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tv   Bloomberg Markets Americas  Bloomberg  October 3, 2017 2:00pm-3:30pm EDT

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scarlet: we're live in bloomberg world headquarters in new york over the next half hour. you're the top stories we are covering from around the world. issident donald trump assessing the damage and recovery efforts after hurricane maria. the visit took couple of turn the he said that aid to island's throwing the budget is little out of whack. think is ceo larry concerned about trump's proposal to end a state and local tax reduction. he says this plan will expand deficits. more on that expose of you just ahead. equifax coming under sharp criticism on capitol hill. richard smith, the former ceo play defense is lawmakers grilled him for three hours over the company's actions and miss actions. u.s. markets close in about two hours time. let's get a check.
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record highs. abigail: very tight trading range. it could be the tightest of the year for the s&p 500, and that is saying something. only about a three point range we've seen for that index today. and again today will be a record close for the two major indices, even if the gains we are seeing are not terribly large in today's session. as we see stocks continue to climb, we look at the various measures volatility and what people are doing protection wise to have been falling. we talk about the vix, this is the credit suisse fear barometer that measures the cost of bearish to bullish and the three months option is down for the third straight week. it is looking at declines as we see global stocks complete a six quarter of gains. theal stock here seen in msci all country world index. and that credit suisse fear barometer plunging as we continue to see what some see as
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complacency in this market. in today's session on the move our airlines. delta coming out with an updated forecast for unit revenue for this quarter saying it hit me at the low end of its prior forecast with a gain of 2%. , including george ferguson a bloomberg intelligence are saying that might be better than some analysts were anticipating, especially with the effect of hurricanes. shares surging 6%, gaining and climbing more more throughout the day. , ual, andirlines jetblue are higher. seeing back to back declines, down 2% over the past couple of days. if the first two straight a decline since september rate, following the best months of crude since april 2016 ahead of tomorrow's weekly inventory report here in the u.s. julia: still above $50 a barrel. rico, whereto
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president donald trump and first lady melania trump face the damage left behind by hurricane maria and record -- reviewed the island recovery. working to restore power deliver food, water, and other supplies to puerto rico's people. us.than levin joins great to have you on the phone. describe the conditions and the scenes the president trump saw today when he arrived in puerto rico. seeing two very different situations in the san juan much of vols area, which is home to a large portion of the island's population and everything sort of outside of that. there is a lot of concern as you get out into the central rural mountainous regions at some of these areas are completely cut off even from neighboring towns and that is creating a number of logistical challenges in getting aid to these folks. of san juan,ity where i'm standing right now, we have seen notable improvements
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in the conditions of the roads and things like this. scarlet: i understand as well the president met with someone from the virgin islands because the president couldn't make the trip over there. can you tell us about the conditions in the u.s. virgin islands? jonathan: the virgin islands have been reeling since our month. i understand the president intended to meet with the head of the virgin islands on an aircraft carrier somewhere close to puerto rico. just surveying the situation over there as well. julia: there's been a lot of back and forth and some degree of criticism of the government's response. i wondered beyond what we saw televised, do you have any sense of what was discussed between governors andand the mayor of san juan and federal officials while he was there? emphasis i think the
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just making sure that the president understands how grave situation is. we have 34 million american citizens who were almost entirely without electricity in this modern age, it's almost unthinkable. the governor will surely be lobbying for a robust aid package from congress. julia: what about the relief efforts that are still going on? can you describe a little bit of that as well? we are showing a banner saying the mayor is selling trump is not about politics here and i think this is the heart of the issue, that this is a crisis and its ongoing. jonathan: it certainly is. at the heart of electricity thee is concerned about weakest and most vulnerable citizens, dialysis patients, are
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they getting all the care that they need? an important part of the recovery effort has just been making sure that every hospital and dialysis center available on the island is connected to some form of electricity. you have this task force that goes around constantly and make sure that those facilities have diesel for their generators and that the most vulnerable folks in this situation are getting taken care of. scarlet: bloomberg jonathan levin from san juan, puerto rico. trout noted the cost of the federal response to hurricane maria. president trump: i hate to tell you, puerto rico, but you've thrown our budget a little out of whack, because we spent a lot of money on puerto rico and that's fine, we save a lot of lives. scarlet: kevin cirilli joins us now from the bureau in d.c. give us some perspective. what did the president mean?
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kevin: it looks like it was an attempt to make a joke. the governor of puerto rico telling reporters earlier today about the impact of what would happen should the united states not act on puerto rico, and i would essentially create a situation -- that would essentially create a situation where millions of puerto ricans would try to come to the continental united states because the conditions in puerto rico could become so dire. the president while in puerto rico meeting with top administration officials including the head of the small business a administration as well as energy secretary rick perry and his chiefs also accompanied by his chief of staff, general kelly. the president during the damage and speaking with those on the ground and at one point, even disturbing supplies to some puerto ricans, trying to show an
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alignment of local, state and government officials are working together. funding for puerto rico will be tied into funding for hurricane irma, maria, and the damage that was seen on the mainland. is that right? that's what we had seen in the past. in some of his budget deals. which also note that they just recently received an increase in its budget, so republicans on capitol hill in control of the congress are definitely continuing to make sure that assistance is there. republicans suggest anything that needs to be done will be done. the president of puerto rico will has a las vegas tomorrow and senator john soon, the third highest-ranking official within the republican senate said that he is essentially saying that there could be a ban on
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semiautomatic weapons materials are used to turn them and automatic weapons. gun control debate very much alive and well. not in the traditional ideological battle lines, but now republicans started to talk about it as well. julia: kevin cirilli, chief washington correspondent for bloomberg news. thank you for that. that was a case of honesty not always the best policy. of get a check on bloomberg first word news with mark crumpton. mark: 45 people remained in critical condition in las vegas area hospitals, which are overwhelmed after seven nights mass shooting at an outdoor music festival. several hospitals reported being at full patient capacity. authorities say stephen paddock used equipment that would allow his assortment of semiautomatic rifle sophia rapidly and continuous -- to fire rapidly and continuously. the death toll is a 59 ockhorities say attic -- padd
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killed himself. ,undreds were injured in spain you are at live pictures now from barcelona. highways were blocked, schools were closed, and business across the region was halted as workers and students joined strikes. catalano officials said 90% of the 2.3 million people who voted sunday were in favor of independence. the uk's trying to tackle online propaganda from islamic state. extremists who repeatedly watch terrorists content online to get up to 15 years in prison. the british government says over the last year, islamic state supporters have promoted almost 67,000 propaganda tweets in english. in the last 12 months, there have been five terror attacks in britain. fargo at slammed wells the senate banking committee hearing for allowing a run sales
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culture to repeatedly rip off customers. massachusetts democrat elizabeth warren told ceo timothy sloan that wells fargo needs to get rid of people like him. you say you've been making changes that wells fargo for 30 years, but you enable this tank account scam. you got rich off it, and then you try to cover it up. at best, you are an incompetent, at worst, you were complicit. in either way, you should be fired. mark: senator warren added that sloan was exactly what was wrong with the bank. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. scarlet: coming up, a bloomberg exclusive with blackrock chairman and ceo. find out with the head of the world's biggest money manager had to say about president trump's tax plan. from new york, this is bloomberg.
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julia: this is "bloomberg markets," i'm julia chatterley. scarlet: i scarlet fu. warning investors to temper their exuberance over president trump's proposed tax plan. fink toldat think -- erik schatzker earlier today. >> i think it has to be amended, and amended quite importantly. i'm not a believer in the reduction or elimination of deductibility's for local taxes. i think it's quite harmful to some of the major states today. including new york and new
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jersey. i actually believe one of the greatest problems in the world we have today is the lack of savings for retirement and liabilities of some of these major cities in terms of retirement. if we stretch these states, theomically, through elimination of deductibility and people move, i think it creates bad behaviors within our own country. ,etting back to the specifics there are a lot of merits in what was being proposed. but let's be clear, what is being proposed is a pretty large expansion of deficits. according to the cbo, deficits are going to grow to $25 trillion in the next 10 years, before whatever this tax cut is. whether this tax reform as trillion, we all have
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our own scoring, but my biggest in 10 years, for the country that is so dependent on foreign ownership of our debt, we of the chinese and the japanese owning as much as 25% to 35% of u.s. treasury debt, and if you look at demographically the domestic needs of china and japan, they are going to need a lot of that money. and to think that we could have foreign ownership of 30% in 10 years is probably a bad assumption. are we growing our deficits in front of some very big demographic walls? if we canrks successfully bring our economy up from this 2.5% range to 3.5%.
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collects that's what the president says he wants to do. >> if that happened with tax reform during the reagan administration, it hasn't happened ever sense. and itgs growth forward decays forward in the future. collects are you saying -- >> are saying any state budget neutral? >> no, but it has to be mindful of what we have to do in relation to our deficits. expert, but i don't believe that we are going to get tax reform if there is the elimination of deductibility is. it creates a bigger deficit. we have to find it somewhere else. obviously, one of the ways of doing it is by raising corporate
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tax rates from the proposed a 20%, close to 25% or 27%. that is still a net positive. and i think by and large, most investors and most corporations would welcome that. >> you would be fine with that. >> we pay about 31% worldwide. it's fine. we need to make sure that we are fair and just across all sections. the proposal related to partnerships that will help the small and medium businesses by having that 25% tax rate. julia: that was an exclusive interview with larry fink, chairman and ceo of blackrock. we spent a lot of time talking
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about the bitcoin debate. lloyd blankfein joining in, he is still thinking about #bitcoin. no conclusions, not endorsing a rejecting. it folks were also skeptical when paper money displaced gold. they were breaking the story the goldman sachs are questioning on how to we get involved in trade this. scarlet: they want to keep their options open, as opposed to jamie dimon, who made very sure that he would fire anyone in the firm it was trading bitcoin. julia: personal views on bitcoin versus what they are trying to do. they are not saying fraud. we will discuss, no doubt. from new york, this bloomberg. ♪
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scarlet: this is "bloomberg markets," i'm scarlet fu. julia: i'm julia chatterley.
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scarlet: richard smith is a not see today, testifying about the data breach that is only done bigger area the number of affected u.s. consumers is increased by 2.5 million to a total of 145 million. lawmakers grill smith on a timeline for the incident, including when chief legal officer john kelly signed off on executive stock sales. all i knew at the time was suspicious activity when we approve the sales. >> that could be a breach, right? >> it was deemed suspicious activity and we had no indication that pii was in fact compromised at that time. we had no idea if the data was extricated at that time. scarlet: joining us from washington is anthony ferrante from fti consulting. he has more than 15 years of top-level cybersecurity. therewere just listening, was a lot of finger-pointing and blaming and questions on who knew what, when.
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as a cyber security expert, what kind of information do you hope to glean as a way to understand how to prevent something like this in the future? i think the: testimony has been very interesting. smith said it himself when he opened up the testimony, he apologized and said the buck stops with him, and he is responsible. i don't think there could be a more accurate statement. i think it is telling that he is sitting on capitol hill testifying as a former ceo of that koufax, which i think -- of equifax, which it think is telling. julia: he blamed human era but also technology air -- human error, but also technology or. the patch for the weakness never got done. and then there were subsequent security screens, and for some reason, despite the fact that the company had been hacked and there were 30 different entry points into equifax, it wasn't spotted were stopped.
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just given your experience, how did this happen? mr. ferrante: i don't have any sympathy whatsoever for smith. the complexities of his network is extremely common. we deal with it every single day when we advise our clients on risk and vulnerability assessments. errore speaks about human and technical error, his family -- informed six weeks liar six weeks prior, and did nothing to address that. six weeks later, they then found out he had an intruder in their network. it was too late. it's hard to say it was a mixture of human and technical error, when the technical information was given to them with ample opportunity to correct it, when in reality, it was human error, they didn't act on this affirmation was passed to them from the u.s. government. julia: this was an ordinary hack and then they turned it off to
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hackers who were far more sophisticated. is there any defense for equifax? if this were state-sponsored, perhaps it was too sophisticated for equifax to be able to stop it or perhaps even notice it? mr. ferrante: no, i don't think that's a valid excuse at all. the reality is their system went unpatched for six whole weeks, and the fact they are saying it less skilleded by hackers and then passed off to more sophisticated hackers, that only makes the situation worse, because the reality is their system was breached from a lack of understanding of their network and a lack of putting in place common defense mechanisms to prevent this from happening. scarlet: government officials looking into this breach, the new york attorney general opened an investigation on their class-action lawsuit that have been filed. does any of this make a difference in how the data is
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safeguarded, or do individuals really need to take action? mr. ferrante: there's a lot of finger-pointing here, and i understand equifax is concerned and saying -- the rest of the industry is saying they need more help from the government, but the reality is, a company is only going to be the best person to take care of themselves. only a company knows the intricate dealings of the way they do business and how they function. they will know best how to protect their critical assets. if a company cannot do that themselves, they should leave on outside experts to help. julia: anthony ferrante at fti consulting, thank you for that. plenty more to come. this is bloomberg. ♪
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every branch running like headquarters. that's how you outmaneuver. julia: from bloomberg world headquarters, this is bloomberg markets. some markets are closing in new york and we start with metals.
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gold hovering between gains and losses. its highest level since july. crude holding above $50 a barrel . investors wait for cues from tomorrow's stock report. they will have fallen 500,000 barrels last week. this as libya's oil field remains shut by a third straight day. trading just said i -- i of $50 and a half barrels. russia teaming up with its rivals and opec to deal with the prices. low oil let's take a deep dive. number 4534, this is looking at russian crude output.
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we will have more tomorrow. bloomberg tv will be live from moscow where vladimir putin will london time.6:00 that chart behind me, the sensitivity, the relationship is clear. scarlet: we're going to head to the blackrock fixed income event where erik schatzker is joined by the man who heads up blackrock's trading and liquidity strategy. : that is richie praeger. more thane trade blackrock? >> i'm sure there are. we are up there in the lead. the bond market has
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been the source of some debate. if we were to rewind the clock we went here a lot of consternation over liquidity. where is the liquidity. we heard talked the bond market was going to be more like the equity market. where are we now? .> we have evil all thankfully we don't have that anxiety in the market or drama attached. i think we have come a long way. specifically in terms of how most participants have adapted. how the traders have adapted from being solely price takers to being price takers and price makers. you mean by that?
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the uninitiated? >> let's be clear. as a buy side participant, we are about performance for our clients. we are not in the market making. that is someone who is happy to make an offer and that is their business, to capture that spread. i either want to buy or i want to sell. i'm going to approach the market accordingly. i'm just going to express my interest. i'm going to show an offer if i want to sell. think about this for a moment. as a price taker you were taking liquidity out of the market. there is a cost to that. i can earn the spread by being that price maker. i'm adding liquidity to the market. -- blackrock is
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doing that question mark >> absolutely. whether the situation calls for the immediacy of a price taker or if they want to work something via price maker, that is what the traders are paid to do. erik: some liquidity is now being provided by the firm's that our clients. >> absolutely. we are not trying to get into the market making business. but we have a lot of new entrants. there is a lot of proprietary trading firms that have moved in , a lot of standardized products like treasuries. comfortable is more to make a price. a lot has to do with transparency. time. in an interesting come january we have a lot more
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transparency. people need to make the connection. transparency sounds like a good thing, but why? the connection between transparency and liquidity is liquidity is the function of confidence. if you are confident you know where the prices you will be more apt to make a price. we think that in the european market specifically will see more liquidity. erik: do you think we are back to the way day -- ways -- to the ways things were done before. as a buy side participant we were in a position where precrisis, liquidity was cheap. there was a crisis for a reason. i say that a big dish a bit tongue-in-cheek. liquidity.that
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we have to work harder now. erik: people keep asking me, talking to me about raising questions about how these instruments, the etf's are going to perform at a time of stress. they say when the market starts to sell off hard there's going to be no liquidity. >> we have seen etf's stressed. you tell me your favorite event. brexit, or the election. we keep testing the product. we often talk about it as a technology. and in some ways it is the most elegant vehicle out there because itself regulates. you can go from the secondary market which is what we see on the exchange to the primary market. as long as there is fundamental ortom-up credit, analysis
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distress players, someone who will see value in a price that looks off market, they can access that. this notionhat, that what happens if, we have experienced the if. we have seen every time there has been a tremor in the market. in the extreme cases we have seen the attraction of new buyers and see that they can buy cheap and have the confidence they can sell it on exchange or to go back to the primary market . greed works in this case. you get this notion of it is too expensive or too cheap. it is the truth, that is where the market is. some when can buy or sell there.
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erik: what about the other criticisms that etf's create distortions, that liquidity that does exist is it real because it is not being driven the way markets used to be, either by fundamental buyers or sellers. it is the passive buyer or seller. it is not anyone choosing to do anything for a reason. >> we do hear about that. right now the amount of passive products in the fixed income market relative to the underlying market is still quite small. no more than 1%. >> 1% of the bond market. >> it is growing. we could easily see this as a 2 trillion market. in the context of 100 trillion. let's keep it in context.
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prices, it is real. that is where transaction just happened. whether it is a rules-based wire and seller or a fundamental buyer seller looking at the capital stack saying that is where they see value, it is good because you have different investment strategies coming to the market and that tells you something happened. erik: thank you. great seeing you. that is reggie praeger, has it blackrock -- head of trading it blackrock. scarlet: thank you. let's get your check of headlines now. >> president trump is on the ground in puerto rico to survey damage left behind by hurricane maria. the president noted the recovery effort on the island is going to
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cost a lot of money. >> you have thrown our budget out of lack. we have spent a lot of money on puerto rico. we have saved a lot of lives. >> while he added every death is a horror, huge or a distinction between a real catastrophe like hurricane katrina and what happened here where at least 16 people died. before leaving the president spoke to reporters about the las vegas shooting. he said the man who killed 59 and wounded 500 others was a very sick individual. he called the gunmen demented and said we are looking into him very seriously. the president said we will be talking about gun laws as time goes by. confirmed people dead, bringing the death toll to 366. 7.1 earthquake
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two thirds of the deaths were in the capital city. it occurred on september 19, 32 years to the day of a magnitude eight earthquake which struck the city killing 4000 people. jim mattis told lawmakers it is an the interest to remain in the iran nuclear deal president trump said he would like to scrap. speaking before the senate armed services committee, he said if the u.s. can confirm iran is living by the agreement with the u.s. another world powers the plan is something the president should consider staying with. the president called the agreement an embarrassment to the united states. global news 24 hours a day powered by 2700 journalists and analysts in 120 countries. this is bloomberg. up, an interview
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with dilma clash in -- bill the clash in. the largest of its kind, morehead from new york. this is bloomberg. ♪
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julia: this is bloomberg markets. scarlet: time for our sectors spider report. today's catalyst, report from the stock of the out were. julie is going to tied this together for us. the homebuilder etf is up 20%. it has had strong performance.
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itt streak that has been on going back to 2013, in today's session the homebuilders of 7/10 of 1%. are af the homebuilders subsector of that. homebuilders are doing well. today's catalyst is our stock of the hour. that is after the company came out with its earnings report. the company coming out with .arnings that beat estimates revenue rose by 15%. the backlog grows. will beage sales price the grossllars and margin will be 22%. that is something in particular they have been focusing on.
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margins are strong. julia: i feel we're going to be asking this a lot, the impact of the hurricane. scarlet: it is lower than it anticipated. weically if you take a look have a look at the region's for the company. half of revenue comes from the area.n in houston there are delays in homebuilding activity but the ceo is saying that activity will come as people start to rebuild. julia: great insight as always. collected 2,000,004 it's fun growing the demand for impact investing creating the largest pool of its kind. by
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earlier in the bloomberg picks elusive, emily chang caught up with him. she started by asking about impact investing and how to make sure you are not diminishing financial returns. >> i spent a year and a half fund, wetarted this spent a year and have working with british ban as a partner to understand whether we could measure impact. we concluded we had a credible way of underwriting impact, tracking it and reporting on it. each company we go into we look for a way to measure the monetary value of the social or environmental impact. we do that in parallel with the investment return we would traditionally do.
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we are first and foremost making sure these are good investments. ensuring these companies are going to deliver a measurable outcome. >> what attracted someone like bono to this? what's everyone of the board members are people who spend their lives focused on social and environmental impact. , he hash his efforts his own impact fund he was one of the leaders in launching. he has been a long-term leader in this field. bono with his work across africa .egin investing a decade ago if you are serious about development you have to invest to create scale. there are 15 million jobs needed this year in africa.
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just based on the demographics. there is a general awareness we're not going to get there in terms of solving these problems unless we activate sustainable capital. >> why have a separate fund versus the strategy? >> it is the investing firm driving this. our belief was to accomplish the impact priorities we needed to add an incremental group of talent necessary to do the work and drive the sector themes. we wanted to attract people that wanted to cofound this. who wanted to create a new model that could ultimately shaped the way investing is done in the impact space. >> you are also an investor in uber. i have to ask, you didn't sign
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the letter that asked for travis to resign. i'm curious what you think about the fact that he is no longer the ceo. >> we're focused on trying to make sure ultimately investors create the best return from uber, working with the company closely to help realize the promise of this business. it is one of the most exciting companies in the world and in our portfolio. our focus has been to quietly work behind the scenes trying to achieve the best outcome. >> there are some decisions they made about how to balance power between the new ceo, travis who is on the board, and the board in general. what would you like to see? >> the business is focused on winning, solving some of the issues it created drama around the business.
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the business is making great progress doing just that. >> i am curious about tech in general. it seems to be having this rising pr program -- problem. do you think that will impact valuations? does that make impact investment more important. >> we're at a moment in time where the world has evolved to a place where impact investing is plausible and part of that is a function of technology. the key three things we focus on , mobility, smartphones, platforms,analytic and cloud-based software. amplification of
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impact in a way that is extraordinary. half the world's population has no bank account. have aon of those people mobile phone already. a billion of the unveiling have the opportunity to have health care, mobile payments, credit. it is result of what is happening. our investment in dharma is working with the international rescue committee, doctors without borders, specifically plausible because they have a platform that can work in a mobile environment. is renewable energy is all technology driven. internet of things. a business creating efficiency
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that is extraordinary that would not have been possible. while there is a not -- a lot of it is all the more technologywe address investments in a way that is contributing. it is not that capitalism is immoral, capitalism is a moral. it needs to be directed. we want to do our part and help directing it. these priorities are not at odds. that was our exclusive mcglashan.with bill toing up, all recently china, what does that look like? from new york, this is bloomberg.
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julia: this is bloomberg markets. scarlet: let's take a look at how stocks are. what has been interesting is treasuries turning higher. yields are coming down. the dollar weakening as well. distinct lack of dated today. >> they will continue to monitor that for you. coming up, are we in a giant bubble? this is bloomberg.
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julia: it is 8:00 in london. scarlet: welcome to bloomberg markets.
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julia: we're live in new york over the next hour. here is the top story around the world. president trump assessing the damage and puerto rico after hurricane maria. thevisit took a turn when president said sending aid to the island was throwing things out of whack. the clash in catalonia reaching new highs. 500 spanish police officers were driven out of their hotels. >> looking at live pictures at barcelona. we'll bring those to you. we are one hour from the close
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of trading. let's have a check of markets with julie hyman. -- it stocks are closing has been a relatively tepid day. even as they rise to records, the small caps are not part of the party today. also hitting records day after day, not quite making it there as they see that index fall. the best performing group today is telecom stocks. level three and centurylink got the go-ahead for their deal to go through. both of those stocks trading higher. these companies which are in talks are also rising perhaps an optimism if they do come they will continue to
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watch that. that is as we get the september sales numbers, general motors out of the gate with a 12% gain in sales. it is u.s. traded shares are not as much of the lift. forward with 9%. struggled to one of the things helping out automakers is incentives. another is hurricane harvey. 500 in the bottom, as you can see it has outperformed particularly since harvey made landfall. we have seen a gain of 14% collectively on this optimism about people replacing those september markets.
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scarlet: another day, another record high for u.s. stocks. closed highed 42 -- 42 times. in july, we were told we were in a everything bubble. everything from government bonds in europe to housing and financial assets were overvalued. it would appear that bubble has gotten bigger. markets from chapel hill, north carolina -- mark is in from chapel hill. it is as simple as that? the fundamentals have caught up to prices? >> i think the bubble has expanded. follow thegoing to 1929 bubble experience markets fall.rally into the there is the famous quote in september that i'm going to warn
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everybody dismissed it because he was wrong or early. there could be a crash and it will be terrific. we haven't had that last euphoric melt up in the s&p 2800 we thought might happen. there's probably room for the bubble to inflate. scarlet: people point out now you've got a return of global growth. the fundamentals are getting better. that justifies where asset prices are now. fort justifies prices emerging markets which are going to take advantage of that. the developed market is going to struggle with bad demographics, every day in this country 10,000 people turn 65. 65 to 85 your people don't spend as much. we have too much debt. there's so much debt and huge
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deficits, that is going to slow economic growth. can't spend your way out. that crowds out private investment and spending. you can see the loans are starting to roll over. the last one is deflation. in the emerging world you can see lots of inflation. i was in shanghai. we can talk about that. >> what do you invest in in the interim? had you make money in the interim? >> a couple places. we like buying things on sale. oil prices start to recover. energy,any diamondback fang. we like what is going on in europe.
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particularly the pigs. less so ireland. julia: despite intentions tensions we have seen in the last week? >> that is what creates opportunity. you want to buy when blood is running in the streets. that is extreme for my tastes. when people are talking about secession. take brazil, everybody said brazil was done. you make the most money and markets when things go from truly awful to merely bad. fangs.said fang and you would short tech stocks? >> yes. shorting stocks is like playing chess. just a waste of time because you don't know who the player is. it is like trying to short amazon at $400. now we are in the in game. i can see a path amazon looks
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like cisco and microsoft and it can be dead money for a decade. does it mean it is a bad company, the stock price is too high. speaking of brave moves, warren buffett said he is ready to that -- why do you think it's going to be different this time? >> active versus passive is cyclical. passive is a misnomer. passive is not passive. it if i percent of stocks were not there 30 years ago. it is just slow active. factor based strategies are just momentum strategies. the central bank easing cycle is ending. think isseven years we going to be better for active management. i will take that bet. julia: passive is cheaper on
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price. >> no. the passive strategy, these low volatility strategies. you have etf's that buy stocks only because they are priced low. that makes no sense. what about profits? volatilityo up shrinks. they have to buy more. higher volatility you are in trouble. >> risk happens fast. escalator up, elevator down. julia: let's get some headlines for you on the bloomberg. mark: risk happens fast. i like that. president and mrs. trump are in puerto rico. the president said puerto rico can be proud of the federal government's response to the storm despite sharp witticism from the mayor of san juan the
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past few days. they did shake cans today. the president and first lady met with officials working to restore food and supplies to puerto rico's 3.4 million residents. on his way to puerto rico president trump told reporters about the man who police say killed 59 people and wounded hundreds of others at a music festival in las vegas. >> he was a sick demented man. a lot of problems. we are looking into him very seriously. we are dealing with a very sick individual. we will beident said talking about gun laws as time goes by. told fink of black rock bloomberg the tax plan released by republicans these to be amended because of will expand deficits. >> i don't believe we are going
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noget tax reform if there is deductibility of stay and local taxes. mark: the only thing blackrock pays is a 30 1% rate worldwide. his proposal calls for a 20% rate. met withreign minister qatar's ruling leader today as other arab states continue their boycott of the oil-rich nation. it began their boycott four months ago. it is the first trip to qatar since the diplomatic crisis began in june. global news powered by 2700 journalists and analysts in 120 countries. this is bloomberg. china buyersng up,
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have the narrative all wrong. that is next. ♪
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scarlet: this is bloomberg markets. julia: it is time for the bloomberg business stories in the news now. goldman sachs lloyd blankfein undecided on bitcoin. he is not endorsing or rejecting. goldman's is with cryptocurrency experts to start a bitcoin trading venture.
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uber is working on an appeal of the ruling and must file by october 13. bloomberg cars remain on the road. in the u.s. he faces board battles against travis calamity. they paid staff more than $128 million last year for 20 some percent increase over the previous year. bluecrest is an affiliate. the first year of trading, they gain $.50. that is your business update. scarlet: back with morgan capital founder mark use go -- mark.
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larry think told us he sees ample opportunity in china. , how resilientse the world has become. china is a growing close to 7%. you had surveys that came out of china accelerating. even a 5% increase of the bank stock today. side, jimn the bear che knows told us he thinks the model is broken. >> debts are growing double digits relative to anyone else. twice gdp. where the banking system is getting bigger and bigger. the can is being kicked down the road. mark has been investing in china since 1995.
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your optimism on china is rooted in the fact china is a command economy that can make changes and be flexible. question, if and when china makes that adjustment that will be painful. it will have repercussions. >> there are certain things if they were to do unilaterally have repercussions. sides of thes both asset and the liability. around 40% of the loans. the state owns the bank. the state owns the state owned enterprise. they could do canceling without having big repercussions. beyond that you are right. scarlet: how are aligned are there interests? they don't necessarily talk to the same entities. go while thelaying rest of us are arguing about how to set up a checkerboard. they think in decades.
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took enough and you socked it away because now we are changing the rules. they are making company show a profit instead of just giving more loans. to transitionan just like the u.s. did from a manufacturing economy to a consumer led economy today. we did in 50 years. they are going to do it in 25. >> do you trust the data? data.rust enough of the i don't trust all the data anywhere. we have all kinds of place where the data is not good. i trust enough of the data. we were just in shanghai last week. we met with three corporate ceos. i trust them with my money.
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in there other companies china i would not trust? absolutely. >> you would not find out until too late. you would not know. the fact that they have two and half trillion dollars to fix a mistake, is that the key? >> that is an important point. in 2005 they were able to bail out the banks. they could have problems that are there. jim is a genius. i'm not arguing with the guy. i will debate that it has to crash. one of the things people forget, many of the companies in that part of the world stalled. someone, maybe a retired banker said if you steal a dollar, it is only a dollar.
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if you live in the company it is $20. julia: money is being made. how do you make money in china? >> my favorite place is in .rivate businesses those are the areas where they are growing at double-digit rates. do telemedicine. they saw 400,000 patients a day. that is unbelievable growth. where else can you get that? >> the numbers are staggering, certainly. steve bannon says china is the primary economic threat to america. economicre the primary opportunity. exports are going five times the rate as from china. about made for china. they are going to be the
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greatest consumer market in the world. we need to sell them things. this rhetoric about trade wars, forget about it. we want to be partners. -- [inaudible] mark, we will get him back on to talk about that. joe: still ahead -- julia: still ahead, not out of the picture -- why the stock has fallen off of the cliff. more on thatyou coming up in the stocks.
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julia: this is bloomberg markets. scarlet: time for options insight with julie hyman. is kevin.ning me
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you have watched the trends in this earnings season. one of the things you have noticed, the lack of correlation in the s&p 500. correlation is low. does this usually happen? >> it is pretty fascinating, it is typically strong for technology. seeing technology break from the rest of the sector. which is pretty interesting. we are anticipating rates are going to be high for lower. it is fascinating that it is completely broke from it. >> meaning it is underperforming. >> yes. as the market has been going up we have seen it break over the
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last month. we can see that it was every other sector correlating with tech as it led this earnings cycle. you had 70%, 80% correlation. except for energy. that is when it started to break. julie: what does this tell you? >> there is a lot of uncertainty in earnings season. one of the things that lead tech and their earnings going forward is immediate expensing as part of the latest tax plan. that would benefit tech. now that is talked about being taken away. the agenda is not beneficial. julie: your trade of the day cannot to do with earnings, it is about nordstrom. .he talk of a potential deal how do you play that talk? way to do are a great
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a replacement of the stock. a lot of people want it to benefit from one of the leading names. may not be was, they able to get financing. that has to do with toys "r" us. great options trade is to go out to june of next year and do a $10 call spread. that is in the money. we have had great earnings. this is a great way to reduce the cost of getting exposure. implied volatility is jill over 30% in this name alone. julie: we solve the stock drop. maybe it protects you from the choppiness leading to an eventual deal. is a great way to
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replace your exposure and if you still want upside, in the name. ,f you are worried about this three dollars and $.60, this is a great way to play it. julie: thanks a lot. back to you. julia: equifax capitol hill grilling is not over yet. the former ceo of the credit reporting agency will face senators in washington tomorrow. what'd iter joins us on you miss. don't miss it. ♪
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mark: time for first word news. president trump visited puerto rico today. relieve costs could strain the
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federal budget. cruz told him it is not about politics. elaine do called the response a good news story. the president responded calling critics of the puerto rico response, quoting politically motivated ingrates. ryan was pressed on the wake ofion today in the the mass shooting in las vegas that killed 59 people and wounded 500 others. once we are focused on bringing our budget up this week. bringing ite are up, we want to pass tax reform. but as one of the most important


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