tv Bloomberg Markets Americas Bloomberg October 9, 2017 10:00am-11:00am EDT
♪ vonnie: here are the top stories we are covering from around the world. remainst trump's agenda in question as he takes aim at gop senators, like tennessee's bob corker. how high is the mountain getting when it comes to passing tax reform? is a diplomatic impasse growing with turkish stocks tumbling. will president trump and president erdogan come to a consensus after they meet? live board member joins us in the studio in new york. what he says about the status of bank regulations and frankfurt's role and a post-brexit banking landscape?
all that is coming up in the next two hours, but we are 13 minutes into the u.s. trading day. the bond market is closed because of columbus day, but stocks are trading. abigail: we are looking at very small moves. the dow and s&p 500 down ever so slightly. the tech-heavy nasdaq up so slightly. the nasdaq and the dow have put in a big-time highs on the day. this happened after last week's gains on the average. the longest winning streak since march. stalled ofay be course. we do have a little bit of a tift between president trump and bob corker. -- and senator bob corker. they are saying that tax reform is not likely to happen this year. we have various small moves --
very small moves. remembered what happened in the last bull market in 2009 with the big financial crisis. what is interesting, in white, we have the s&p 500. in yellow, we have the returns. this includes dividends. we see over the last 10 years, 60% of the return is from price 100 alltion, and 40% is in returns. interesting to see that. a big boost for stocks over the last 10 years. some stocks are not doing so well. we have ge sharply lower. fund has gained -- enough tryon fund has gained. is cut.c
finally, ge is a just mentioned down today, but really down since the new ceo has taken over in the beginning of august. 20% on6%, down more than their worst year since 2008. the uncertainty could be the except thehey did board seat -- that he did except the board seat. investors typically don't like uncertainty. end: 90 minutes until the of the equity session. stocks are rising today for the fourth week in a row. running. was the best between the u.s. and turkey is the turkish lira.
one cent percentage move. rise for the biggest increase since may. turkey suspending visa services. monday's decline as a reminder of the underlining fragility of the $5 trillion a day foreign-exchange market. we had the pound crash in october of last year. this is a look at turkish stocks today. temple is lower tanbulus the one in is lower today. weatheredhas
political storms this year. on for the best year since 2012. it is now 10% below the record set on august 29. we will look into this in a few seconds time. vonnie: we go indeed, mark. in the united states, no shortage of tension with president trump. the ongoing situation with north korea has sparked a new word -- a new war of words between trump and tennessee senator bob corker. u.s./turkeys the diplomatic issue. cirilliart with kevin who joins us from capitol hill. let's start with daca. we got a lot of notifications from the white house late yesterday evening on how this was going to proceed, and how funds for the border wall are being solved.
does that take center stage away from other debates in washington? kevin: i am not sure it does. i have spoken with several people this morning that told us is the political twilight zone simply because of this latest political feud between the president and senator bob corker. that could have severe implications on the president's ability to pass his legislative agenda tax reform by the end of the year. we saw a similar play out during the health get there -- during the health care debate where you saw representatives and others. corker haveator really pulled no punches in dealing with this administration in terms of policy. collectively, i continue for months, we have been hearing rumblings of what senator corker said in that interview with "the new york times" publicly. vonnie: speaking of which, let
krueger.bout chris does ite realizes that now and just made it a reality. is it a case that bob corker can scuttle any regulation that trump tries to get past? kevin: collectively, he could. they are drawing on the criticism. the senators that having a super majority makes it more difficult for the president to get things done. i spoke with two republican sources that deal with this administration, and that are taking the administration's side , saying no one ever thought that senator corker really supported president trump. and that this latest tit-for-tat is a game over for the relationship that was never very
strong to begin with. said, senator corker was on the president's shortlist. as someone who is a policy -- who was someone who is strong on policy issue. interesting that this is happening after the rex tillerson debacle last week. vonnie: kevin cirilli, thank you. mark: let's take you to istanbul. the two countries suspended visa services with each other. information on the relationship between trump and erdogan. is there a matter of time before this spat is it the escalated? escalated? de
>> that remains to be seen. we have this unprecedented decision from the u.s. to completely block visa services to turkey, and turkey retaliating in kind. the statement was very open-ended. there were no conditions. there were no stated conditions leading to reinstatement of relations. it is unclear where we go from here. vonnie: we know that president erdogan is becoming closer and closer with both russia and iran. benjamin, put it this escalate so quickly? what if this him and eight from? -- where did this emanate from? theamin: an employee of germanye, including and france, the turkey is going after these people.
and taking them hostage and using them for political leverage. mark: benjamin, put today's market moves in perspective relative to the lira. put the market moves in context related to other periods a political uncertainty. benjamin: sure. this was a serious blow for markets. nobody expected the u.s. and turkey to be openly hostile in this manner. overnight, the lira fell 6.6%. that was the biggest drop since the coup attempt last year. this is a major, major reaction for market here. mark: benjamin, thanks for joining us. bloomberg's turkey chief. vonnie: let's check in on the first word news with taylor riggs. taylor: the nobel prize for
economics award to richard taylor. he was awarded for his understanding of how humans make decisions. as a result, the committee says they said that richard made economics more human. that thes discovered russians placed ads. they placed -- they figured out that as were placed on google search and gmail. spain is warning that they will take action of catalonia declares independence. the president said spain will not be divided and authorities will do anything to do to prevent it. fable address the regional -- the president will address this tomorrow. would want to
reassert her authority. senior conservative officials will have to deal with four chanson. he has anchored colleagues. global news 24 hours a day by journalists and analysts. mark: thank you. coming up, a special talkingtion regulations, risks, and much, much more. don't miss it. this is bloomberg. ♪
this is "bloomberg markets." time for futures in focus. oiltical risk countering trading, $50 a barrel. joining us is a chief strategist. talk me through what is happening to gold above the 200 day moving average. clearly, geopolitics is center stage. you wonder how long that will remain? >> nice to be with you today, mark. investors sawterm value in gold and we tapped that 200 day moving average. but with the geopolitical environment, with the situation with catalonia, iran, and north korea, given that any one of those situations that they
materialize into something bigger can spell a lot of trouble for global markets. 94 for there saying dollar index is key. do you think we will go through it? >> that is dependent upon tax reform. admittedly, i don't have a lot of confidence in the political situation in the u.s. right now. a robusttful that version of tax reform will get through. i don't think 94 is a perimeter we'll hang on to for long. chieftim evans, strategist. still ahead on "bloomberg , andreas dombret ways in. don't miss it, this is bloomberg.
i'm mark barton in london. vonnie: and in new york, i'm vonnie quinn. --ven finance minister german finance minister who step down is warning of another global crisis. he said economists a look at the world are concerned about the increasing risks rising from the accumulation of more and more liquidity, and the growth of public and private debt. i am concerned about this, too. joining us on the potential for financial instability and also are sorry happy to have andreas dombret. he is with me in new york. we'll get to the finance minister's concerns in a minute, but let me ask you the overhaul on global banking rules. how close are we? andreas: it is very hard to say because we have been negotiating
for such a long time. there are still differences, but it is, i think on everybody's mind that we need an agreement. it would be good to have an agreement this year. must, but it will be great to have. it will open up the box of pandora. ofare working on year and vascular working on the year end of 2016 numbers. vonnie: the whole world is changed and headquarters are changing, so it got a hold more complicated if you ask me. t of about the appointment supervisor of overseer. does it make your job any easier? andreas: not from our point of view because we know that the
united states will always be able to conclude at this time. very smartnsidered and knowledgeable, but it is not depending on it. everybody can move, if you find the right formula. way some of the major economies are going the way they are, is it more difficult to have an agreement on a global set of capital requirements, or anything to do with one industry globally? andreas: we benefit from the fact we of globalization, but everybody is benefiting the same way, but the overall benefit is there. and we should really strive to away with- to put regulatory arbitrage so global standards make sense. to have thissted
global standard. mark: if we could cut to back to the comments. he is worried about a financial crisis. from theng comments ecb governing class member. leaving them vulnerable to a major correction. do you share those two adult gentlemen's concerns? andreas: actually, i do because you have to ask the question whether the risks are adequately reflected in the bank's actions? continuation of this of interest rate environment, if we have these , you need to ask yourself, would you do with all seeing structures we are again? the real question is not will be
have bubbles are not? it is difficult to see the bubbles coming. to ask ourselves, our banks under pricing it? are they not seen the issues with the risk management? that is the job of supervisors like myself to make sure that bank understand the risks and prepare for that. mark: and do they? what are you saying to banks? what is the response you are getting when it comes to them understanding the risks right now? andreas: there is no uniform answer. there are different banks with different actions. nevertheless, we make it very, very clear to the banks that we don't want additional searches for yields. we want the banks to stay stable. that is why we are benefiting from the fact that we now have higher capital ratios, more liquidity, and regulation is helping. stronger banks also do more
business with a real economy. stronger banks also lend more, especially to europe, where they lending market is very light. having stronger banks is not a drop killer, but rather creating jobs and making banks safer. i think most banks understand that, and the ones that don't, we talked to very, very clearly. mark: can we talk about brexit? you said last week that a hard brexit is becoming a likely scenario. target comes to the next , banks are going to leave or go to paris, frankfurt seems to be in the driver's seat right now. are the banks progressing when it comes to taking on a broader, regulatory role? andreas: thank you for that question. i really don't know if we are going to have a hard brexit or not. banks are is that
going to have to prepare for them. the outcome is what you will have to see. is -- if that is the assumption you are working from, a hard brexit, it is not only the banks that have to prepare, but the supervisors. by the way, the banks who transfer part of their business to the continent will not only go to frankfurt. they will also go to dublin and other places. but i would think dublin and frankfurt are probably the two biggest cities that will get the business. this is quite a challenge because we never had supervised broker-dealers. broker-dealers are coming away way, so we have to make our preparations for the right level of inspections. this requires us to work very, very closely with our friends at the bank of england because we are going to take on some of those risk models. and we trust very much the
judgment of the bank of england. but the better and closer we work, the easier this transition will be at the end of the day. vonnie: i want to show you the german two-year yield minus seven basis points. look at that line going straight down. how much longer do we see interest rates that negative? remember, the u.s. two-year yield is at 150 right now. i normally look at the 10 year, not at the two-year. nevertheless, what i would like you to think about is what is, how is the economy going in the eurozone? there, you will have pretty good results and strong results. that means, i
news with taylor riggs. taylor: it is open were for between president trump and a senior senator of his own party, senator -- tennessee senator bob corker. he says that president trump is leading the u.s. on a path to world war iii. house called the white and adult day care center. and president trump is making tough demands on immigration letting the so-called dreamers stay in the country. the president wants congress to provide funding for his border wall with mexico. top democrats rejected the demands. dream is our young people brought in illegally to the uss children. and a diplomatic dispute between the u.s. and turkey has escalated. --h sides have now respected have now suspended visas. erdogan's after arrested a turkish national
working in a u.s. conflict in alleged involvement in the 20 16th coup -- in the 2016 coup. in germany, chancellor angela merkel has cleared an obstacle on forming her next government. to seek annual limits on migration. in the past, she has resisted demands for migration caps. the anti-immigration party alternative for germany went on a 13% of the vote in last month's election. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. vonnie? vonnie: let's talk bank earnings. earnings season kicks off with jpmorgan's, city, and wells fargo reporting third-quarter results. analysts have been revising their forecast upwards with growth and inflation. let's bring in jeff hart,
principal of research. he is joining us from chicago. jeff, how will earnings season compared to this time last year? optimisticcautiously . my concern would be that stocks have had a really nice run until but when ieason, look at expectations and consensus, i think the bar has been set appropriately. there are not too optimistic of expectations. as you move into fourth quarter and first quarter, anything with capital market leverage tends to outperform. i think we are looking good coming into this quarter. i am not expecting big misses. as long as the macros continue to operate, i think we can make it take year end. trading,hat about vix
equity, and other trading revenue? jeff: we know vix will be tough year-over-year because three q last year had brexit benefits. fischer has been quiet. -- this year has been quiet. we are looking for -- we are looking at 20% year-over-year. equities have been hanging in there. when it comes to capital markets, underwriting has been slow. the lack of clarity on tax reform has hurt that some. but equity underwriting, especially m&a revenue should be pretty good. on capital markets, we are looking at down year-over-year, but that is priced into people's thinking. will things pick up in the fourth quarter? mark: what do you think, jeff? are things picking up in the fourth quarter. too early to tell? andreas: it is too early to tell -- jeff: it is too early to tell. we haven't seen a dialback and
companies willing to transact in the capital markets. from get toward year end, an investor's standpoint, you have to put the money to work. we could see a rush into trading activity in the fourth quarter as the year end approaches. from a longer-term perspective coming into the first quarter, most of the underlying drivers are pretty positive. we may get a positive tone for management teams, but too soon to tell, but we feel pretty good about it. mark: what about the traditional banking environment? what picture will be see in this reporting season? jeff: that will be interesting. growth has slowed down. the data shows it has stabilized or it as that -- it has stabilized where it has at. credit, we are still not seeing any problems. could he get much better? probably not. we will be watching for commentary on things like
commercial real estate, auto, and agricultural loans. the yield curve flattened quite a bit. but it steepened up quickly. looking at interest margins going forward. we will see what the fed does or not. kindutlook for banks has of stabilized and has gotten better over the last few weeks. we have seen loan growth stabilize. vonnie: when it comes to things like the vix and the moving index, they have been quite depressed, jeff. the will obviously impact vix businesses. but it affects expectations and the willingness to take out loans right now. how has that impacted the quarter? growthe have seen loan really slow down this year.
it has gone from 9% annual growth to 3%. a lot of it has to do with the uncertainty around tax policy. sony some of the capital markets. a lack of volatility in things that commodities and interest rates suggest the corporations don't have a real, clear picture of how things will look like. maybe less of the demand to borrow. i would expect those things to work themselves out as we go forward. the lack of relativity -- volatility doesn't usually persist. that is the $64,000 question as we go forward. i think it will stimulate additional loan demands as well as our connectivity levels. vonnie: does it become a more interesting business for investors in 2018 if we get some legislative, any legislative passed in washington? jeff: to some extent. the bar has been set him
people's mind that this is the new normal. slower growth and that is the way it is going to be. we go from a 2% growth rate to 3% growth rate, that should drive loan growth. that should steepen the yield curve and help the fed do with they need to do. from a spectacle -- from a cyclical standpoint, there is an upside. are we ever going to see that growth again? i'm hoping we do. but that is why i am cautiously optimistic. you can make that same case for a number of past years. it could turn around, but the question is will it? jeff: from a universal bank perspective, we're more bullish than that then banks in general. you capital markets exposure, those revenues will pick up. scale manages -- scale means
more. the problem with the trust banks is on a fundamental basis. their servicing fees continue to climb seeing that they are having pricing pressure there. see stabilization, the trust banks will be lacking. vonnie: we just spoke with andreas dombret. gettingappear we are there. our u.s. banks ready? jeff: i think so. u.s. banks are ready. comes,change like that you tend to find out who is an to isn't. thing is a change site that has been widely telegraphed. thanks of had time to prepare for it. the things that are more surprising are surprises that they don't have time to prepare.
mark: and live from london, i'm mark barton. this is "bloomberg markets." time for the bloomberg business flash, look at some of the most, some of the biggest stories in the news right now. general electric is adding a triageember from nelson fund management. they had been pushing for a new ceo to cut billions in cost. weinstein's company, harvey weinstein has taken a leave of absence over an allegation of sexual harassment stretching back decades. the new york times reported they reached settlements with some of the claims. air berlin will end flights this year. they declared bankruptcy in august after its largest shareholder decided to end its
financing. air berlin has been losing money for years. that is your latest bloomberg business flash. vonnie: it is time now for the stock of the hour. of the gaming stocks, it cost the entire sector. joining us to explain the whole thing is taylor riggs. taylor: active vision saw the price cut to $67 a share. say they are pressing in from 12% to 13% year-over-year growth. that is more than the industry has seen over the last decade. these unrealistic expectations of growth coming into play on the whole sector. he also mentioned that 2017 is crowded in terms of what types of games are being released, saying the sector is tightly correlated.
if you have one or two ago names that missed on expectations -- if you have one or two names and missed on expectations, the sentiment could be deflated. board showing on how the stocks are getting pulled down as a whole sector was cut. ea was already outperformed. activision blizzard is now down. they have done very well year to date, but today, a little lower. out.e: we will have an eye 61 .65.ading at that is our stock of the hour. mark: let's get to gaming of a different kind. after a multi-year restructuring
season, the name coming from the old julius. it is the real estate investment fund. bloomberg's eric schatzker discussed the future of the gaming industry with caesar's chief executive, mark frissora. this was taped the for the las vegas mass shooting. >> when you think about the gaming industry, it is fairly incestuous. there are not of a lot of -- there are not a lot of players that come from outside. for me, there are a lot of the same things going on. if a gaming company -- you have gaming companies that supply the suppliers and supply the casinos. their interest playing -- they are interestingly very, very doing the same things over and over again. that has changed since i have been here.
i have seen more innovation and we are starting to get new games on the floor that are better, if you will. i also noticed that this industry has very high margins. higher than what i have experienced. we are 27% even to margin right now. when i was in other industries, those margins are double to triple. because of that, supply chain isn't that advanced. looking under every rock for a penny isn't something that has been done an awful lot. they have been used to having organic growth and very high margins in the business model. >> if you are very successful looking for pennies under rocks, your 27% margin could be what? mark: we just improved it 800 basis points. but nobody is going to thank you for what you did yesterday. mark: we spend an awful lot of money on marketing. $1.9 billion a year on a $8.5 billion in your company. that marketing is all about
giving customers a lot of money to come in and game with us. we are trying to get more efficient about it. erik: worship that number be? -- where should that number be? mark: not sure, but it has a lot of room to be more efficient. and spend more money instead of giving money away, but giving a better customer experience. most of the money that is spent is giving incentives that are really cash incentives, or coupons, free steak dinners, free rooms, anything you can imagine to give away free, we do it. the idea is to change that. instead of spending all of this money on just giving product away, or getting services away, actually coming up with a new customer experience that makes a more pleasant for the customer, come andess friction engage the customer more where they gamble. erik: you have improved your margins by 800 basis points.
can you envision another 800 basis points, or is 35% just a dream world? mark: i will not get into trying to forecast for it is going. we don't want to get ahead of ourselves. we feel there is significant runway to improve margins. but again, it will be in supply chain, providing a better customer experience. we really try to work both revenues as well. we do, but wegs only do that if we can improve customer satisfaction and employee satisfaction at the same time. mark: mark frissora, chief executive of caesar's entertainment. vonnie: still ahead, president donald trump has transformed the hotel overlooking one of the world's most legendary golf courses into an opulent palaces. ♪
♪ vonnie: live from london and new york, i'm vonnie quinn. mark: and i'm mark barton. this is "bloomberg markets." is donald trump's biggest investment outside of the white house turning into a money pit? serious losses forcing him to put in more cash. let's bring in the biggest biggest correspondent went to scotland for the story. crystal chandeliers?
goldplated taps? >> he sunk and a lot of money to renovate the hotels, that is why we have a crystal chandeliers. he has done a very good job, it is a very luxurious place. it is very trump. a lot of gold. a lot of bling. may he be losing from the two golf courses? loaned thosehe has two companies, the two resorts 152 million pounds, so almost $200 million. it stretches back to 2012 when he opened his golf course north of aberdeen. sunk intoney he has both to renovate the course in the hotel. vonnie: so, he has only to a talent scotland, but if you take
scotland, ireland, and england, he has 15 golf courses and results. that attracting the british open or so forth pay for the others that are losing money? >> this is a real interesting question. given the amount of money he has put into these two courses, it is unclear how he is funding goes. i put those questions to eric trump and the trump organization, and they did not respond. it is a very sizable amount of money to put into those two courses. turnberry alone, he has lent 200 pounds to date. obviously, the trump organization has cash flow outside of the u.s. he mostly does licensing agreements, where he sells his name to developers in exchange for a fee. likenow, he made something $45 million off of those licensing agreements in 2016.
clearly, he has sizable other business interests like trump tower. but it is a bit of a balancing exercise, and it is unclear how he will make money in turnberry given that it is in a fairly remote location. vonnie: right. and memberships cannot be that expensive, or he will not have many members. there are a limited number of people who can afford that. you spoke to one. it doesn't matter to president trump because it is an exercise in self aggrandizement. if you speak to golf lovers, they really love what he has done to the course. you have to give trump credit for that. he does now how to make changes to courses that satisfy some of the top players.
but the broader question really is, how is he going to make money off of this? for turnberry, he bought it because it is a british open championship course. it last posted to open in 2009. it really ought to be on the road by 2020, but it won't be considered until 2023. that has been pushed back again and again for a number of different reasons, but undoubtedly, hosting a major tournament like that post -- at a course hosted by the president encourages the risk of protest. mark: are banks steering clear of golf? >> they have largely steered clear of loans to golf courses and resorts because it is a shaky business. in the aftermath of the financial crisis, they pulled back. there are conflicting reports about golf being and declining
game. are many people playing? is the younger generation coming through? thanks -- banks aren't big lenders to golf courses. mark: where is the money coming from? >> he out of his cash flow or other investors. mark: great piece, stephanie. this is stephanie baker. "european close" is next. 34 minutes before the end of the monday session. the ftse is lower. i will review with the currency board today. the currency of the day is the lira. i will explain at the top of the next hour. "the closing quote is next. ♪
"bloomberg markets." ♪ mark: here are the top stories we are covering from the bloomberg and around the world. u.k. prime minister theresa may will speak in parliament this hour after her disasters speech in manchester last week. regain the trust of her party with crucial brexit negotiations ongoing? ferrari has been off to the races as a public company. could electric cars cause a speed bump for the italian luxury brand? in the entertainment industry, harvey weinstein has been fired from his independent movie powerhouse after allegations of sexual harassment. how his departure shake up the hollywood landscape?