tv Bloomberg Markets Americas Bloomberg October 24, 2017 10:00am-11:00am EDT
-- markets. julie: these the top stories. the dow hit a new high fuel by earnings. we get the latest on how to invest around earnings and the fed search with david kelly. this major trump backer and the president is on the right track when it comes to tax reform in the way he is running his illustration? -- administration? saudi arabia speaks to exclusivein an interview. he plans to add billions more in assets under management. we are 30 minutes into the trading day. abigail is with us. it looks like the nasdaq is
taking into the green. abigail: the dow hit an all-time high today on a record closing high. the nasdaq had been down. at that time, it was the second down date in a row. there is a divergence between the strength of the dow and the small fractional gains of the s&p and the nasdaq. we have been very strong in terms of technical analysis of the markets. she says yesterday's pullback thinksed a signal she will bring a near trend for a year and rally. the green we see may not continue according to katie stockton. let's look at what is really driving the dow higher. we have all trading sharply
higher. 3m and caterpillar are at all-time highs. sincehaving its best day 2013. 3m was helped by the weaker dollar and the divisions had a 13% gain. caterpillar the earnings adjustments and huge way, by 56% to they beat sales by x percent. this is the ceos third sales heat. -- the. the stock is already up 49% year to date, it's best year since 2010. mcdonald's matched estimates. traffic, sales traffic, but traffic is suggesting the turnaround is on the way. we do have the dow would the record high. there is talk about if we will
see a pullback. katie stockton said there is a sale signal saying there could be a pullback. 77 and the bloomberg. this is a momentum indicator. we are hitting a level on the dow rsi above 85 that has not then seen since 1955. like it higher, it suggests buying momentum is in place. mark that a pullback could be on the weight. -- way. mark: we have 90 minutes left to the tuesday session in europe. we are led by financial services. it's a busy day. investors mostly see equities
weathering, france is tapering. there are signals that plenty shares may be right or a pullback if the euro continues its rally. you expect the euro stoxx 50 to decline. this is no longer as cheap as they used to be on the book value. that's what this chart shows right here. readingthe highest since april 2015. this is the lender that led a nexus of companies from catalonia. they beat estimates and analysts are pondering the crisis on business. the chief executive is relying on revenue or the asset management business and cost savings from the absorption of ppi as record low interest rates hit revenue. banking shares are up .7%.
before today, it was down four days in a row. since the referendum of october 3, the economy is maintaining its strong momentum at the final quarter of the year, rising workloads are encouraging companies to take on new staff at the sharpest pace in over a decade. this is the white line. rose tocreation julie the highest level since data collection started in 1997. this is up nicely for the ecb thursday. julie: we will be discussing that later in the show. let's go to the future investment initiative in saudi arabia. this brings together investors from a range of industries. erik schatzker is there now. he is with a billionaire and
sometime advisor to donald trump. erik schatzker: that is true. we are talking about tom barrett, a man who has been doing business in saudi arabia since the early 19th evan these. i say that to give you credibility. is there anybody in corporate america the nose the saudi's as well as you? erik: i'm sure there is a young pup who knows quite a lot. probably $22 trillion worth of investment capacity in terms of individuals managing honey around the world, all grouped together in riyadh. a sign of the
times in many respects? the crown prince has a plan to transform not just economy, but the saudi society. given your experience, that is an ambitious plan. what is the most difficult part? it all seems difficult to me. tom: he is an amazing young man. the most difficult part is cultural. in 1970, saudick arabia was 2 million people and oil was two dollars a barrel. the, wasre, a monarch based on a family unit. combination of the culture that had existed housings of years. theculture was free of
elements of a normal commercial civilization. there was trade, but it was limited. by medina denoted gave them a special place in the world, the guardians of something very sacred. the idea not taking 30 million people which consists half of young people and saying we are going to diversify so 30 years from now the necessity of relying on oil at the hands of sometimes the west and sometimes the east will be free. we will have a future or the youngsters. the biggest challenge this young man has, he is so smart, he is
so focused, is conveyed the vision to his own people and a cadence they can adjust to. erik: i know you were that he not him, because you have to as a friend and supporter. it do you think he will succeed? ,: i do. -- tom: i do. stars aligned for him. has withtunity he america's sponsorship, president trump really embraced his father on a personal level. jared russian or helped -- kushner engineered the first summit and created a breakthrough of relations, just
relations. the geo political situation of the gulf is amazingly complex. very strained. manner demands leadership from another generation. you have a across the gulf. , you have thehabi amir. even though there is a amalie dispute, out of the involvement , what couldration come out of it would be. erik: this country needs foreign capital.
that goes without saying. here, going to invest while they are in the midst of this standoff? tom: i think today was a great tribute to the fact that if you want -- walk through this hotel, you would think you are in new york city. transparency, is a legal system, a capital system that is usable. erik: none of those things exist yet. ,: they are on their way. ink: are you still involved brokering a truce? tom: i never had an official role. allowing theate of sovereign nations to solve that in their own way, which they will do area -- do.
erik: you think it's going to happen? tom: this is been going on for hundreds of years. qatar is a sovereign nation. necessity of the gulf as a unit, taking care of its own issues as a unit is imperative as it affects iran and turkey across the way. erik: i need to ask you about something that has been in the news last week. you rode to the rescue of the weinstein company. back home, it has been rocked by accusations of sexual assault by its cofounder harvey weinstein. why did you come to the rescue?
know that we have come to the rescue. we purchased miramax from disney. company therevious weinstein's sponsored. projects in the can. portre familiar with the olio, the library, the process. erik: why haven't you rescued them yet? tom: there is a big difference between the weinsteins and the company. was totallyconduct ,nacceptable, reprehensible unacceptable on any terms, no one is interested in benefiting
harvey. you have a tv production company, an independent gnome company, a distribution company which has counterparts that are relying on civility. in a short amount of time, if the element could be removed if -- toxicity could be addressed and the content of the company could continue on in a normal way, there is value. erik: do you mean bob as well as harvey? bob is in a satellite position. the benefit of his name is also the detriment of his name. bob has been very capable in his , whichension -- company is dimension.
without eating punitive to -- punitive -- being punitive to bob, the counterparts will want them gone. how that gets done is a process grid. erik: can you tell if you're going to buy it not? tom: no. erik: any idea what it will cost? tom: you have hundreds of creative people whose lives are in the offering. erik: let's try to put scale. a $660 million deal, a big film library with famous titles. is this as valuable? tom: it's hard to say. you have to take liabilities on
the balance. the actsa library from of harvey now. which are attributable to the ongoing basis is very difficult to determine. the first objective is you have a patient dying on the table and you need to revive and get them to breathe first. if they can walk, it's a real issue. erik: a recent issue in the washington post implied you are losing a in president trump on some issues. are you? tom: not at all. what i was trying to convey in k, article i did not see
constituency to criticize the withdent is understandably valid issues. bee issues appear to unnecessary falls. erik: for example? immigration? muslim countries? some of the rhetoric? ban is a great example. look where you are today. after the president took the issue which was very harsh and the rhetoric, in his act he is opened and unbelievable and now of tolerance. al of tolerance. erik: it's been almost a year
with no major legislative accomplishments. why has he failed to unite enough members of congress to get a bill passed? tom: it's not just the president did its 535 other people. is process of government treacherous. i'm not so certain the worksatic process we have so well for the population we have. this president is a normal human being. has better political instincts. he hasn't been through this grinder before. coalescing his power.
if you look at the stock market as a proxy for how we feel about life, phenomenal. education, foreign policy everywhere. front of what is there is always very difficult. it's too early to judge him. what's going to happen? are we going to get tax reform done? steve mnuchin is here today. they are working hard on it tax reform. republicans know they have to get something done. think it's playing in the sandbox. i want to thank you very
much for spending time with me. rehab. -- me.n pod he is a close personal friend of president trump. schatzker at the future investment initiative. he is still pledging his full support to the president. let's move back to the markets. oil is trading at $52 a barrel. opec is working on an exit strategy. gold is at a two week low. joining us is bill. it's good to see you. oil is bouncing here. it's been on a bounce. do you think opec is gaining credibility as the production cut plan seems to be working?
bill: i think there is some inability they have garnered over the past year. , 120%cent numbers compliance in the deal, have garnered that believe area -- belief. you have to watch how the rest of the year plays out. they are banking on where they will be in that compliance and where they will be in the third quarter next year. you don't want to come to conclusions until the picture is more clear. iraq, thet about kurdish territory there. what do you hear and how is that affecting things? bill: there is more oil moving into turkey. half of what they are normally doing. that is starting to come back online.
the situation will not be very clear or a couple of weeks. -- iraq hasrting taken a stronghold there and moving forward. i am surprised the prices did not go much higher. what could have gotten worse from the beginning, there is a lot of resistance in the market. there are multiple trendlines dating back to january and april. the market is facing a lot of resistance. if the iraq situation gets worse and reports become more bullish, we could see $55 in hurry. data thishave ap afternoon. anotherill ahead with commonest party congress winding down, president g's intent on leaving his mark on china for a
julie: in china, the national congress is wrapping up and president xi has never looked stronger. by in training president xi , they elevated him to the same level as mao. this will go long past the next five years. a.m., we act the pollen bureau to be unveiled. seven men will follow resident xi on to the stage on the red carpet.
that is elevating his allies to the politburo and the standing committee. we will get a better idea of who is directing his implementing his policy agenda internationally. julie: we will have live remarks on the chinese president from top5 a.m. tonight after the political body is unveiled. arel ahead, investors preparing for a rougher ride, that is according to david kelly. he joins us next. this is bloomberg. ♪
emma: the president of the european council is loading the idea u.k. won't stay in the u.k. after all. -- the british prime minister has struggled with her own government over how to handle brexit talks. opec is not just negotiating an they are working on an exit strategy. the goal is to reassure in esters it won't flood the market with oil once the agreement expires. it may take weeks to find out what really happened when u.s. soldiers were ambushed in nice year -- niger. the u.s. patrol did not expect contact with the enemy. for americans were killed. are not, regulators
reporting results this week. the authorities want to make a stock market stays stable well party limbo -- leaders are meeting. companies of said they will delay their reports. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. julie: this week, there is no shortage of potential catalysts for investors. it's a big week of earnings. mcdonald's reported today. there is tax legislation and the decision on the next fed chair. in europe, there is the ecb meeting and the crisis in catalonia. joining us is david kelly from jpmorgan bonds to help us navigate that. dow, we record for the see the s&p and nasdaq push
higher. it has to do with the earnings. caterpillar hit a record. they are showing growth, not just beating estimates. how encouraging is that western mark -- that? summerwe see an indian in terms of the economy and earnings. going into next year, earnings growth looks good. exterior,ond half of you will see rising wage costs and interest rates. economic growth will slow down. investors need to maintain their discipline. people need to be cautious. julie: we can trot out all of our winter is coming references. i want to take a look at the bloomberg. up,of the things you bring it's the idea of valuations
being stretched. the yellow line here is the average. we have an above average or quite some time. that doesn't mean we are going to come back down. david: that's right. a terrible timing tool. they are good at telling you about long-term returns. this is about 13% above long-term averages. if you go back to an average ratio, you can look at stock prices. if earnings are up five cent, you only get 2.5 cent on prices. be overall market should not as good going forward. that's what people need to think about your it they need to reduce expectations and be more
active and look or better pockets of value in the market. been somere have predictions that we should not be where we are now. you can talk about earnings and you can talk about the growth, are those the primary factors driving the rally? ared: the two other parts where are you going to go? 30 years ago when we had the stock working rash, the 10 year yield that day was 10%. you could just move your money into treasuries. today you can't. that is keeping people in. we don't really know what sort of tax cut we are getting next year. wagered --d have waited and gotten lower tax rates.
mark: you are saying underweight fixed income for now. u.s. 10 year is 2.4%. to move oney point from 2.4%? is it different this time? david: the fed is likely to the raising rates. is, the fedeconomy is going to raise rates in december and probably twice next year. if you push those rates up and tapering from the ecb, all of these things offer more inflation and growth. frustrates the 10 year yield up to 3.25% next year.
mark: i've got a chart here. a correlation between the euro and the euro stoxx 50 leading up to the issue you mentioned. does the ecb boost the euro and thereby have a detrimental act on european earnings and equities? like that simple or bad. the real issue in europe is getting investment going. that is happening now. we have a robust recovery emerging. if the euro goes up more, that can help returns for u.s. investors in european stocks. i think europe will do well with a higher euro area -- euro.
you as ie got to ask am in london, some are suggesting that maybe mark carney if he hikes rates could make the mistake some of his fellow central bankers did in the past. might it be seen as a big mistake given the economy if the bank hikes rates next week? david: i think the uncertainty about frexit and the level of sterling might you reason to hold back. the bank of england has so telegraph a move that they would undermine their own credibility by doing so. given where they are right now, i think they will go ahead. i don't really worry about it in terms of the u.k. economy. can they control sterling to make sure it stays low and help
them grow exports? julie: you mentioned you are looking for a rate increase in september -- december. you did not mention who will be in charge. look atds me to if you the rate increases. recognize,thing to janet yellen is the most dovish candidate. the president might nominate somebody who follows what he wants to happen, it's like nominating supreme court justice. once they are in it, they are think it's ai lower balance. john taylor might be more aggressive. julie: we have an interesting story that posits no one who is in charge, we won't know until
the last moment. traders are betting on a flatter curve no matter who is in charge. david: that seems to be once in the users market area i just don't believe it. this long rally will come to an end. also, just bringing the balance sheet the other way, if it meant nothing, why did they do it? actually reduced long-term rates by 1%. year, theyr the next will do this. if you are looking at the comparative returns between that and stocks, is 3.25 enough to
make bonds look more attractive? david: at some stage, yes. got zero credit risk, that's an interesting issue even what we are doing with the budget. once happening here is the stock arc it goes up and those valuations get tougher. get 3.25 by this time next year, most of the bond market loses money. you have to be very selective. you've got to be specialized in terms of what might do ok in a tough environment. david, thank you so much for spending some time with us. mark: great stuff.
mark live from london, i'm artan. julie: it's iphone supplier the jumped 22% this morning in european trading. thatngs smashed concerns the manned for the iphone ask would not live to forecast. joining us now is taylor riggs. there has been a lot of concern about the iphone x. we are reading a lot of tea
taylor: they will see the revenue in the fourth order. then, they provide some of three sensors. the ceo said they launched a global platform by a leading smartphone manufacturer. we know that is apple. they get 20% of revenue from apple. analysts said the third order took a hit from that. we have a chart of revenue. it was weaker than expected. itrth order guidance smashed out of the park. the jump was 200% in that quarter year-over-year. mark: is everyone going to benefit rum this? -- from this?
taylor: they were looking at some of the other momentum's. higher again.ere these are just misguided and the apple food chain is going to be fine. some shares are gaining. amf is outperforming today. much for theyou so timing conundrum. the: let's look at some of business stories in the news. barclays is looking at some risky business. the british bank may push into debt trading. they are dealing in complex credit products. they are encouraging the bank to take more chances and recapture market share. brexit could have broadcasters leaving london.
they hope for a quick deal that would ridge the u.k. divorce from the eu. among companies leaving, discovery and walt disney. new hubs include the netherlands and ireland. company makes products ranging from elevators to aircraft landing gear. they are increasing the production of a new jet engine. they are making a move into aerospace. that is your latest bloomberg business/. -- business flash. the saudi's have plans for growth. we will play some of that interview next. this is bloomberg. ♪
julie: i am julie hyman. mark: this is bloomberg markets on bloomberg television. he aims to have $2 trillion and asked that's under management by 2030. we spoke exclusively to erik schatzker about the future investment initiative. eric asked about the size of the international partners. >> i'm not going to commit to a number. if you're looking at the investments we have, two of them are international. are theinternational typical investments like $500 million here or there.
-- megathe writer partnerships. we will continue doing those. i think we will continue. this is our way of doing it because once you go big, you can't change things. it's not just going to be a passive investor. this is something we want to do. if you look at the terms with oftbank, we change the face the gp lp relationship. at the same time, we are not typical. we have all kinds of things.
we have people on advisory boards. we know what is going on. we have the right to bring more governors into the relationship. erik: that sounds like what you want out of future partners as well. yasir: absolutely. erik: is that more of a priority to you? these mega partnerships? yasir: we do have some likediaries of hours salix. they are looking at these. differentribed budgets into which you put investments. fun,e total investment what percentage are you dedicating toward international? is localrrently, 90%
and domestic. 10% is international. think this number will continue. we will have cash. we will grow our portfolio and that is one of our active's, the growth of our portfolio. 2025, the percent is going to be up on the international front. that 25% area where is cash coming from now? we haven't looked at the investments we have today. it is basically all liquidity. we need to look at leverage. tot's going to be limited
things. use theroject, we can underlying project as a base for to leverage with no recourse the rest of the portfolio. erik: how do you plan to lever up? yasir: we just hired a new head of treasury and corporate finance. that is part of his mandate. he will be with us in the coming month or so. that is one of the questions we will be asking him and hopefully getting a better answer. erik: do you think you want to lever up one time western mark two times? less: i think it will be than one.
we are still working on our strategy. the numbers are still yet to come. erik: that's with the intent of reach movie -- improving returns? yasir: you have made investments in other countries. uber, for example. we have done cosco in south korea. that company. item for us.ticket i think we will continue. , wee see good opportunities have a good process. process, people. the number of people was less
than 60. today, it is 200. in two years, it will be 500. the number is drawing. advisers weto the are working with, they are the best of the breed. they are from all over the world. new york, everywhere. at that, it'sook really big. not going to go to the direct investments until we are more comfortable. i think in the future we will see more. executives the chief officer of the saudi public investments. he was talking to erik schatzker. cannot, it's the european close next.
we are 35 minutes away from the end of the tuesday session. stocks are lower or the third day in three. check out the currency boards. ecb is awaiting the big meeting on wednesday. the euro is rising against the dollar. i will leave you with the bond board as we approach the board -- close. this is bloomberg. ♪ who knew that phones would start doing everything?
this is the european close on bloomberg markets. ♪ mark: here are the top stories we covering from the bloomberg and around the world. a new turn in brexit negotiations. philip hammond sides with the prime minister and backs away from a push for an early brexit transition. where does this leave negotiations? how much could bunds and euros move if the ecb cuts on the purchases? the latest on the ecb decision as it looms on thursday. .n interview with tony ressler does he markets climbing higher having a look-- at european equities,