tv Bloomberg Markets Americas Bloomberg October 20, 2017 12:30pm-1:00pm EDT
shery: from bloomberg world headquarters, here are the top stories we're following. janettch as we learn yellen is back at the white house, just a day after meeting with president trump. we have the latest on this critical decision for investors worldwide. as a whirlwind week of third-quarter earnings came to a close, we look at the details. tech's record influence on the cycle in much more. as part of bloomberg's special series on automation, we speak with rishi ganti about the coming revolution involving new technology like a.i. on the financial industry. ♪ let's get a check of the major averages. investors looking closely at
what janet yellen is doing at the white house. we are here in she is said to be there for a meeting with gary cohn. these are the latest in regular meetings they hold. investors are concerned about what is happening with janet yellen's candidacy for the fed chair post. she met with president trump yesterday. we are seeing the markets continuing on this upward trend. a record high again. treasury yields are up. the dollar is up. optimism on tax reform. an announcement about the next fed chair anytime now. financials and tech are leading the gains on the s&p 500, which is up for tens of 1%. the nasdaq is rebounding from yesterday's losses, up .5%. vonnie: we are learning the fed chair janet yellen is back at the white house for a meeting with gary cohn. it is a semi-regularly scheduled
meeting. we want to turn to washington, d.c. and have a look at what is been the priority this week for the trump administration. a little excited only heard janet yellen was back at the white house. turns out it was a regularly scheduled meeting. doesn't mean you won't slip in some questions about what you might do if her term is extended? alex: that they have to have this meeting today? they got my pulse racing. it looks like much ado over nothing as it turns out. we think. it seems like they would not be able to avoid talking about what everybody is talking about this week. there was a vehicle to get tax reform done. doesn't make it more likely the tax reform gets done in 2017 . alex: is the first and easiest step. there was not much doubt republicans would pass a budget
allowing for a tax overhaul. there are much harder talks to come about what goes into this bill and how they navigate all the differences, just in the republican caucus much less bringing in democrats. vonnie: we will leave it there for the moment. we will come back to you later on this friday. thank you. he is our white house team leader. for more on the markets and how they have been reacting to all of this, i want to bring in michael regan. answer, but some of this week's actions were about who will be the next fed chair. mike: there was the political report yesterday saying chairwoman how was a front runner -- chairman powell was a front runner. reported john taylor was also in the mix.
i think we are back to square one at some point where it is almost anyone's guess. in the predictions market they are still looking at powell is most likely the front runner. i don't think anyone knows exactly who it is going to be. shery: the excitement over the new fed chair, not to mention we have seen the selloff in global equities. the volatility, again, back below 10 for the vix. mike: people scratch their heads. it is not only a single digit vix. you have this huge short position in futures markets on the vix. to some degree it implies volatility. the expectations for market swings in the next month or so, which is what the vix shows are very much a function of realized volatility. the market has been so quiet. it is ethically quiet right now ally quite right now. this wings is light 3.2,
something we have not seen since the 1960's. if you're trying to figure out where volatility is going, look at the recent past. the vix looks too high with volatility that low. it is no wonder people have these huge short positions on vix. see that is data that tracks speculators. mostly hedge funds. whether net position is in the vix. it is way at the lows on the bottom right. some of the lowest levels we have ever seen. vonnie: the trouble is contrarians will say they are shown to an obvious reason to sell and get out because we are heading tops. people say there is room to run. as thebeen turning down
s&p 500 has been going higher. some say that means there is more room to run. mike: that is a forward yield. that is important to point out, meaning it is based on the estimates for next year. knock on wood those estimates have been hanging in there. the market is taking confidence these estimates are legit. that was not always the case. the last couple of years we saw estimates for strong growth at the beginning of the year come steeply down. a lot of that was because of the big crash in oil prices. that is the caveat for looking at forwards earnings yields like that. is attractive compared to bond yields below 2.4% on the 10-year. when you have a foreign earnings yield at high, it still looks attractive. the problem is it is based on estimates that could come down. usually compared to bond yields.
bond yields can move higher quickly. we are looking at all these possible candidates for fed. if it is more of the status quo it would have janet yellen or who isor someone expected to keep the status quo, that is one thing. a shock could send bond yields higher. in looks attractive with caveats. vonnie: we have to leave it there. blogger forlead markets with. mark: house speaker paul ryan said the republican tax overhaul plan includes a fourth tax bracket for the wealthy. it has not been decided whether the top record will remain at the current 39.6% rate. ryan says the bill will be finalized in his words in a number of days. president trump has said he wants the middle class to benefit from the overhaul. it has been a month since
hurricane maria devastated puerto rico. only 20% of the people on the island have power. the governor met with president trump yesterday and is pledging to get that the 95% by the end of the year. the hurricane struck at a bad time. the puerto rico electric power authority filed for bankruptcy in july. it has put up badly needed maintenance in a just finished dealing with outages from hurricane irma in september. british prime minister theresa may says there is still some way left to go on brexit talks, after little apparent progress of the european union summit. sheking today in brussels said both sides were nearing an agreement on citizens rights, but still have work to do on settling the border between ireland and northern ireland. >> i am positive and optimistic about where we can get to in relation to the future partnership we will with the european union because it is not going in the interest of the british people, it is in the
interest across the other 27 members of the european union as well. partners part -- or agreed to discuss with a joint position should be on future relations in trade so they can be ready for what they call sufficient progress is made before the next normal summit in december. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. shery: coming up on the show the automation wave is cresting. how it will impact those on wall street. this is bloomberg. ♪
♪ shery: this is bloomberg markets. vonnie: let's turn to our stock of the hour. shery: shares of paypal are popping higher. they are taking a record high. abigail doolittle is here with a breakdown of the quarter. is it earnings they are liking, the guidance? abigail: probably a little bit of both. they beat 5.7%, revenues by 2%. these are not small numbers. the forecast calls for revenue growth in 2018 up 20%. some say that is conservative. looks like they could keep on beating. three reasons for the conservative possibility. first, a surge in new accounts in 2017. that is the gift that should keep on giving as a are more users. venmo, a digital version of paypal and away really has not
taken up quite yet. third, they had partnerships visalisa and mastercard -- and mastercard. paypal that was a bigger market cap and american express. along.ket cap trailing on this searcher paypal, taking over american express. new school taking out old school. vonnie: it is a tech stock. how does it compare? we always think about the fangs as having this performance on the year. we have paypal back in the bloomberg. this is pretty incredible. 955. take a look at this. in blue a fang index of 35% year to date. outperforming all the indexes. look at paypal, up 75%. this is a stock for investors to take a look at even the valuation is at a premium.
the company is really growing and putting up strong quarters. great execution. vonnie: thank you for that. week bloomberg has been reporting of the automation wave hitting wall street. firms are working to develop software that can suggest trades. advances in technology means summer pretty major job losses as people replaced by automated services. joining us is rishi ganti. thank you for joining us. what is the trend you see most disrupting things? rishi: the trend we see is mass up comprehensive -- copper attentiveness of the attack on automation on jobs rate large. -- writ large. really it is up and down the pay scale, up and down industries. that is becoming conference if. shery: there was a report saying
machines are ready to do one third of the jobs being done by banks rank-and-file. where do these people go? speculative,s very but when you haer is a lot of -- hear are a lot of buzzwords like they have to of scale or involve. it will be difficult for that the continue to happen. while job instruction medicare dude automation it does not engender job creation. there is job creation. it is not clear a human being will fill the job. what we need to do was look at the kinds of things that require more creativity to see if we can make an emphasis on that. shery: what with the next steps be? perhaps you are afraid your job is one to go, what do you do? rishi: one needs to recognize the degree of pattern recognition in the job. how much of one particular job work for due to wrote identifying patterns.
look for breaks in the system. new things are always coming up. creativity is required. people are able to look at those areas and really rise up to them. i think one of the major parts is psychological, having the willingness to go into something new. that pressure will come more and more as automation takes hold. shery: you are calling them esoteric assets. high human capital in order to manage, that will do well for these people to go to. how does that compare to being able to gets of those assets and actually performing well in them? rishi: i think that is easier than harder. at orthogon we look at low income housing in south america to financing hospitals in italy, to providing financial support to charter schools in the united states and inventing that market. when it is less competition for an asset it becomes more alpha rich. i believe the invisible hand of the market, which is automating
many functions and many high paid functions, even radiology in the hospital, is getting people to more alpha rich assets that are not able to be commoditized easily. vonnie: there is the type of vehicle like hedge funds. are they more prone to it like big banks? rishi: no, i think this is a multidimensional attack. i don't believe the form of the firm you are working in really matters. is the nature of the work being done, and whether or not creativity is required. whether or not it is easily done by a machine or anything like that. shery: some said financial managers in general could be protected from automation? rishi: i don't believe that is the case. remember that the major thrust of automation is to replace a highly paid individual with a computer or robot. the more lucrative the position,
the more attractive it is the automate. there is a misconception it is a low-paying jobs that are able to avoid automation, but they are the hedge fund managers, the stock pickers, or even highly paid radiologists. vonnie: is there anything that can be computer traded? rishi: in sports we are not interested in watching irobot beat usain bolt. i do think there is always a place for human ingenuity in combining with computers. and whether it is the arts or something creative for sports. remember the most important message is to the extent you are doing pattern recognition there will be pressure on you. shery: scary words. rishi ganti, thank you for joining us. orthogon partners founder with the latest on automation.
bitcoin closing in on a milestone. they approached $6,000 for the first time to put its gain in 2017 to above 500%. cats --ing in leave the lee lee katz. we're seeing this rally. gained more than 500% this year. it has now crossed $6,000 in the last hour. it now has a market cap of the goldman sachs. i think goldman sachs is $98 billion. bitcoin is now $100 billion. bitcoin moves in mysterious ways. i've heard a lot of potential reasons for this. i think a lot of it is speculation. some people are saying economic instability in zimbabwe could be causing this. a lot of people are buying it in
zimbabwe. picture, in the last month or so we have seen a lot of different governments crackdown on bitcoin. it has bounced back up. i think after a lot of these proved to thed of market it is resilient and it can survive these regulations. vonnie: we want to keep a close eye on bitcoin. your latest story with great graphics and bitcoin mania. lily katz.oomberg's ;i; you have to wait a little longer for that sprint-people merger. this is bloomberg. ♪
markets. sprint and t-mobile are working towards the merger in but would be by far the biggest deal of the year. bloomberg has an exclusive that a news announcement may take longer than expected. alex sherman joins us in today's deals report. what is going on? alex: we were expecting a deal announced at one of the two companies, really one of the .our companies one of those company's earnings we figuratively get an announcement. we are now being told by people familiar with the matter that a deal announcement may flip to after these companies announce earnings. it is a wall street faux pas to announce a deal just a few days after you announce earnings. two things may happen. it is possible all the
companies, for at least several of the companies delayed a earnings. may be ending early november. they typically announced towards the end of october. if that were to happen it is possible we will see that you announcement intertwined with earnings. the second scenario is that the companies may announce earnings and then purposefully the deal may not be announced until two or three weeks after the fact to avoid this weird optics think of announcing earnings and that announcing a deal three or four days later, even if it was basically tied up. they will probably delay it to mid to late november to get around that sort of weirdness around not announcing a deal with earnings. shery: is that why it could be more beneficial to announce a deal later rather than sooner? alex: that is a good question. it does give the trump administration regulators a little bit more time to get into their position and sort of do
the research on the lay of the land. this will be a very, very controversial deal if and when it is announced. it takes four major wireless players down to three. most deals that take four competitors to three get heavy scrutiny, particularly those that are this size. at&t tried to buy t-mobile about five years ago and regulators nixed that deal because regulators said we want this industry to be a four player industry. now we are seeing the same companies. if you read with from five years ago and applied to this deal, it will not go through. the trump administration regulators will have to agree with the argument that sprint and t-mobile are bound to make, that the landscape has shifted and sprint and t-mobile coming together, the third and fourth
largest wireless players by market share with at&t and verizon being the top two, if you put the bottom was together you make a more robust competitor to at&t and verizon. you have three stronger players that can benefit the consumers for both t-mobile and sprint because they have a faster network. vonnie: thank you so much for that. as the u.s. senate adopted budget resolution, taking another small step towards considering president trump's tax-cut plans, we will executivels group's vice president about their hurdles. this is bloomberg. ♪ who knew that phones would start doing everything?
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. >> it's one a.m. and hong kong. from bloomberg world headquarters in new york, i'm david gura. shery: and i'm shery ahn. dave: your top stories -- the
u.s. senate are -- adopting a budget resolution, taking a small step toward president trump's tax-cut plans. the hurdles still to come before a possible bill reaches the president's desk. -- beginsson the guns despiteong trip to -- his very public differences with president trump. in the race for fed chair janet yellen's seat, the president seems to be leaning toward john taylor and jake powell. the critical decision could come at any moment. david: president trump's top legislative priority of the moment has taken a step forward. the budget resolution that will allow a tax bill to