tv Bloomberg Markets Americas Bloomberg October 11, 2017 10:00am-11:00am EDT
vonnie: here are the top stories we are following. markets are higher ahead of the fed minutes. we will speak with michael holland of holland & co about the future of the federal reserve board leadership. withdent trump set to meet canada's justin trudeau, then has to pennsylvania to pitch tax reform. there are new indications that more republican senators could be potential roadblocks. -- ukip prime minister prime minister theresa may raising more questions about brexit negotiations. we will speak to the prime minister of wales. we will get a check now of the european markets.
-- 90 minutestes ahead from the close. mark: stocks a bit lower today, little changed, down by .1%. they were higher by .1% a little earlier. the president stepping back from this immediate declaration of independence. let's get more spain centric, this is last monday, one day after the referendum through to today. losses at 4%, now down just 1% for the duration. the ibex marginally lower for the period, investors responding to what's been going on in the last 24 hours, as they are with euro, which is up today for the fourth day. catalonia's president stepping
back from that immediate declaration of independence from spain. the spanish prime minister stepping up pressure on catalonia's government to back away from independence talks. that could lead to the assertion of direct control from madrid. analysts forecast the euro will end the year at 1.18. the most bullish at 1.26. pnc financial has a 1.07 forecast. those are the two ends of the spectrum. yields in the 10 year the aftermath of the referendum. today the spread narrowing as much as six basis points. lower since september 29. a week ago, it had widened as much as 19 basis points. the difference over the eight
day trading period has narrowed to just five basis points as they talk about the future of his region in spain. 30 minutes into the trading day in the u.s. julie: we are seeing very little change here in the united states. we have the dow slightly higher, only three points. barely a whisper higher here. the nasdaq and s&p under pressure. banks are the big drag on the s&p 500. rates backing off a little bit in today's session. consumer stable stocks continue to show strength. yesterday, the leader was walmart. today, the leader is kroger. the company might sell its convenience store business, a $1.4 billion operation across 18 states under names like turkey hill commitment market, quick turkey hill, minute
market, quick shop. there's increasing competition from amazon. consumer staples rising for the second day after yesterday having the biggest collective gain since february. also watching interesting analyst calls this morning. johnson & johnson being upgraded over at jefferies to buy. theysts they are saying pharma division is "under modeled by the street." that's where revenue growth will come from. don't bet on the company getting broken up into pieces, bet on growth. mcdonald's being mentioned positively at cleveland research. the company is firing on all cylinders. analysts are more positive on the company's strategy come execution and comparable sales outlook. at cowin. upgraded a quick look at the u.s. dollar on the bloomberg. we see a pullback in the
greenback. strategists looking at the technicals and wondering whether the rally we've been seeing or the rebound we been seeing in the dollar has more to go. looking at the dollar daily change with the bars. vonnie: thank you for that. minutes from the fomc september meeting released at 2:00 p.m. new york time. investors will be looking for some clarity on december's rate increase and the balance sheet unwind and the ongoing inflation debate. top investors and economists have been placing their bets on who will be the next fed chair. said kevin warsh has been "wrong about everything." explained why he could still get the job. >> politically correct from the republican point of view, has
some family connections with trump. might still be appointed. vonnie: joining us now is chairman andnd, ceo of holland & co. kevin warsh has a chance of getting it and pull krugman is coming from a particular place when he says he's wrong about everything. what would he be like as a fed chair? michael: i think he will be just fine. from whence he speaks because he's been wrong about lots of things, himself. worth has been worried about inflation and overspending on securities. overall, he was the honest fed governor ever appointed -- the youngest fed governor ever appointed. the market will take it all right, bonds will trade off
because the bond market believes he's going to accelerate the unwinding of the portfolio. powell was that, mr. the author winner last night, is one who will probably get a thumbs up from the markets. mr. taylor is the only one -- he's the third name in the mix and he hasn't been mentioned recently. markets might have a bit of a problem with him. vonnie: he would almost certainly raise immediately. what will we hear about the balance sheet unwind today? the fence on is this. michael: we will hear "gradual" used on this set many times. ismatter who gets in there, not in anyone's interest for them to be aggressive and stupid in terms of disturbing the markets. o somecan we move on ty
in original companies? stock. own. ofy announced the departure a trio of executives. are you happy with your shareholding or not? michael: i couldn't be more delighted. thank you so much for that. it's been a painful ride. i believe mr. flannery is probably a good ceo. i believe the board, if you look at the people on the board, it is a strong board. having said that, it's been one of my worst performers in years. walmart and johnson & johnson helped offset part of the decline. what people will be looking at in his november speech to the community is to what extent is he going to safeguard the
dividend? cut ton said it will be a $20 stock. having looked at the power distance, they think the cash flow for that is being hurt . that's been a subject of discussion for couple of years now. overall, people will be looking at some of the parts. mark: what is the right business mi jpmorganx? x? business mi michael: i don't think you have to talk about breakup or anything. which businesses will flanery in november say he's going to -- when they start taking things apart, my guess it's more than where we are today. vonnie: which ones get scrubbed?
do you hold on to it either way? michael: i give the management time. i did that with ibm years ago and then decided they weren't getting it done. i jettisoned that stock after a ibmiod --ful per with painful period with ibm. vonnie: jpmorgan among the big banks -- what to anticipate this quarter for the big banks? michael: disappointing trading revenue for all of them. jamie dimon himself said to expect that. how deep is the cut? there's a 20% decline. the offset to that, will the banking business makeup to the plus side -- seven consecutive
quarters of outdistancing the estimates, outperforming estimates, which have all been cut back, of course. we will see if they can do that today. i'm not looking for a big surprise to the upside today at all. vonnie: what about the other banks? any strange surprises there? --hael: i think this trading a year ago, we had brexit and the u.s. political scene with the new election. we had all kinds of volatility in the markets, so people made a lot of money a year ago. this year, the banks have been at nine solid enough things going on -- and nothing is going on. to the extent that you are relying on trading revenues, you are going to be hurt. mark: i will give you an underarm. what excites you? withholding excites you the most
right now? -- which holding excite you the most right now? michael: i only mentioned walmart. johnson & johnson. over the next couple of years, the surprise for me may well be my holding of microsoft. a company that for years disappointed of it. they have a possibility with this cloud stuff they are doing. it surprising everybody, including me. vonnie: those treasuries might start giving you more value. michael holland, chairman of holland & co, thank you. coming up tomorrow come in interview with christine lagarde . let's check on the first word news. emma: the wildfires in northern california are likely to have a long-term impact on the state's
wine industry. four napa valley vineyards have been destroyed. things may be worsening bring sonoma county -- 2000 homes them of other buildings have been destroyed. president trump plans to make the case tonight for corporate tax breaks benefiting middle-class wage earners. the president is inspected to say the typical american household would get a $4000 pay plan.through his tax his own advisors and say on an annual basis, the average benefit is close to $500. the spanish prime minister is ramping up the pressure on catalonia to end its campaign for independence. taking the first up in a process that could strip the catalan government of its powers. the cabinet will formally asked the catalan authorities of they've actually declared independence.
a shocking result for the u.s. men's soccer team. u.s. will miss out on the world cup for the first time since 1986. u.s. soccer partners are sponsoring a team that won't be playing. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. minister spanish prime speaking to parliament about catalonia. we will bring you the headlines as they come in. this is bloomberg. ♪
vonnie: live from new york and london, i'm vonnie quinn. mark: and i'm mark barton. this is "bloomberg markets." oil modestly higher today, $51 a barrel. opec reiterating a market rebalancing is underway. , the vice president at blue line. is this bullish? >> i think we are just coming into a bit of an equilibrium. we know the main goal of opec has been a stabilize -- to stabilize this market. we are almost three years to the dates and we broke down that $100 level. they taken big steps as far as
balancing the supply and demand sides. only control one of those, that being supply. cutshave abided by those for the most part, they are 98% compliant. that's a lot better than a lot of market participants were expecting. 2018, demand was increased today. this puts the demand for 2018 right above 33 million and supply just below 33 million. we are hovering right around that mark of equilibrium. it will be interesting to see what we have going forward. today should provide a bit of volatility. we have api later this afternoon, eia and iea tomorrow and the baker hughes rig count on friday. mark: we get the fed minutes a little later. how stalled a position ahead of those minutes? >> using a bit of a short
covering rally. we have seen some bargain buyers step into the market. we are not expecting anything really significant on the fundamentals side of the fed minutes later this afternoon. no doubt, there will probably be some short-term volatility into the market. we continue to find value in gold above 1300. a big, round number. and represents the 50 day moving average. -- you ande trim courage trim followers to get on board. trimurage followers to get on board. kroger rising of this morning. they will sell the convenience store business come a $4 billion
operation with stores in 18 states. amazon is making inroads into the grocery business. uber faces five criminal investigations from the justice department. authorities are asking questions whether the ride hailing startup violated price transparency laws. they are also looking into whether uber had a role in the theft of documents containing amazon ridesharing technology. forinding the company antitrust violations. regulators say qualcomm has monopoly status over key mobile phone centers. that's the latest bloomberg business flash. mark: still ahead, the meeting that changed masayoshi son's life.
mark: this is "bloomberg markets ." vonnie: as a teenager, masayoshi son talked his way into meeting one of japan's most famous entrepreneurs at the time, the founder of mcdonald's japan. son discussed his life-changing meeting. masayoshi: at one point, it is said you were interested in meeting the head of mcdonald's. my room interested in meeting the head of mcdonald's? did you like mcdonald's food? what was it? masayoshi: he wrote the book and that book became the bestseller. i was so impressed and said, oh, my god, this is great.
the guy who wrote about it must be great. >>? how old were you? masayoshi: 16. , aalled his assistant long-distance call. back then, it was so expensive. i made almost a hundred calls. i said this is my name, i'm a student, could you ask him to spare me some time? she said i will try, but he's not going to meet with a student. i said don't decide by yourself, let him decide. assistantth the summoning times. that's so many times. i said this is a waste of might telephone bill. i flew into tokyo and i said i
can because the phone calls are becoming more expensive than air tickets. >> what happened? masayoshi: i said tell him exactly the way i said. you don't have to look at me, you don't have to talk to me, you can keep on working, whatever you are doing, i just want to see his face. [laughter] masayoshi: for three minutes. so, i'm not bothering him. i'm just so impressed and respect him, i want to see him. if you tell him that i'm not going to bother him, i'm not going to damage his life -- he said ok. i said if he spends 15 minutes with me -- >> he give you some advice. which was to learn -- masayoshi: i asked him, which business should i do?
he said computer. at this age -- don't look at the past industry, look at the future industry. that's the one, the computer industry. i said, wow, great. vonnie: you can watch more of that interview with masayoshi shown the david rubenstein tonight. still ahead, the keys to tax reform. the senators that may exert the most influence, next. this is bloomberg. ♪ retail.
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let's check in on the first word news. emma: firefighters haven't been able to contain any of the hitting northern california's wine country. the fires have killed 17 people and have destroyed 2000 homes, businesses and other structures. group does not toend to become a piggy bank solve illinois fiscal problems. rooted inge is less chicago because it barely relies on face-to-face training -- iran's president says if president trump presses ahead with threats to scuttle the nuclear deal, it will be a failure for america, not iran. he said it would be clear "which is the rebellious government and that is the side
violates international rules." global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. minister spanish prime , mariano rajoy, speaking to parliament about catalonia right now. he says the catalan government -- nobodyosition should be happy with violence. you can continue to watch this on live . no one should be happy with the violence at the catalan vote. rajoy speaking to parliament in madrid. vonnie: in washington, senator bob corker is one obstacle
president trump is facing in uniting senators around the biggest tax cut ever. joining us from capitol hill, sahil kapur. just as i was in throwing -- paul ryan said corker and president trump should sit down to work these issues out. grounds and on what will there be problems from senate gop members with this tax plan? sahil: you have the feud between sender corker and president trump over a completely unrelated matter. corker has been critical of the president's handling of foreign policy. over the weekend, he called the n adultouse an day care center.
have figures like rand paul and senator ted cruz of texas who want deeper, larger tax cuts and don't mind the near-term deficit. they believe, ultimately, it will be made up in the long run. he's also got moderate and independent minded senators who are never easy to win over. they played a major role in torpedoing the obamacare repeal effort in the senate. vonnie: can we rule out any democratic support at all? is that pretty much a nonstarter? sahil: it's hard to rule anything out. it's looking very unlikely at this point. 48 sent democrats signed a letter saying do three things for us before we can support this bill and they did none of those things. is looking unlikely. from west virginia
says he doesn't want any new deficits on the tax bill. trump says he would adjust his tax plan over the next few weeks. exactly how? what needs to be adjusted? sahil: your guess is as good as mine. he didn't indicate whether there would be an adjusted framework to come out. republicans i've spoken to on capitol hill say they don't respect to release an updated framework. makinge constantly adjustments and constantly working towards the best bill they can. be on that, it is unclear what he meant. vonnie: don't miss an interview with the chief tax writer, kevin brady.
that's at 1:00 p.m. new york time, 6:00 p.m. london time. the fourth round of talks to update the north american free trade agreement begins today. even as president trump threatens to walk out. sarah mcgregor.mariano rajo what then idea of conditions that trump is going to present today. some of those conditions make it seem like he's going to torpedo this whole agreement, including renewal -- it looks like increasingly the u.s. is proposing ideas that are just really far out there, really off-limits for mexico and canada. one might say these are negotiations, but these are
things people would not agree to , it's like asking for a unicorn. we are hearing bubbling from the business community -- we heard from the ceo of the u.s. chamber of commerce is facing these are poison pill agreements. there's a lot of worry right now about what the future of the agreement is. yesterday, we saw an interview that trump did in forbes saying he's willing to walk away from this agreement. mark: because he wants the deal to collapse. does trump want the deal to fall apart? sarah: as hard as it is to imagine that the u.s. government would want this deal to fall apart given that business interests from the auto industry to agriculture have said please save this, that's the rhetoric we are hearing right now. the trump administration all throughout trump's campaign saying we want to fix these trade deficits, our
manufacturing decline is to doesn't even if trump say he wants to pull out, there's a lot of escape hatches to not make that happen. we are waiting to see what will happen, how these talks are going to go. the fourth round is starting today. is are moving forward. we don't expect anything in the immediate future. the tops of this round were extended until tuesday. the ministers will meet on tuesday. we expect press conferences. we will learn more then. vonnie: there's this idea that there would be a five-year desk each party would have to agree to the whole thing again every five years. it would discourage investors investing abroad. sarah: there's a lot of
proposals in here that canada and mexico are uncomfortable with. the dispute settlement mechanisms, their companies would be unfairly treated. a mechanism now allows a third country to hear disputes between partners. an interesting one you also mentioned is the sunset clause. this has been put on the table publicly that wilbur ross has said they want a clause so that every five years, the deal expires unless they agree to a new deal. it's raised the idea that this will create such an unusual amount of uncertainty they would be unable to plan five years out. charles evansp, and says it is too early to call for a december rate hike. more from our exclusive
mark: live from london, i'm mark barton. vonnie: i'm vonnie quinn. this is "bloomberg markets." one of the worst performers for the stoxx 600 today is providence financial. about why to talk shares are down sharply, abigail doolittle. >> not only are shares down today, but on the year, they are down 70%, on pace for the worst year since 1981. june.tory goes back to
plunge back in june when the company basically profits would drop by half. back in august, there was a report in the sunday times in london sing the shorts were circling. this massive decline behind today's drop -- barclays downgrading shares to underweight. .nalysts slashing targets they have not updated guidance, plus she doesn't like the fact that the company has lots of outstanding. it seems there could be trouble ahead for some of the debts due in 2019. mark: why is this analyst worried about the company's debt? abigail: when you look at the balance sheet, they don't have a ton of cash, 215 pounds in cash at the halfway mark of this year.
we see right here that the debt due in 2019 roughly $250 million. this is more do than what they actually have on hand, profits are dropping like crazy, plus , if the priorhere obligations are not paid off, those become do as well. they may not have access to the capital markets. here in the u.s. today, we had one main financial put itself up for sale this week. who knows? will provident financial go that way? time will tell. vonnie: abigail doolittle, thank you. one federal reserve official says it's too early to decide underweight -- on a rate hike in december/ charles evans explains why he's disappointed in the inflation data.
>> it's too early to say. i do think the inflation data have been disappointing. i understand, i read the arguments, i've heard them that it's likely due to transitory factors. there have been a number of those in the u.s. low inflation is a global environment. the whole world is dealing with transitory effects. i'm sure some of that is true. i'm really nervous that inflation expectations are low. they've been low for quite some time. our fomc statement going back to october 2014, we've been regularly calling market measures moving down. they continue to be low. survey measures are also weaker than sometimes we talk about. >> expectations are incredibly important.
that a benchmark i look at every day. push thosee fed expectations? what more could or should you do to push the expectations up? question, a big think really. this comes down to how are we talking about meeting our policy objectives. i think we need to be making our decisions on outcome based monetary policy. we need to be clear in telling everybody we are supposed to be sporting full employment and price stability. the unemployment rate is quite low at 4.2%. wage growth could be stronger. if stronger wage growth would reinforce that idea better -- getting inflation to 2% is incredible important. we are willing to go above 2% if
that actually happens. we have a symmetric inflation objective. we should be willing to push inflation above 2%. we should be spending some time above 2%. >> can i just push a little bit harder on that? what is running hot chicago style? is a 2.5%, 3%? is it the ability to let it run, let it breathe? >> we shouldn't fear 2.5% inflation. 2.5% is not inconsistent with asymmetric 2% inflation objective. we should be spending time above 2% just like we've been spending time below that. vonnie: that was charles evans, the chicago federal reserve president. ahead, the first minutes -- why the whales
vonnie: live from new york and london, i'm vonnie quinn. mark: and i'm mark barton. "bloomberg markets this is "bloomberg markets." prime minister theresa may refusing to say she would vote to leave the eu and another referendum. she later clarified her comments this morning against jeremy corbyn. >> we are not looking at a no deal scenario. toare actively working ensure we set out and get a good britaine right deal for for a brighter future for this country. mark: she continued to insist there's no chance for another vote.
carwyn howell jones is here, wales' first minister. any chance for another referendum? pm jones: no. it is immaterial now. the referendum has taken place. any deal the u.k. comes up what should be ratified in all the parliament of u.k., not just one. mark: is it wrong to say if there was another referendum i would vote to remain? pm jones: i would say no. we are past that stage. mark: what is the communication channel like right now between you and downing street? pm jones: downing street barely existed, to be honest. our communication tends to be with other departments. we would like to have a stronger link with downing street. with.f it we don't agree
we don't see why we should leave the customs union. 60% of our exports from wales go to the single market. access to that market was more difficult. mark: you have a relationship green's joint council of ministers. pm jones: we emphasize the point that if the u.k. is going to work properly when we leave the eu, its own constitutional mechanism has to work well as well, we have the opportunity to get their, -- we have there opportunity to get there. mark: how close are we to some news on that? pm jones: we are not close to that yet. there are powers that would automatically come from brussels to wales. we agree those powers should be diverted to london for an indefinite period. we understand what they are
trying to do. it's certainly important for business. we get that. for us, that should be done by the consent and agreement of the governments. mark: a breakdown in talks between the u.k. and the eu and contingency plans are clearly in place, as we discovered a day or two ago. do you see talks breaking down between the two sides? pm jones: we will see a lot of this discussion over the next few months. it's massively important that we have a deal. no deal is a disaster. if u.k. cannot get a deal with its biggest market on its doorstep were there is a great deal of regulatory convergence -- it's massively important we access the single market on the same terms as we --now, even though
mark: what do you think is doable? -- ites: my preference is has more or less market access. that's a good position to be in until a final decision is taken as to what the uk's relationship should be with european union. it satisfies the result of the referendum last year but doesn't create economic chaos that would occur if we had no deal. mark: what sort of economic chaos for wales? pm jones: the steel industry would face tariffs. industry, and 40% tariff. we then have customs at our ports. have all matter of bureaucracy. if we leave the customs union, a
massive amount of red tape is imposed on businesses at a time when u.k. government says it wants to reduce red tape. mark: if there's a customs union, you can't strike deals with other countries, can you? pm jones: if we are looking at free-trade deals, we should be careful who we do free-trade deals with. if you get it wrong, you ship jobs out of your country. the agreements take many, many years to negotiate. six to seven years to come to an agreement for britain. it's important the u.k. look to the models to provide that level of certainty. the grass is always greener on the other side. if we do that, we have to get an agreement with the biggest market we share a land border with. mark: strong and stable was the
catch phrase of the election. many are calling the prime minister week and wobbly. can she survive? perspective,m our we see governments in london where different ministers offer --ferent views boris johnson wouldn't have survived if he was in my government. you know this goes against what we said before. you can't stay in the government. mark: how does he hold the remainders and brexiteers together? pm jones: she has to chart the realistic way forward. we know she went to the people of britain and said "i want a hard brexit. back me." they said no thanks. she could work with other parties or more closely with
other governments to deliver a brexit that works for britain, but we've seen no sign of that yet from her as per minister -- prime minister. the next election will happen before 2022. we know that. at the end of the day, we don't know -- it's possible. labor will be ready. mark: thank you for joining us. we are less than 34 minutes away from the european close. this is bloomberg. ♪ .
see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. ♪ mark: 11:00 in new york and 4:00 p.m. in london. 30 minutes day in the trading day in europe. i am mark barton. vonnie: i am vonnie quinn and
this is the european close on bloomberg markets. ♪ mark: they top stories we're covering from a bloomberg and around the world. the spanish government turns up the heat on catalonia a day after they punted on their independence push. we will last -- ask david owen whether there will be spillover effect into the euro zone economy. the u.s. average is flirting with record highs, how high my the s&p 500 climbed in 2018? we will speak with jonathan who just-- golub increases target. the u.s. loses to trinidad and tobago in the world cup qualifying. european equities