann down in
puerto rico. -- howa question specifically are they getting cash to pay for the fuel at the gas stations, or to pay for food and water? i heard the numeric -- new york fed way -- fedex shipped down cash. jordyn: and there are some atm's open but like most essential goods, the lines are very long and people are limited at how much cash they can take out. the government says there is enough for everybody but they have to save what they have, because a long line to get more. david: many thanks to brad setser, and bloomberg's own jordyn holman. if you want to check out tv , go online, click on our charts and graphics and interact with us directly. live from new york, this is bloomberg. ♪
♪ emma: this is bloomberg daybreak , i am emma chandra with your bloomberg business flash. a study has found foot traffic from new shoppers rose 33% in the first week after amazon acquired whole foods. walmart accounted for the first reducedsome of the races are still higher than those at walmart. most americans feel driverless cars -- fear driverless cars can be hacked. three quarters are concerned about hackers taking control of the cars. the majority do not expect driverless vehicles on the roads within the next two decades. goldman sachs exploring how it could start a bitcoin trading venture.
they are in talks with cryptocurrency experts but they have not come up with a business plan yet, although what they will say public a dutch publicly as they are exploring how to serve clients interested in cryptocurrency. jonathan: can you hack a driverless car? can. yes, you can i? that is on a need to know basis. jonathan: will it be a big problem? cory: absolutely. jonathan: we have had this issue with advertising with russian efforts to influence the 2016 u.s. presidential election. we know from facebook about 10 million people's -- people saw those ads. much more weight of they going to have to put behind this effort to satisfy d.c.? cory: that is a great question.
i do not know how d.c. can be satisfied, but this u.s. centric view of things that you will appreciate with your accent is this notion is that 1000 people, maybe 1000 americans can sit and monitor how those are catalogued, how much is russian dish russia interfering with elections? china? happening in these issues are hard for facebook because it is fundamentally built on a different notion, that any voice can be heard and any individual can be targeted through its advertising platform and for the content they deliver. shaoul, apart from facebook and the russian advertisements, is this part of a larger phenomenon where mega tech companies become so ubiquitous that it some point the government is going to have to get involved in how they do their business? michael: i think certain people feel the government needs to get involved.
the lady talking about equifax, i think she would love to cross over to tech knowledge he and write a few thousand regulations. or is going to be a class between governments and tech knowledge he. -- technology. it will depend on who is in power. this battle going on between google and the e.u. 20 years ago, microsoft had a clash with regulators that and -- arguably came out with damage for 10 to 15 years. one of the few things that we would worry about with u.s. technology is a developed word -- world revelatory backlash. i do not think this facebook thing has -- cory: but one person's regulations is another's protections. this town inby idaho that was the victim of fake news and how there was a false story about a sexual crime involving nonexistent syrian
refugees. something i was unaware of, there had been a protest organized by russian hackers in the small town in idaho, and the notion that that can happen through facebook and that dribs and drabs of information about how impactful these things are on the margin when our elections are being determined at such a margin are reasons these protections would have to take that come into place. --, into place. michael: governments have used news for decades. david: you do not necessarily know they are russians. michael: what has come out of this i think is a greater skepticism for everything you read. from what we saw at of the horrible attacks on las vegas, we instantly saw fake news saying things about the shooter, targeted people who wanted to
believe things about gun control . i think some of those people, and they see what they want to believe, they believe it. jonathan: 1000 people for a company that generates billions and billions in revenue and profit does not sound like a dramatic amount to consider bottom line. does it become a share price issue? cory: i do not think so. the role facebook has with its , ifs, if that would change the user start to distrust the information they are getting, if they stop relying on news, i keep people on my facebook feed, family members who make me nuts because of their political spouting of things that are seemingly crazy, but i want to hear those voices because i do not hear them in my life. i can see an easy way to shut them out that i do not do that. you can see from the results of facebook, this does not have any result on the bottom line -- effect on the bottom line at all. revenue per user continues to
increase and even viewers at incredible letters. jonathan: i remember when mark when on the roadshow in a hoodie and people said, can he laid this company and make it -- lead this company and make it expand the way it needs to be expanded? is he answering effectively? some of theirrors things with regard to the privacy debate. the fundamental way mark looks at the company is an open platform and inherent in that are some problems. jonathan: cory johnson and michael shaoul, thank you. the opening bell around 30 minutes away. we are bloomberg tv in new york. ♪
so new touch screens... and biometrics. in 574 branches. all done by... yesterday. ♪ ♪ banks aren't just undergoing a face lift. they're undergoing a transformation. a data fueled, security driven shift in applications and customer experience. which is why comcast business delivers consistent network performance and speed
the dressing a hurricane ravaged puerto rico and tragedy struck las vegas. major mistakes led to a historic hack. jamie dimon's views on bitcoin look isolated on wall street. good morning. a warm welcome to bloomberg daybreak. alix steel is off today. counting down to the opening equitiesur u.s. analyst. futures are firmer on the s&p 0.1%.p about bond yields keep grinding higher. significantrs of dollar strengthen euro-dollar takes that currency back.
weekend he got to the oven this tuesday. let's see some movement. here is abigail doolittle. abigail: good morning. we have shares of homebuilder trading higher as it beat third-quarter earnings estimates by about 6%. new orders were up 8%. that blogs were up -- backlogs were up 10%. they are on pace for their best year since 2012. during less welcome tesla, well as- fairing less shares go down when production figures for the model three do not meet forecasts. the forecasts have been for 1500 model three, so producing just 1/5 of the forecast. the stock is up 60% this year.
whether or not this turns into anything bigger, probably not. we have elon musk fans very popular into the vision come into his vision, the art the company will succeed. perhaps just a speed bump. after that tragic shooting in las vegas yesterday, we had to casino and resort stocks trading lower. today basically flat. gun stocks continuing to gain since yesterday. resort'sthat wynn yesterday started beefing up security. visitors were forced to be checked with metal detector wands. perhaps this is the new normal. david: thank you. president trump has two puerto rico and las vegas this week. -- heads to puerto rico and las
vegas this week. he tries to move forward on his agenda in washington. here to cover his plan is toluse olorunnipa. tell us what the president is seeking to do in las vegas and puerto rico. the president is going to try out the role of console chief.onsoler in houses and pulled perrigo -- in puerto rico are out of water and food. he is going to assure puerto rico that they will have the resources they need to rebuild the entire island. when he goes to las vegas, he is going to need to console that community, which has been devastated by the gun violence that led to 59 people dying and more than 500 injured. first massically his shooting, something presidents have faced for years in the
u.s., every president tested with responding to a mass shooting. the president is going to try to play that role. he did that a little bit yesterday with a short speech. he is going to talk to victims, first responders, and try to get las vegas to respond after such a massive tragedy. they are still trying to respond and figure out how to recover. jonathan: i want to keep people up to speed on u.s. oil numbers. i think this is what is called beating a low bar. 9.7%, thesales down estimate down 13%. david: which is good news. jonathan: apparently. i don't know of it is too positive. david: we are anticipating an update and auto sales because of in auto sales
because of the hurricanes. we know the president is on his way to puerto rico. what is going on with the staff as they try to move forward on his agenda despite the tragedies of puerto rico and las vegas? toluse: at the white house they are trying to focus on tax reform. the tragedies have made it difficult for the president to push for on tax reform because he has been distracted and had to go to places where devastation has caused the need for a presidential visit. they are trying to push for on tax reform, trying to push forward with the house and senate as the plan comes together and put together words for a bill to roll out. the idea is the white house will be able to shepherd some of the stray bullets that are starting to voice -- stray votes that are starting to voice concerns. deficitit is about the or the idea that this tax reform
package seems to be giving most of the benefit to the wealthy, the top 1%, they are trying to make sure everyone is on the same page. even though the president would normally be going out to sell the plan, he cannot do that, so they are trying to sell it for him. david: thank you. jonathan: let's get to the market. the dollar touching a fresh six-week high as science show the economy strengthening. the optimism on the economy has pushed equities to another record close and the potential for a december rate hike is in play compared to where it was a month ago. joining us is michael purves weeden and company, and cameron crise around the table. michael, let's begin with you. the pain trade has been the treasury, the dollar. the equity trade has been difficult for you given with have shot through the year and target and stayed there. where do we go next?
michael: i think you have to disaggregate a couple of things. you can call it short covering the dollar and simply over position longs with respect to treasuries. right now you do have some good economic growth in the u.s. and around the world. right now the question is how much further are we going to go on this dollar move and treasury. i am going to guess as the tax discussion unfolds in the coming days and weeks, you will start to see pretty aggressive selling in this rally of the dollar. that is going to ricochet through to treasuries. equities is a different asset class right now. i think it can continue to perform to the outside -- upside. cameron: when you look at that, what are your favorite places to
position? are you meeting on growth again? michael: it is funny, when you look at the ndf growth chart it looks tired. how much can we expect out of the bang and other large cap tech names? on the other hand, if you are aggressively buying the u.s. and you think tech is tired, that means you are buying the trump trade, banks. i think u.s. equities will be in a stronger position. charts, itt the tells you it is going higher. i think you have to be careful with regard to sectors. h catches to q4, as tec its breath, and as this trump reflation trade fetes, i think te -- fades, i think tech will
lead higher. macro as you look at a perspective, is it reflation from trump we are seeing with the dollar and the 10-year, or is it yellen 1.0? michael: it is an interesting distinction because in many ways it is similar to what we saw at the end of last year in terms of nominal treasury yields going up the dollar going up, and even with it equities the value outperforming growth and u.s. outperforming emerging markets. the one thing that is important is the yield curve. the yield curve has not steepened always, whereas it steepened dramatically in november and december. if you were stuck on a desert island and had one indicator to use, the u.s. yield curve would be the top of your list. the fact that it has not steepened is suggestive that the market thinks policy settings
currently are and in the future will be more restrictive than was the case at the end of last year. that has certain implications. it would suggest the dollar rally could have a little more permanence than was the case at the end of last year because, broadly speaking, a steep yield curve implies easy policy, and easy policy implies currency weakness. jonathan: i will extend your island analogy further. with fewer people be taking that yield curve with them now compared to 10 years ago? >> i don't know. jonathan: a lot of people would say it does not tell us what it used to. >> i would say the jury is still out. look at the -- in the u.s., a little over 80 basis points. that is roughly midcycle historically. utterlytainly seems consistent with what we have
observed so far. the real wildcard is the identity of the next fed chair. if janet yellen is reappointed, that has certain implications. if someone else is appointed, that has very different implications in terms of their on the record comments on the role of the central bank, it's prominence, or its lack of prominence. jonathan: thank you for joining us. michael purves of weeden is sticking with us. do not miss this conversation, tom keene sits down with the fed vice chair stanley fischer before his departure from that role. don't miss it, right here on bloomberg. ♪
david: this is bloomberg. i am david westin. september was a great month for the dollar. so much for emerging markets. they posted their biggest monthly losses of the year last month as the dollar strengthened on expectations the fed will raise rates at the end of the year. we were talking about the strength of the dollar before. does this automatically lead to a selling off of the yen? >> there is a response to the market. if you look at the u.s. small caps divided by the eem and show that against the dollar, it is clear as day. withtrade tick for tick each other. when you see a dollar move after a weakening trend for the first half of the year, you will see this type of response, and emerging markets gets sold as part of that broader reflation
trade. i think the question is, so far if you look at the eem as a proxy for emerging market assets probably come it is played good defense through dollar strength. i think the big question will be toll in the coming days as the dollar continues to strengthen. not fall apart" together, that is a little bit of a statement -- does not fall apart and holds together, that is a little bit of a statement. emerging markets underperformed the s&p 500 for seven years. if global growth is on, and u.s. rates are not going to get that much higher than they already are, and the political conditions and emerging markets like china are instructed, then i think we are in this eem move
now. jonathan: more breaking news as far as auto sales are concerned. septemberom ford, u.s. vehicle sales coming in, up 8.9%, the estimate up 2.9%. that is a solid beat. david: it could not happen at a better time for that new ceo. this afternoon he is laying out a new report, and he needs a little wind in his sales. -- sails. the expectation is overall it will be at a rate of over 17 million vehicles again, the expectation for auto sales overall. jonathan: michael purves, your view on auto sales in the u.s. at the moment. they were rolling over. people were concerned about them. these are decent numbers. michael: we will have to strip out the hurricane nice in the
coming months. timesre trading at seven forward earnings. if you get stronger numbers in the coming months in a market that is not exactly cheap, then you have some faith the fundamentals for these u.s. auto manufacturers will hold together. jonathan: the average middle-class family and go out and buy a car with $1000, i don't know how many of them can buy a ford. i joke, but i wonder how supportive the tax regime will be for the u.s. consumer at a time when a lot of people are saying, the economy is ok, but when you look at consumer loans, business loans, auto sales, there are some cracks. michael: it is interesting, if you look at personal bankruptcies as well as business bankruptcies, they were in general decline for two or three years. they started planning up again. it is not one of those red flashing lights.
i would say it is yellow flashing that you need to be aware of. david: where is the household balance sheets at this point? it is being rebuilt since the big crisis. where is it now? michael: it is reasonably healthy, but you are seeing little pockets, the auto subprime last fall, the occasional spurts in credit card delicacies -- delinquencies rise up. that seems to have gone to a more positive place in the last month. the consumer health really starts trending weaker on the whole, you are going to start seeing the session lending front and center -- recession looming front and center. jonathan: toyota sales are solid, u.s. sales up 14.9%.
the estimate was 9.3%. these are solid numbers coming in for u.s. auto sales. jonathan, we said, had soft numbers the last two or three months. to have the auto's comeback would be good for the economy, no question about it. michael purves will be staying with us. coming up, exclusive interview with scott keogh, audi of america ceo. this is bloomberg. ♪
advertisements on its platforms. purvesith us is michael of weeden. paul sweeney is with us. >> i think the problem is this is an open platform. it is built upon almost 2 billion users globally. it is extremely difficult to police. they have to do something. they have to make a better effort. jonathan: should they be regulated to have that sort of presence to make sure fraud and money laundering is not taking place, significant compliance numbers to oversee that activity, are these numbers one to be regulated in the sense that social media platforms will be treated as if they were financial platforms and they have a responsibility to make sure this is not happening? paul: i can tell you the companies and investors are
hoping that does not happen. europe has a long history of regulating u.s. technology companies mostly for scalp. i think companies like facebook and twitter and instagram that are being looked at in terms of tennessee issues, desk privacy issues versus -- in terms of scale. issues versus i think they will have to work hard to regulate themselves. david: historically in this country, we have had two models, one is a telephone company that is an open platform. the telephone company is not liable for anything that is said over the platform. the other is the cable television company, they are liable for what is said. they are content producers. should we regulate it like a common carrier? paul: the whole concept of the
network is an open platform, with light touch from a regulatory perspective. they had been adamant that facebook is not a media company, but i think it is becoming clear as we are seeing with these regulatory oversights by congress, they need to take a much harder look at themselves before someone does it for them. david: when it comes to political ads, that is when congress pays attention. that is how they get reelected. it is going to be difficult for them to say we are not responsible for the content when people are running political ads against themselves. the broadcast television industry has been doing with that since the beginning of television. we have seen over the last couple of election cycles that some of these political advertising dollars were beside him -- were being siphoned from broadcast television and sent to
social media. i think that will attract initial scrutiny from regulators. i think we will see some companies, google, facebook, the leaders trying to get in front of it, trying to make ofh-profile hiring in terms regulation. >> clearly this is not impacting multiple stocks. they have long-term earnings prospects. if you had to take a guess about how much earnings compression we would see if we saw a shift in regulation for the sector, what would you expect? paul: longer-term that could be a risk. the risk for these technology companies is always out there in terms of regulation. you could argue for microsoft a generation of regulatory overhang coming from europe impacted that stock. we do not see that in these stocks at all. they continue to be highly valued at the marketplace.
if you will see a significant overhang of regulatory oversight, that could be an issue that impacts the top line growth jonathan: of these companies. to u.s.: i want to get auto sales. gm september u.s. auto sales is 11.9%, thet, estimate 7.9%. paul sweeney of bloomberg intelligence, thank you. michael purves will stay with us. up on the dow. this is bloomberg. ♪
futures a little firmer. dow futures positive 30 points. to help you feel better about life, we have the opening bell. treasury yields higher by a single basis point. the dollar just a little bit firmer. adding strength yesterday against the euro and the pound. treasury yields continue to grind higher. it is a muted price across assets. abigail: once again the buyers are in control. we are looking at something similar, all caps -- all three averages on pace for record closes. investors really liking the
promise of tax reform, and that strong isn report yesterday. investors liking strong economic data. it does feel like an invisible bid, but the buyers just keep going and going. let's take a look at u.s. car stocks today. we have good gains as gm, ford, and chrysler beat estimates for september sales. gm up 3%. 11.9% versus the estimate of 7.9%. ford beating also. fiat chrysler, the one decline, but the decline of 9.7% was less than the estimate of down 13%. it looks like this is all on strong demand post hurricane harvey and strong incentives and investors selling day. we are seeing strength for the car stocks. let's look at a performance
difference between european countries and u.s. equities. this is an interesting chart. it is a one-year chart. you're looking at the stoxx 600 in dollars versus the s&p 500 in dollars. in blue we have the stoxx 600 in euros versus the s&p 500 in euros. as the euro started to strengthen around the beginning way,y in a much bigger that started to take a toll on a relative basis on the stoxx 600 price in euros. the question could be with the political uncertainty we are seeing and mario draghi talking down the euro, could that help this level out? jonathan: interesting chart. thank you. others around and the table with us. europe is what they screamed at us again and again
once you. i don't hear that so much. i used to ask them a different question from and the launcher they are buying euro. >> two things happened in abigail's chart. euro in relation to the dollar went through a regime change. in the prior three years it was defined by real rate differential. it traded well north of where should be, so other factors come into play, arguably the removal of the eurozone existential political risk with populism. that was a powerful factor. also what happened at that time was european equities with the euro traveled upward in the first quarter, and the second quarter you started seeing that strong euro when i got to 1.18 to 1.20 that started to cut into equity performance.
i think of it is going to sustain where it is or go higher, you need a lot of good economic european growth to happen. acrone in this post-m honeymoon phase now, we need to see engagement there and policy reform. jonathan: auto sales keep coming in. down 8.7.the estimate numbers impacted by the recent hurricanes as the black to go out and buy new cars. they are still beating the estimate, 8.7%, the outside 9.5%. has much changed for you after the german election and spain? >> i think a lot of us thought there was a stake driven through the heart of european populism with le pen's decisive defeat. what happened in germany last
date was a reminder that this is not d-- last week was that this is not dead. ways, merkel, in so many her power is shared, it also reminds me of the republican party in the united states. ultimately that limits the efficacy of the ruling party to get things done. >> i think it is interesting that you highlighted growth as one of your stories. i think we got captivated by the dollar, currencies, politics, but the getting of this year the story in europe was the explosion in global growth. with the midyear earnings season being relatively disappointing, are you questioning that idea? >> i think you have to. the counterpoint to that is if you look at economic growth estimates around the world, they have all been from january consensus estimates on the
bloomberg, every major economy in the world has had major upgrades except for the united states. your has had the biggest that europe has had-- the biggest upgrade of any major economy. of fallout, the reflation theme globally. the second quarter was top on many economies -- tough on many economies. >> as you look at 2018, are you looking at this as potentially depressive on the euro? >> yes. what level does the euro start causing real pain? from a tightening point of view, when you are thinking about correlations, negative correlations between fx and equities in developed markets, japan is exhibit a and europe you have abit b,
real trend for strength there. i am going to allocate away from the u.s., you are on a weak dollar thesis, it raises the thought that you want to be allocating to emerging markets. david: when you're talking about china be europe, could the ace in the hole? the united states seems to be ambivalent about our relationship with china, could that help drive european growth? >> certainly. from what i understand about this highway that is going to be constructed, that is several years off into becoming a reality there. when you think about europe, just like the u.s., they are heavily defined by what is happening in china. they export quite a bit to china
, and there is a healthy trade balance there. europe china, so goes and the united states. vonnie: -- jonathan: great to have you with us. gains on the doubt, record high. six days of gains for the s&p 500, all-time high. slightly higher by 0.16%. up zero .1% on the s&p 500. from new york, this is bloomberg. ♪
technology, the president and 5:30 eastern time. ♪ david: u.s. auto sales were month.last audi of america reports september sales up 9.6% led by the q7 and q5. joining us is scott keogh, audi of america president. good to have you with us. you did pretty well. scott: we did. we have had a good year so far. we are up 6% for the year. september, we are seeing good momentum heading into the fall. we have new products, which helps. we feel consumer confidence is strong, and that is driving growth. david: how are you doing compared to your counterparts,
the other luxury -- you are in the luxury category? we are. we are gaining market share and growing faster than them. we have gained about one point of market share in luxury, which is beyond lexus, bmw, or cities z benz?irit -- mercede . david: what is your biggest concern? scott: i see consumer confidence, investor confidence at a good level. the biggest concern is the market is nearing plateau. point --y is about one 1.8 4 million. taken,men does not overproduction, oversupply, loss of pricing power. in general the market is
behaving. i hope that continues. in a flattened market, you have to keep your business integrity, and that is what we intend to do. >> you mentioned your are taking a little market share from other luxury providers. what is it about audi that is driving consumers to your brand? scott: as i look at it, we have the fundamentals together. there is no tricks to the automotive business. you need the fundamentals. the fundamentals are consumer reports say we make the best cars in the world. power, how we treat our customers, we are number two. we have great suvs driving the market now, all new q5 family getting us this nice growth. historically we have been strong in the northeast, boston and new york, and we are getting significantly stronger in the south. this is what we're seeing. we did almost 5000 cars in the south.
houston was up 150%. houston was nearly 5% of our total sales. we are becoming a national brand. this is having a big impact on our sales. jonathan: i just wonder whether anything changes where the buy german manufacturing story is from the last couple of years. where are we now? scott: in terms of? jonathan: in terms of a huge easel scandal involving volkswagen and the whole industry taking a hit. seized on the opportunity to promote u.s. brands. are you noticing any resistance to a german brand like audi? scott: we have not. we have seen 81 consecutive months of record sales. here is how i view the matter, we did not create this madness
at audi of america, but it is my job, our dealers job to make sure the customer is treated well through this. we have been treating our customers well. we have been navigating this difficult situation, but the brand has never been stronger. we have been able to navigate this crisis well, and that is what i intend to continue to do. customers have stood by audi because we have done the right thing by the customers. david: finally, you mentioned incentives and the possible effect that can have on profitability. talk about auto credit. we are seeing some weakness in auto credit across the country. are you seeing that with your credit? scott: no. obviously, you are seeing this as you go into the industry as people go deeper into the paper and credit tears. that is not a factor without a in terms of our terms and how deeply go. somethingsee that as
we will go into. our default rates are miniscule. across the industry, that is worth tracking. as people want to push more sales, they are going deeper into that business and piling on incentives and increasing supplies. i think all of us in the industry want to make sure we keep the appropriate here. specifically with audi, not a factor. david: scott keogh, thank you for joining us today. we will stay with autos now. automakers were on ine as they all be estimates september sales. albertine,is james consumer edge research senior auto analyst. he has an equal weight regulation on board and general motors -- ford and general
motors. david welch, also with us. from detroit. these autor take on sales. we have seen what the turnaround looks like in september after a pattern of softness. >> absolutely. scott made a good point talking about audi in the market as a whole. it is a plateau. we have seen sales down in the first half of the year. when you see a month like this, you have to say replacing cars damaged in a storm has to be a big factor. we saw it a little sooner and maybe a little bigger because we sought numbers like nissan blowing estimates out of the water. everybody was over there estimates by quite a bit. there has got to be some replacement by the storm pushing this. people did not wake up and by providence decide they need to buy a lot more cars.
david: how do you see the industry overall in the united states? is this a turnaround or a temporary blip due to hurricane damage? >> i think it is from demand due to the parking. we will get another read on that. group one automotive has an analyst meeting scheduled this morning. i have spoken to dealers for my sense is that is the biggest driver. what you have to do to distinguish between a high islity and low quality sar to look at inventory, incentives, and retail versus fleet mix. there seems to be a lot of fleet sales growth in these numbers. 20%lieve ford fleet was up year-over-year. i would put that into a category of less sustainable, more seasonal, and perhaps lower quality.
i think this is a positive blip for sar. >> we have talked a lot about autos this morning. i think with failed to mention that stocks are already back to where they were at the start of the year. what pushes you to overweight? what could you seek to get in the cycle to push stocks even higher? >> that is a great question. i think one of the new paradigms in auto is how techy you can be from a multiples perspective. i think gm has done a lot from a pr perspective to shift the narrative to autonomous and electric vehicles. i think clearly kind of multiples tesla has received over the years on those secular tailwinds. to the degree that there is a breakout candidate, i would categorize a company like audi as well that is trying to bxox
out more or better around autonomous and electric. powerfulmes makes a point, the auto companies are saying they're not getting the credit they deserve on the street. indication the street is starting to believe them? >> i do. aloneok at gm's stock yesterday. i think there was a belief for a while the car companies were going to do maybe one ev and a couple of hybrid vehicles because they were dragged into it by tesla or regulators, but now you are seeing german carmakers, general motors talking about 10 or 20 ev's coming out in the next five years, and the market is saying these guys are getting in the game rather than standing by and watching. maybe they have the technology play. bloomberg,d welch of
♪ you're looking at live pictures of the house energy and commerce subcommittee where former equifax ceo richard smith will be facing questions from congress in a few minutes, part of the inquiry into the security breach that led to the theft of more than 140 million american's personal data. joining us from washington is our bloomberg congressional committees reporter. first question for the former ?eo, what will it be
and foremost, lawmakers will drill him with tough questions on the basics, the timeline of the new what and when on this breach. they will see this as an opportunity to hold him accountable. what we have seen from his testimony is that one of the biggest revelations is the company did know there was a vulnerability, and it directed staff to fix that vulnerability in march, and that did not happen. as a result, this breach occurred. the responsibility equifax had in this will be first and foremost. jonathan: the other part is when did they find out, and who knew what and when. the who and the what is critical. there were executives who sold stock. now people want to know what knowledge they were holding at
the time they sold that stock. what do we know about that now, and what is the former ceo told us ahead of this hearing? >> we don't know much more than we did before. the company has maintained those three executives did not know about the breach when they sold that stock. however, lawmakers have raised the question why wasn't the stop -- was it the top security and legal people at the company did not know about the breach at this time? is it negligence, or is it something worse than that? a lot of questions. that is certainly going to be a focus. as are a range of consumer protection issues, and the timing with which the company notified the public and regulators about the breach. david: if there was insider are lost to hold
them accountable, but he has already lost his job. is there anything congress can do at this point? >> that is a good point. the company has made a number of other changes. i think it is more about making this the public event that it is, having him face tough questions, and we will see. the investigations are continuing. what could come out of these hearings could lead to more investigations. jonathan: thank you very much for giving us your time. thank you to our guests for joining us around the table. we are 26 minutes into the session. more records in the united states. coverage continues on bloomberg markets next. this is bloomberg. ♪
♪ >> here are the top stories from the bloomberg and around the world to read blackrock chairman moments.in just what he says about tax reform in the future of the federal reserve. then president trump on his way to puerto rico to view recovery efforts on the hurricane devastated island. will this forces hand when it comes to tax reform? russian president vladimir putin is preparing to me saudi arabia's king later this week as he exerts more influence over the middle east. could is expanded role be one we come to regret?