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tv   Bloomberg Markets Americas  Bloomberg  October 19, 2017 10:00am-11:00am EDT

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barton. welcome to bloomberg markets. vonnie: here are the top stories we are covering from the bloomberg and around the world. wake up, some overnight declines in asia's making global investors jittery. and apple dialing back its orders, also weighing on u.s. stock. some disappointing earnings. between spain and catalonia takes a turn after prime minister -- the spanish prime minister unleashes wide-ranging powers to suspend catalonia's autonomy. will this end the region's push for independence from spain? and a lesson from black monday 30 years later. our home depot cofounder joins exclusively to weigh in. the dow drops .
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thise about 30 into session. >> this is only the worst session in a little more than a month's time for the major averages here in the u.s.. recordid, we have seen after record recently. this is a little bit of a switch in sentiment, certainly, if nothing else. also, as we have been talking about with the anniversary of black monday, that is something a lot of traders are talking about and thinking about, and if you have not checked out our oral history on of that day, it is a fascinating read. we are amid earnings season as well, so it is about the fundamentals. this is a slower growth in earnings season, or is expected to be. the earnings-per-share estimates for the s&p 500 and the year-over-year growth that is estimated. we have come out of this earnings recession now, we have four quarters under about -- our belts of growth, and there is estimated to be growth this past quarter, but it is slower growth, as you can see, before
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and it acted increasing growth -- an expected increase in growth by analysts. one thing that will pressure earnings this quarter, the hurricanes and their effect on insurers, for example. we will see how the numbers come in and have the forecast look as well. one company in focus as morning -- this morning's apple, and the ripple effect as well. there was a report that apple cut its november and december orders of the iphone eight the plus by about 50% on weak sales. this is not the first kind of report. there has also been a lot of speculation about whether consumers are just waiting for the iphone x, and that is why. whatever the reason, apple is down two point 5%. that is a lot of pressure on the market, and many with suppliers here is logic, corriveau, and tylox semiconductors -- dialogue semiconductors all trading lower. one company coming out with
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earnings that miss the lowest company analysts for the third quarter. they cut birther percent share -- the ceo says he is intensely focused on the plans and initiative underway to cut cost and improve profitability. the whole sector is trading lower. as you can see money flowing out of stocks here in the u.s., where is it going? into bonds today, the 10 year yields down by five basis points. that in turn putting some pressure on financials. the dollar selling off of versus the japanese yen, and gold is catching a bid as well. mark, a bit of duck and cover this morning. mark: check out what is happening here. all 19 groups lower today. since august 20 nine. the lowest since september 28. it has been led by weaker forecast earnings, which i will come to in just a moment. utilities best performance, personal household goods. a big decline here in europe as
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well as well. these are percentage declines in's 1987. back then, 30 years ago, europe's benchmark fell by 8.5%, which was the most on record. here in london, the ftse that day fell 10.8%. the next day, 12.2%. that was a record. the dax plummeted nine point 4%. that puts history and perspective. stocksay, we saw these and europe's volatility index fall to a record low this year. slumping by 39%. has surgedity gauge by 32%. it is now near a record high relative to these stocks. this is the chart, signaling investors are paying up to hedge themselves against turbulence in the marketplace. let's finish up with what is happening in spain today. this is the spread between the spanish and german ten-year. we went out to 1.28% earlier, we are at 1.2 3%, roughly one basis point higher. the country said it will move
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forward with the process of suspending the patters of that powers of the cattle on government following the president's refusal to drop his claim to independence. investors will be watching closely. the next movements by madrid and the regional government in barcelona expect original announcement on tapering. the spread moved to 1.23%. it was the highest since april. it came down to 1.17%. we are at 1.23% today. vonnie: as you mentioned, 30 years ago investors learning how quickly markets can shift. are notdrop, and we anticipating another black monday anytime soon, but when do you ever? credit suisse's global head of risk advisory has been examining why investors are unmoved by global chaos. mark, it is fascinating. we are seeing it lower today and
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we will see how the day ends. but investors have been pretty complacent. is this a market that considers itself invincible? mark: from the positioning standpoint, obviously ashen managers and hedge funds needs to be -- need to be in the markets every day. the way they have been managing through this elevated valuations , peg spread, and still trying to garner returns for investors is a concentrated a lot in the equity markets in technology. i think if you look at some returns on the day, obviously every industry moves down in the past couple of days, but probably on the year, infotech and internet retail have returned on the order of 18% and 23%. so they are concentrating. they are cautious. when we look at the interest hiking,e think we have we think inflation is there, but hedge funds are still long bonds. that is a defensive measure. vonnie: are you saying basically
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--t technology is the new for example? will this be a signal for the next drop or even plunge? watching the positioning and price action in technology will be the new canary in the coal mine. it used to be emerging markets, high yield. i think infotech in some segments, software, will be what investors are watching. mark: mark, what would you like like to -- liken it to, with the dow scratch in the last minute search. people would like this -- compare this to 1995, 2013 with little bits of turbulence. what would you like in this tube we are looking back in black like 2005,k: it is 2006, where we had light
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spreads. but the regime was up at 5%, and here we are at 50 basis points to 1.25%. ammunition in the weaponry of the central banks to protect us today. like 2005, 2006, but also like august 15. that is the scenario we are speaking to clients about to run their books on. how are they positioned for that? admitgiven that you could a quarter of the gains in the back love it -- back leg of a bull market, what do you investors?or that fear of missing out? is that?is it -- fomo, i have never said that on-air. mark: you had some ceos say in front of congress, while the music is dancing, you have to keep moving. that is about the point of your, making it back to the last quarter. people are invested, but they are not as leveraged as they
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were. that is the caution. we have a rollback, and this is something you wrote about recently, people will reengage down 2%, 5%, 10%. thingss this idea that will march higher, it is just a matter of time. take the hit, because it is going higher. vonnie: what about the winds of cisco policy? we spoke to richard taylor last week. the newly minted nobel prize winner, he had this to say about u.s. tax reform and why that is maybe an argument or not an argument in the u.s.. richard: i don't know about you, but i am nervous. it seems like when investors are nervous, they are prone to being spooked. nothing seems to spook the market. as you said, it crawls up, slowly but surely. based on the expectation of some big tax cut, shortly investors should have
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lost confidence that that was going to happen, given what has happened so far out of congress. vonnie: do you get cold, mark, about the u.s. tax reform, and do you have a position on -- if ite might be does not happen? mark: it is the number one topic today. it was the fed balance sheet forever, but when you look at the happens the -- during u.s. election, a lot of volatility around there. but you saw what happened to banks. it was thinking we would have fiscal policy for the first time in eight years take hold, and when that happens, you have discretionary decisions. it is not one monolithic lift in assets. you have money put back in the hands of companies, individuals to make decisions, very constructive. that is what drove markets. it went away in the first part of this year. it is being resurrected. if that does fade, there will be concerned. i do want to tell our
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viewers, do read the bloomberg businessweek article that mark is in. a lot of crazy stock market punishers, and mark, you said in that context of a proposed crisis upheaval, does post crisis of people -- post crisis upheaval, --, but everything changed with brexit. why? mark: nobody was positioned for it. polls were fine, but nobody was positioned for brexit. it was not in the mindset or contemplated. to the fact that 3, 4 days later, the markets took off, we think in the investors mindset that whether central-bank policy or other drivers, if frexit to not take the market down, what will? we mentioned august 15 earlier, we got a lot of calls because a lot of perturb its in the market. it lasted for a while. ,e saw that in january 2016
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earlier in taper tantrum's. october 2014, in the rate spike. we have not seen it since. people are focused on their books, how to manage it, but not a lot of concern. we are meeting with people, because what they are doing, we think, instead of reacting, they are tooling up and getting more calibrated with quantitative strategies. even if their fundamentalists. they are doing a lot of work. but as we saw in the article highlighted, you have been paid to take the hit and keep going. vonnie: mark, come back soon, we want to check in with you pretty regularly this day. mark connors, global head of risk advisory at credit suisse. let's take it on the bloomberg first word news. caps on president refused to drop his claim to independence. he is demanding talks with the prime minister and his
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government. he has called a special session of his cabinet this saturday. his advisers are finalizing the measures he plans to take. in brussels, there will be a showdown over brexit. it is prime minister theresa may will use tonight's european the euinner to demand move brexit talks on to trade, but the eu officials see the breakthrough is next to impossible. they are deadlocked over financial settlements, citizens rights, and the irish border. claims fell by 22,000 to 222,000 last week. that is the lowest since march 1973. workers who were affected by hurricanes harvey and irma continue to return to their jobs. president trump sent out mixed signals on the bipartisan agreement to prop up obamacare, until they declare the ministry should as opposed.
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some congressional leaders are also against it. restore theld subsidies to health insurers and give states more flexibility. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. on nabila ahmed, this is bloomberg. onk: coming up next bloomberg markets, oil breaking its winning streak, even as the opec chief tells bloomberg a balanced oil market is now fully inside. teachers in focus is next. this is bloomberg.
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♪ london, i'm mark barton. vonnie: and i'm vonnie quinn. this is bloomberg markets. on the oil front today, opec syndicate strongest to go yet there will be an extension of
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production cuts until the end of 2018. the secretary-general told bloomberg exclusively that it is taking its cues from russia. lead in thes been a restoration of the stability in the market. together with saudi arabia, they have been powerfully part of what we have been able to achieve, and we look forward to them continuing to provide this leadership in 2018 and beyond. vonnie: for more on oil, we are joined from chicago by lawrence shopper of ssg alternatives. is this a good thing for the oil markets? lawrence: this is continuing the tug-of-war we are seeing between what opec says the headlines are in the production in the united states. we keep in mind that u.s. breakevens continue to fall, continuing to defy expectations. it is one reason we are seeing such an amorphous -- an enormous
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spread,. it has kind of created a floor, even though the oil market is off a bit today. vonnie: almost 2%. what are u.s. traders at the cme orused on is it opec signals more the inventories and short-term, high-frequency data we are getting? lawrence: i think it is a combination of both. we do know that yesterday, gasoline stocks rose. they rose above consensus. but on the other hand, people know that manage money has placed a lot of these contracts into an overbought situation. they have made a fantastic run the past three or four weeks. it is due for consolidation. i think if anything, traders are on the sidelines, waiting are watching for a better signal. vonnie: we have seen the dollar weakened over the past several weeks, it seems to be consolidating. where is the next direction? lawrence: it is amazing. the september rally really fizzled out.
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it is ironic, when you consider the growth numbers we have had, consider the fact of the news of a hawkish fed chair, and yet the dollar has unchanged from july, and so are rates. there is something going on. i continue to think the dollar is still too high. i do not think we will see a crash, per se, because the market estimates of long rates are much lower than what the fed is protecting. i think it will be a brief consolidation, looking for the dollar to go lower, especially against the euro. you, our have to ask traders down there a little bit more awake and alert today for signals about where this market might go? think traders here are doing the same thing investors are doing. they continue to go on the sidelines and get out of their portfolios, and i think that is actually adding tailwind to the stock market. it is kind of counterintuitive, but that is what is going on this morning. vonnie: thank you for the perspective. of ssg.larry shover
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prime minister theresa may demand that brexit talks move on to trade at a dinner. we are in brussels for this showdown. this is bloomberg. ♪
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♪ vonnie: this is bloomberg markets. i'm vonnie quinn in new york. barton ini am mark london. let's get to brussels, where you leaders have gathered for a two-day summit, amid stalled brexit talks. theresa mayinister said to demand the talks move on to trade, and the showdown with leaders over dinner today. she spoke with reporters on arrival at the summit. to set this out in a strong speech, and i look forward to discussing matt, and also the other key issues.
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the challenges we share with migration, security, counterterrorism. these are issues that are shared across europe, and the u.k. will continue to play a full role in cooperating with the eu. mark: nejra cehic joins us from russells. -- we know she wants to move on to trade, but will be eu listen? theresa may arrived here earlier, and she basically says she wants the eu to cooperate with the eu on a number of issues, and she is expected to address leaders at the dinner tonight and push for the talks to move to trade more quickly, ideally by the end of the year. the problem is what the eu see is -- says is while the u.k. said it would honor its commitments, when may spoken for recently, the eu wants that transmitted into a more clear and firm negotiating position. it needs more negotiation on the brexit bill.
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it said it is not getting that. so will the talks move to trade in december? that is the question, and there is a very slight possibility. the eu has been working on preparing to possibly make a decision on whether to move the talks to trade in december. you can see a lot of possibilities and maybes there. there is absolutely no guarantee. but perhaps seeing a slight softening in the eu's stance there. but in terms of whether there will be any progress at this eu summit on brexit, that really is looking unlikely, even on whether the talks will move to trade in december, one diplomat told bloomberg at the chances are looking at around 50-50. perhapsmay herself even suggested she was not expecting much progress at these talks, because she did they that -- say that this meeting was about taking stock of what has happened so far. mark: i heard you have been pestering the leader of the
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labour party, jeremy corbyn. i say that with my tongue in cheek. has some of been shine -- the shine taken off on mazer i will because corbyn was in town earlier? nejra: you are absolutely right. i have been pestering him, i even ran alongside him as he entered this building about an hour or so. he is in brussels to meet with eu leaders, and also possibly. himself, heleader is in opposition, but he was met with a lot of fanfare. in fact, he was announced as the next prime minister of the u.k.. some called it political theater, but what corbyn is saying is that he wants a jobs --st frexit, and he has said that is why he is here, really, to push for that. it has taken some of the shine off of may. she arrived hours after he did. vonnie: thank you, that is nejra cehic at the european commission
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headquarters in brussels. speaking of jobs and brexit, we have ceo of goldman sachs lloyd blankfein tweeting a few hours ago. he says i will be spending a lot more time there, and #it with the brexit mark. was this a sign that they will be moving jobs from london to frankfurt? mark: frank for teams to be emerging as the winner when it comes to banks moving their employees away from london. it seems to be top of the queue right now, isn't it? vonnie: as long as the regulators are there, there is an added incentive. up next, we are at the investors conference with can length on. -- ken langone .
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live from bloomberg world headquarters in new york and london, i'm vonnie quinn. mark barton. this is bloomberg markets on
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bloomberg television. let's check in with bloomberg first world news -- first word news. >> spain is deploying an ultimate constitutional weapon in the battle of catalonia. this is after the region's to drop hisfused claim to independence. he said that the cattle on -- if the parliament may -- president does not agree to talk. they are not looking to -- since the financial prices, they have counts a number of measures aiming at constraining the central bank. the president is scheduled to meet with yellen today. theowners hurt by hurricanes are falling behind on their mortgages. in texas communities hit by hurricane harvey, the number of borrowers who are at least 30 due soaredto -- past 57% last month. in other areas hit by irma a 48% increases
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in borrowers who have followed behind. -- fallen behind. retail sales were up more than 10% and factory output was strong. all of that gave china's president sheesh and paying a stronger hand to rein in excess industrial capacity, curb pollution, and shift to a more sustainable growth model. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm nabila ahmed, this is bloomberg. nebula, thank you. we are seeing a bit of a global selloff today in asia, sweeping through driven partially by earnings. in the u.s., we are seeing the first clients since august. this is also the 30th anniversary of black monday. the dow fell 23% that day. joining us from the investors conference, an investor who are members that day in the market all too well. he is there at bloomberg's new bro, -- bureau, jason
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kelly. >> you mentioned 30 years ago was quite a day, ken. ken: yes it was. jason: what do you remember from black monday? >> it was like any other day, at my desk doing business. i remember the crash, i remember being in part confused by a. i will always look back, but respectively, if you look at where interest rates were and alternatives for investments, you realize that investors had viable choices. that is why i think a comparison with today is not valid. look where interest rates are now. i think a ready recipe for losing money is to buy long bonds, why? because rates are likely to go up, especially if this economy keeps moving the way it is. office, i was in
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shock, i was not necessarily worried for two reasons. company's --he companies i had invested in, their balance sheet were in good shape. i also know i had good businesses. and two, i have a healthy respect for not having lenders as my partner. that is when you use control of the decisions you make. so i understand financial engineering and how it works, and i understand it is applicable in some cases. in my case, i like to be the sole determinant of my future. was -- nd home depot ken: i did not add the depot so much, but i did add lillie and i still have him. i added to a small company, i had investors in north carolina unify the company. i had buying power, and i saw it
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as an opportunity. i were on stan and the phone 6, 8, 10 times through the night, trying to figure out what was going on as we watch this contagion go around the world. but you know, you have a lot of loose ends, you have durant contra scandal, you had all that of issues there, but was -- it was a time told. the legacywhat was 30 years on? how did it change business? ken: i think hopefully it gave people a healthy respect for the dangers of leverage. and i think also you have to look at the fact that alternatives that have alternatives. at the end of the day, i do not care who or what you are, the ultimate reason why you buy stock or a bond is to get a onck every once in a while
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the return in your investment. i'm not a very good time or. i am like -- timer. i like most people for one reason. there are eight trading days. that is what a stock will give you most of its performance for the whole year. i'm not smart enough to know those eight days. the only way to get them is to be there when they happen, before they happen. that is my belief. do and i spend i an awful lot of time trying to understand what is going on with sales, manufacturing, competitors and competitive pressures? forke to get to the numbers those numbers result in numbers that wall street looks at. jason: fast forward to today. abovew 23 thousand, 23,000. off a bit today, but the trajectory is a very steady climb up. how worried are you about where it sits now, valuations, what do you think apple -- yet? --
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think? my description of glory is how much am i exposed to things that go against meac of that is including how much do i need to live? exposure do i have two forces beyond my control, like leverage? frankly, ihings, and do stress test myself. supposing the market is down 40% , supposedly is down 90%. where am i then? what adjustments am i going to have to make? that is, to me, the way you do it. i remember -- i understand that if i was more risk-averse, i would have less. on the other hand, if i was more 2008 could be87,
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a painful time. is always antreet and balance and investing is the balance between fear and greed. where is that now? is there enough here in the market? too much greed? ken: what is going on now is a lack of terms. you look at the stock market and bonds, and you know this, the 2.25, 2.5% bond yeah oh if the event takes rates up next year, 100 basis points, a 10 year bond is going to have a larger yield, and a reduction in value. i like the idea of companies that have shown the ability to grow, that are generous and successful, and share that with stockholders and share that with stockholders in dividends. i more just didn't -- i am more interested in buybacks. but i am very sensitive to balance sheets.
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stress event out there, are these companies going to be able to stay the course? jason: how healthy do think balance sheets are generally? an enormously good feel in the market today, enormous. as the fed stops up qe, obviously a lot of that will go away. but i looked the banks, the banks are in the best shape they have ever been, certainly in my entire life. in fact, i take the excess of regulation out of washington, i think it gives us opportunities to say ok, is regulation more reasonable? for example, i think the fed is nervous to have a bank pay out more than 30% of its earnings and dividends. they will it you go by all the stock you want, because that can be turned on and off. i would like to see some flexibility on the upside of dividends. look at j.p. morgan, for example. i love it. i love the bank, i love jamie, i tried to get him to run home
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depot when he was out of work. i wish i had gotten him. honest to god, i really really believe -- really, really believe the banks today are a whole different kettle of fish than they were in 2008 or anytime in the past, 1989, with the real estate crisis with the savings banks. regulationwhat about at this point? is wall street getting what it needs in terms of regulatory form or changes? what are we going to see? ken: i would say the tenure of regulation is much improving. i think the understanding in washington, you do not have regulations for the sake of them, you have regulations to make sure bad things do not happen. i think we have gone beyond that. --uess it is that he to better to air on the side of safety than risk, but it think tooou -- i think if you go much in the way of safety, i think we will see a loosening of some of these particularly, in
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regard to the banks. .hey had a feeding frenzy this is what annoys me. you had to listen to what bonnie frank had in the 2000, every -- own ashould home home. everybody played the game because they thought they were playing the tune that washington wanted to fear -- hear. and now that all these sub prime loans blowup, how do you have that happen? if a guy can buy two homes with no balance sheet, no documentation, no cover, how can that happen? jason: are the right safeguards in now, for example? ken: i think there is a concern that has gone too far with making flex ability and loans. remember the guy on television? papers, these piles of all you have to do is come over here and sign your name and you
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have a loan. that was absurd. but that is what we were. think,e have learned, i do i will also say those who to ignore history are doomed to repeat it. we want to keep it in the back of our mind, but i think we are in a good shape. that iso how much of reliant on tax reform, health care reform, infrastructure. how much of that is priced into the market, and how much do you worry about those things not getting done? ken: i challenge anybody to relativethose things to where investors are standing on stocks. i believe that if i have the capacity to hold on 10, 15 years, i will be 92-97, but if i had the capacity to hold on, i have no doubt that over those years, the company's i'm investing in will be a lot better, a lot more successful, and the values we share will be a lot higher. about the do you feel
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potential for tax reform or even the tax cuts in the next -- call it six months. ken: i think they are good. jason: how confident are you that they will get done? ken: let me tell you my problem. i think if they do not get done, they will get done for the wrong reason. i think there is a belief in washington that anything you do to help trump look good as a ,resident is bad for my course ok? i think that is unhealthy. theught to ask ourselves question is this good for america? i will tell you this. the biggest single fear i have in america is income inequality. we have got to figure a way out, to bring out the standard of living and incomes of everybody, ok? i do not think i should get a tax cut. outrageous that i get the federalh from
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government, and my wife gets another $1100, $1200. what are we doing with our success and financial getting $3800 a month, almost $45,000 a year from the federal government? it is nuts. jason: what would you do after the tax code? ken: i would go after entitlements, particularly for the high income people. for example, i should be able to pay for my own health insurance, my own health care. butight be a lot of money, when you look at my resources and my income, you say wait a minute. you do not need insurance. the whole idea of insurance is it is there if you need it. easy, this would be the way politically, because there are fewer voters there. but it is a good start. it is a symbolic start to letting people understand. when you talk about tax cuts,
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how do you cut taxes of somebody who has stopped paying taxes? it does not work. nothing from nothing is nothing. you mentioned health insurance. your name is on a hospital. it is a place you have worked in, a lot of your philanthropic work is there. what is the realistic view of what gets done in terms of health care? what needs to happen, from your perspective? care, we all health are living longer, my grandfather had hiv and died at 22. .- 72 i have a fed, i'm 82, i am still going strong. as a little boy, i could not swim in long island sound because of the polio fear. we do not have polio anymore. think of the vaccinations we have developed with people, helps babies live. we had a baby at nyu medical center, a baby that was a couple of pounds. they did open-heart surgery on
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him, the kid is five or six years old now. we have made tremendous advances in quality of care, and i think we want to be careful that we do not throw the baby out with the bathwater. the headline today about how much you are paying for drugs -- i saw this morning that gilead is coming out with a drug that apparently the fda approved, and his $370,000. but guess what? that is the cost. eli lilly, he has spent -- i know that, because i have spent -- i am a big stockholder -- he has been over $45 million on r&b in the last five years. the cells in ohio were bigger than 10 years ago. why? because they became up empty-handed. no guarantee if you spend the money you will have a blockbuster. americans ought to take a step back and ask the question, wait a minute. but you remember in the 1980's, when hiv stuck its ugly head out? everybody was going to die? it didn't happen.
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i think of cholera, diphtheria, i can go on and on. my grandmother died of the flu epidemic in 1919, 37 years old. sure, people die of flu today, but it is rare. i am a staunch advocate of the drug industry, ok? a staunch advocate. are there people out there that take advantage? yes. do not throw the baby out with the bathwater. those people that are excessive, the people that abuse the system, those companies? go after them. get them hard. but how do you get a guy like me to invest in a company like eli lilly, that spends $45 billion in 10 years? that is what they spent to, 50 handed. -- two, up and d handed. empty-handed -- to come up empty-handed. jason: before we send you back
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in there, what is the latest move? ken: i think corporate boards need to be reset. ok? corporate boards -- every board member should be an activist. this horrible situation in general should not have happened. they have a mess on their hands and they will see it poking out of their chest in november. i was on the ge board for six years, so i want to be careful. i do not want to indict people. on the other hand, i know for the fact that all these deals made, all the bought companies were told that there was never once they were perspective -- a representative on the board to say ok, here's what happened when you bought the business. but go back two years, see where we are. this guy could not have done what he did without the board being complicit. the procter & gamble --
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they think they won the fight. they are kidding themselves. when 49% of your people say we want this guy on the board, that is a mandate in my opinion. jason: so a new era of government is coming in? happeningnk what is is with board members, we have gone through social correctness, community responses, all of these issues, but at the end of the day you need people in that room that want to stand there as a representative of the owners. that hadnce, a company a wonderful record for giving back, doing the right thing, socially correct, all of that stuff, eastern coda. -- eastern kodak. where were the board members when the digital cameras stuck up their heads? all of those charities benefited
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by kodak? gone. i can do more god. -- do more good. i did could not have do what i did if i have not had the financial success i had. the drugs companies are giving --.50 million 4 i could go on. we have to understand that corporations are a business first and foremost for their business reasons. we cannot compromise on that. we cannot do good if we do not have the wherewithal to do good. jason: who is going to lead the way on governance? ken: i think feels-like proctor and gamble is a wake-up call -- -- ink views like prop think views like procter & gamble are a wake-up call. andon was invited to speak, i raise my hand and said nelson, help me out. should every director of every company be an activist? yes. the questions that nelson is asking as an activist is what
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every good director should do. when i think of the boards i was on -- general electric, home depot, beautiful i -- you to fly -- unifly. in that effort, i led an effort st management. the company is doing splendid now. we almost went broke. take a plastic water bottle -- we process 100 million bottles, 100 million pounds of those he string, into yarn, which goes into patagonia fleece, which goes into north face fleece. every ford vehicle with upholstery in it is made with that fabric. --t i am saying is directors there is a new calling, and you better be part of it. i think some of these companies have to say where was the board when this was all happening at a what were they doing?
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what were they saying acca what was the challenge to management? i give warren buffett a lot of credit. i would have made a different decision, but that is not the point. brought innagement an acquisition of coca-cola, and warren buffett said no, he led the effort at the board to say we should not do this. i think if you look at the result of gatorade, it might have made a difference. that is different from a board exercising its strategic responsibility. jason: ken, always great to be with you. we appreciated. vonnie, i will send it back to you in the studio. we will be thinking about a real toxic battle in a few moments. bloomberg's jason kelly from robin hood investors conference. mark: breaking music up of minutes ago, we have learned that the be the -- bp chairman is going to step down. they have launched a search
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based successor. sandberg will remain as chairman until a successor is in place. he did on the board back in 2009 . he became chairman in 2010. mark: the adp -- vonnie: the adp proxy battle heating up as the november meeting approaches. the ceo carlos rodriguez tells me he is listening, but that is it. have a listen. >> the board had a meeting with , a specialmeeting idea around marginal expansion, and other ideas around consolidating operations and etc.. the board has continued to be open to new ideas. mark: today, ackerman and his two other nominees will participate in a fireside chat. joining us now, lisa ellis, sanford c bernstein and company analyst. he said the board is listening, but it has not been enough for ackman. he is still pushing for those three seats, correct? lisa: correct. mark: why now --
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vonnie: why now? rodriguez is open and the insult of stopped hurling. is ackman bound to change his approach year -- year? lisa: right now, the two firms are definitely continuing with the proxy fight, at least with the november 7 election, where bill is making a push to get his three nominees elected to the adpd in lieu of three nominees. this could have gone down a different path, as i said earlier back in august, but once we made it through the original deadline for board nominations, it was sort of a no go decision. either they were entered into a proxy fight or not. that is where it is. vonnie: bill will be one of the nominees, and then there is veronica pagan and paul again. he says his new board members are fine when it comes to things
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like technology and innovation. lisa: exactly. the focus of today's fireside pushing tomarily on independents nominees, ronnie --.ins and paul they are paper nominees. we have not had a lot of public visibility out of them. can ask them questions about things like what compelled them to join pershing slate as a dissident director candidate for adp, what specific skills are they bringing? is you highlighted, neither of them have direct experience either in hr services or technology. what skills do they bring? what assets do they feel are the strongest? what are their views on some of adp's push back, etc. in,if they were elected what would be the next steps? what do they see them doing come
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november 8 if they won seats? vonnie: and in that case, what do you think, based on the cases ,hat bill ackman is making rodriguez told us we are doing a lot of what bill says, to set a slower pace. that is right. the interesting thing about this they are is that locked in a proxy battle, but the reality is the two firms agree on a lot of things, about adp's strategy. they are disagreeing simply about the rate and pace and magnitude of the push for operating a larger expansion and payroll:y in the adp business. i think what they will be , i thinkor, honestly shareholders will be looking for the outcome to be closer in valuation of the opportunities to expand margins as direct answers to a lot of the questions pershing square has
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raise. one of the examples, one of the case examples pershing uses is a company called cdk, which spun out of adp a few years ago and has some seen -- seen some substantial margins since then. announcements like that are never exactly perfect, so i think one of the ideas here is that potentially, some of the operational team and external consultants that did some of the and with cdk could come in potentially do a similar at all that adp. lisa ellis, that will be an interesting fireside chat. researchs, senior analyst at sanford bernstein. this is bloomberg. who knew that phones would start doing everything?
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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 mark: 11:00 in new york, 4:00 in london, 30 minutes left in the trading day, and europe. on mark barton. vonnie: and i am -- i am mark barton. vonnie: and i am vonnie quinn.
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this is the european close on bloomberg markets. ♪ mark: here are the top stories we are covering. in europeing earnings weighing on stocks on the 30th anniversary of black monday. talks between spain and catalonia take a turn after the prime minister suspends catalonia's autonomy. the tug-of-war between spain and catalonia having a ripple effect in europe. fiona frick joins us from the robin hood conference in new york. we are under 30 minutes away from the end of the third base


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