tv Whatd You Miss Bloomberg October 25, 2017 3:30pm-5:00pm EDT
president trump: it was almost a lovefest. maybe it was a lovefest there there is great unity. if you look at democrats with bernie sanders at hillary clinton, that is a mess. mark: the president was discussing his meeting with capitol hill and senate republicans. he added that senator flake to the right thing for himself by not running for reelection because the poll numbers in arizona were too low. rex tillerson is calling on pakistan to eradicate terrorists . secretary tillerson spoke on a visit to india. >> there are too many terrorist organizations that find a safe lace from -- in pakistan by would -- to conduct their attacks on other countries. he -- the u.s. is concerned about terrorist groups undermining stability in pakistan. a speech in japan next month at
a conference on women empowerment. the white house said today the white house adviser is visited -- visiting prime minister of eight. the white house did not answer questions on whether mr. trump would join the president on the upcoming trip to asia. a rock 'n roll pioneer is dead here the associated press sites a conference in louisiana that said he died tuesday of natural causes. he was best known for his hits, moon very hill, and ain't it a shame. one of the first 10 honorees to -- inducted into the rock 'n roll hall of fame. 89 years old. 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. ♪
>> live from bloomberg's world headquarters in new york, i'm abigail doolittle. fu.let: i'm scarlet joe: i am joe weisenthal. abigail: the s&p 500 on pace for its worst day since early september. joe: the question is what did you miss question mark scarlet: -- miss? plus, taxe just -- reform remains on the present's plate as mixed signals come out in congress. we speak to a congressman involved in the debate. jeff good luck says it is a moment of truth for the bond bull market or what the 10 year yield does from here on out. the race for the fed chair has claimed another victim. president trump is set to have cohn, onceinst gary a favored pick among fed watchers, but his disagreement with the president's response to
the violence in charlottesville, virginia, lowered his standing. let's bring in bloomberg's white house leader. what do you think it was, the disagreement in the relationship, tax reform, or something else? >> a combination of things. charlottesville did not help. the president has reportedly been disappointed with the pace of tax overhaul and gary cohn is supposed to be leading that. i think his advisers told him they did not think gary cohn was the ideal guy for the job. they think he is qualified to run a big bank but not a phd economist. all the past fed chairman had been. he doesn't have the ability to seek a broad consensus. that is what hurt him. joh: is the white house going to eliminate one after the other games to -- game show style or get this over with and announce it?
>> you know who the president is, right? it.eems like he told lou today that he is down to two or three people. he said he is looking at janet yellen, john taylor, and he had not mention cone or kevin and those remarks. we think both guys are out of the running. we think cohn is. when the president announces his pick, will he do 84, the fed chair and the vice chair and maybe other nominees, or just the chair on his or her own? >> we have no idea but he said he is considering just that. he speculated with business network not -- last week that he is thinking about appointing pal to lead the fed. we do not really know which one
would be chair in which would be vice chair but it could be a twofer kind of deal. >> all right. on fed watch for us in washington. we are also on fed watch. i cannot get my words out from a policy perspective, we want to bring in tim, professor from the university of oregon and contributor who joins us. let me start with this idea. to -- to what extent the leaf that the trump asked -- trump administration on the back of fiscal policy, tax cuts or deregulation, factor into who gets -- >> it is an interesting question. we want to know if the next chair will be supportive or not of the push for 3%. economists inst the mainstream are cautious about the 3% estimate. janet yellen is cautious and it will lead them to really want to see evidence that the
supply-side boost is really coming that for this part of the models. that is a? -- a question mark looking forward. some sort of regulatory lead 3%, to that mean the framework we usually used to describe the various candidates is crude or perhaps misleading? >> it is definitely misleading. i admit i use the framework myself. typically, it is really hard to pigeonhole any of these individuals into the hawk or the dovish camp. in the past, may be a dove with someone who wanted higher inflation but the institution as a whole is committed to a 2% inflation target. hawk or dove now is about how that forecast is unfolding and how does a policy maker think the path of the race is appropriate for that forecast.
with that stick comparison, what about the model relative to the taylor rule? which one is considered more hawkish question mark there reason to think fed chair yellen is more hawkish than john taylor, widely considered to be a big hawk? >> right. rulessue is did the taylor suggested overly tight monetary and theuring the crisis recession? the answer is probably yes, if you took it in its literal form, it would put us far too tight a monitor policy and probably now, given that mutual real interest rates have fallen. definitely the situation that if you looked at the taylor rule, it would appear hawkish. what janet yellen wanted, you have to think about,
would john taylor be more sympathetic to supplies died -- supply-side stories rather than concerns of that themselves. joe: in other words, it seems plausible that john taylor may take a more positive light on thep's actions to boost economy and come to the conclusion they would not necessarily be inflationary and thus, perhaps, and this is just speculation, perhaps would not lead to automatic rate hikes, per se. >> correct. if you think potential growth is forecast to be somewhere closer to 2%, the interest rates in the near term might not be as high. in the medium-term, it is worth noting the higher path of potential growth would suggest a higher underlying rate of inflation, of interest rates.
even in the short run, it would be more dovish and you would not need to lean against it. in the longer run, we would want interest rates to be higher to compensate. thelet: what happened in last fed meeting was extraordinary. janet yellen it knowledged it is a mystery why inflation remains so week. a new era in which fed chair is no longer -- no longer need a built-in answer for the inflation conundrum? tol the next fed chair need articulate a specific reason why inflation can get to 2%? or do we leave it at we don't know? >> as long as they will have an inflation target and say we want inflation at 2%, they will need a view of how you will get there and why you're falling short of that target. the story of we don't know what is going on will only take you so far. if inflation continues to be lower than the target, they need
to figure out why and what they could be doing to resolve that. >> with four point $5 trillion on the fed balance sheet and so much liquidity out there, is the system so fragile that any change at the home of the federer ideology could be destructive? >> i do not think anyone person should be disruptive to the institution. there is institutional framework and a commitment to at least a goingtical path of action forward depending on how the economy evolves. there is a commitment to the idea that the balance sheet reduced, and the process by which that would happen. there are a number of other people besides the chair that would have to come on board with any plan the chair wants to make or a deviation from the current framework. i think overall, the institution will be somewhat resilient to the change at the head of the
institution. it is much more of an interesting question of what happens if you, after a number of these spots become filled, right now, one person will make a huge difference in the near term. joe: a few moments let's talk for a second, there is a view it might represent the continuity candidate. how accurate is that in terms of a characterization? >> i think it is fairly accurate. he tended to be supportive of the current direction of the fed , largely a regulatory direction and the monetary policy direction. surface be on the somewhat more hawkish in the sense of, may be willing to tolerate a slightly more high interest rate path. more revealing of the regulatory framework. the experiencee
in the institution that would be very helpful for leaving the -- leading the us tuition in the future. scarlet: thank you for joining us. coming up, investing with the public investment fund. steve schwarzman sitting down with erik schatzker to discuss the $30 billion investment. this is bloomberg. ♪
discussing the kingdom's multibillion-dollar commitment. >>, -- >> for us, $400 billion pif, so as wet expand, there is scope the kos at least 10% per year. sometimes a lot more. we are starting a variety of new businesses. there is a real opportunity for many people to be investing with the firm. not think the scale is of interest in terms of inhibition. >> the reason i ask about that in particular is, is there another firm that has written a single $20 billion check to blackstone? >> probably not.
saudi arabia has so much more, it will need to invest. $2 trillion at some point, less .han 15 years that is why i'm specifically interested in the relationship between the pif and blackstone. these things will happen slowly actually. it public and that will be a next year event, toward the end of the year, as it is scheduled, depending on markets, they have other mandates they have to find. i don't think the growth would theoretically outstretched the ability of blackstone to keep growing. part of what we do is start new investment areas and there's plenty of room in what we do, generally.
i think there will be a series not necessarily a $20 billion level. theory of the cases to try and find the best managers in the world and have partnerships with them as opposed to some sovereign funds have 300 and they give money to it. this will be more concentrated. >> hellas do you think you can help? generally,di arabia the general advice outside of normal investment to the kingdom is personally interesting to me. very dynamic person i met in new ago, onear-and-a-half of two people in new york we met with, he laid out the whole vision for 2030.
three new cities. the liberalization of the types look at andople say, why are they still doing things like that? you have a population and 70% of it is below the age of 30. the fact that he is close to their age is interesting. but he is a very smart and energetic and visionary person. someone liked with that institutionally is fascinating. steve schwarzman speaking with erik schatzker. abigail kohn is time for the bloomberg's newsflash. being sued by engineers for alleged pay a gender discrimination per the women claimed the company violates the staffed ranking.
they say it offers less compensation and fewer promotions to people who are not white or asian. paysche bank has a great to 200 point million dollars to resolve charges it manipulated interest rates between 2005 and 2009 here the german lender is found to have counterparties and boost of traits. it will go to fortify states for cost linked to the offered rate. a presidential offer granting local governments more authority in response to requests from firms in the drone industry. they have been forced to test and other countries due to the u.s. restrictions. scarlet: let's get you to the stock of the hour. falling. analysts await details on what they believe is a lack luster order.
this has to do with a sale or another of key drugs. >> yes. the biggest drug treats very -- has various applications. it is not doing very well. out the company said there is $140 million inventory in the channel. for some reason or another, the inventory has not been moving and he said that is not then priced in. looking at the bloomberg, we have prescription data and basically, we have seen a tumble in prescriptions over time. he does not have terribly high hopes for the quarter. if you look at what the stock has enduring, it looks like other folks do not have terribly .igh hopes joe: biotech as a whole has been rolling over a little bit. the biotech weakness.
jitters abouteral the space now? how much is a specific or anxiety about the valuations we're seeing? specific.necessarily the group has done well. we have seen a little bit of in the group. there is also periodic jitters about the high pricing and whether there will be regulation, that has not materialized despite the rhetoric going on. but it is a little different. iran, a snapshot of the earnings we are looking at. day three point 4%, little more than 3% we have seen on average over the past several years. choppy afterpretty earnings are it over to the right is the price change column we see here. this one here, we have seen some pretty all over the place reactions to the past earnings
reports. a little bitcome of a lower sales growth versus some of its competitors. he is perfectly -- personally pushing fortic and some, if there will be any more fireworks were excitement from the company, it will be on the call, he says, potentially. --have seen this wrought for broad portfolio on drugs to treat migraines. when eli lilly filed an application for a migraine drug, there were comments to indicate it is going to file and it does not believe there will be a patent challenge. so that could be a catalyst for this. you.et: thank a next, results, a big couple of days for earnings. live up toe expectations? this charts that you need to see. this is bloomberg.
scarlet: coca-cola shares down for the fourth straight day, losing ground for the six time in seven days. sales beat analyst estimates thanks to the loss of the -- as the chart shows the trajectory for revenue is down in the last four-five quarters. 15% but to bell fair, organic growth increased 14%. the reason is the new ceo has been cutting costs, offloading bottle operations to slim down the company. no surprise the top line would go down as well. investors adopting a wait and see approach. >> they are trying to pull off a turnaround as is aaa. in white -- chipotle. sales but whenre the e. coli situation broke out, same-store sales declining more
negative. more recently started to recover. inventories up at a five-year nonetheless,'s but it is probably not a relationship chipotle or the investors like. at a chartooking that might tell us something about the changing economy. a big at agency versus the s&p 500. it goes that about 20 years and as you can see, they always track each other. if the economy in the market is doing good -- we are seeing a switch where the ad agency is selling off sharply in the last several months while the s&p is making new highs. it could represent investors betting on profound structural shift. how much of the ad money google is taking, the revolution in consumer packaged goods companies. an interesting chart that tells you some about a long time
its worst0 posted days in september, the dow falling 100 points. i am abigail doolittle. scarlet: i am scarlet fu. joe: i am joe weisenthal. we want to welcome you to our closing bell coverage from for clark to 5:00 p.m. eastern. scarlet: let's begin with market minutes. stocks,ay for u.s. dropping the most in seven weeks, the dollar slumping. i guess you could blame it on an even corporate earnings? were picking up, but what causes that? is hard to say. a notable selloff. the facte also for that all sectors are down. if we looked at the grouped ranked returns function, take a look at that, all 11 sectors
lower. 2.3 percent. an ugly day for the s&p 500. let's dig into these movers behind these declines. chipotle mexican grill down 15%. they missed earnings by 18%, blaming everything from hurricanes to viruses, lots of problems there. a big mess for that stock. dr pepper down on the day after the marriage off to a rocky start. that stock having its worst day since april. boeing the biggest drag on the dow, shares lower, a delay tanker for the u.s. air force. with aerialles refueling issues. so all of this marred the
quarter in which cash flows swelled and shipped a record number of airplanes. 13% as thegroup down company saying costs will be higher than investors expected for the rest of the year. joe: let's look at the government on market, starting with the two-year and 10 year ticking higher today. this is the story, the drift higher in yields, the mid-2.2% range. is probablyear spooking equities are little bit with a hawkish turn and higher rates. to look at south africa long-term bonds, a very sharp move higher as the government announcing more debt, so concerns about its debt sustainability mounting once again amidst this emerging market rally we are seeing. right now clearly some investor
anxiety about south africa. scarlet: we will talk to black rock later on about that. land, the peso rowling after the central bank decided to boost options and hedges because of volatility. over the past month, the peso is the worst-performing major currency and traders have been repricing the risks of nafta the increasing odds of a popular shift in the 2018 election. -- eyekeeping and i on on pound sterling, strengthening the most in three weeks before next week's boe meeting. mark carney tightening may be needed. declining after the bank of canada kept interest rates unchanged. mentioned what is going on in south africa, the rand pledging after south africa
ramping up debt to plug that budget deficit. the turkish lira plunging versus the euro to a record low after reported that european bank for reconstruction and development -- we have seen relations between turkey and germany worsen over the year. let turkishsing to politicians campaign there before the turkish referendum. none of the banks have formerly put a freeze on funding, but tighter restrictions. joe: on commodities, oil and gold, not too much happening here. west texas intermediate hanging in above $52 a barrel, but down .5%. gold is essentially unchanged on the day. those are today's market minutes.
scarlet: "what'd you miss?" may be having their moment, the 10 year treasury yield rose to 2.4% earlier today. luc to unlockfrey good tweeted the following. -- jeffrey gun is i read to discuss jersey. jersey. was or anything that prompted yields to rise. we are trying to look for a catalyst. >> there are two things. the ecb reducing asset purchases as early as tomorrow, pretty bearish but the long end of have the central banks globally taking duration out of
the market. the second is potentially more hawkish fed chair, so john are seen as more hawkish than janet yellen. because of that, the bond bears have a little help here and people don't want to put on extremely long positions. stock do you place on the technicals, 10 year yields coming close to 2.4% in july, then slicing threw them in the last couple of days. is that significant to you? was a big level if you look at the charts over the last -- since march this year. 6.2next technical level is -- 2.62%. these ranges are sometimes broad 2.4%, so it looks
like them market it will be between 2.40 and 2.65. that would not be surprising. speaking of technicals, one indicator that is interesting to watch the net speculative longs on treasuries recently hitting a record high, but if we look at this chart in the bloomberg we will see this positioning near record highs, but the last time it has gone high at that time, it has dipped down quickly. does this tell us the investors have gotten it wrong and we could see rates drop into that low 2.3% ande lower? >> it is possible. i believe we are still stuck in a range. 2.20 22.60, but we will need catalyst,of external
faster growth or the ecb tapering asset purchases. all those things are mr. necessary. bondsll market in probably ended a year ago because we did not follow the trend that was going on since 1990. we would be near zero like german bonds today if we had followed that trend, so we have broken trendlines and are at the end of the life of the bull market. saying that because this trend is broken we are immediately going to go to 5% or 6% on 10 year yields, i think that is optimistic or pessimistic depending on how you look at it, but we could go sideways for a number of years and not see any secular trend in the bond market. >> if we do go sideways over the next few years does that mean we are in a rate trap? we also hear there is too much liquidity out there and central banks don't know how to clean it up, but in terms of bringing
rate to a normalized level, what has to happen? >> if you look at the very long-term, 10 year yields between 2.5% and 5% is not unusual. when you talk about normalizing rates, we have to think about what might keep the 10 year yield here. we have this continuing me and during with inflation a little higher and the federal reserve that ends up meeting the dots for the first time ever since they started putting out the dots, where they hike three times next year, that is something the market is not prepared for. you wind up seeing curves flattening were two-year yields 2% towards two point -- 2.5% and you end up with the flat juncker. if the fed keeps hiking after that, that's when you could see rates rise further. we are far away from that right now. joe: you mention this might be
anxiety about a hawkish turn at the head of the fed. do we have enough data at this a clearsed -- to have idea of how the bond market assesses each of the remaining candidates? or are we filling in dots based on partial information? >> i think it is speculation impartial information. taylorossible that john might be more hawkish than janet tolen, but maybe that means hikes next year instead of one the market is currently pricing in. i don't think it is the end of the world, but the 10 year sells optical people say we have a more hawkish person at the fed and have have to sell and don't whatto own bonds, but what happens is that gets bought and it is really the short ins that wind up getting sold. that is where the treasury department is likely to be issuing more bonds as deficits grow over the next couple of years as well.
♪ it is time now for first word news. president trump has described as said reporting that hillary clinton's residents are campaign and the dnc help pay for political research that ultimately produced a dossier of allegations about mr. trump's ties to russia. >> i understand they paid a tremendous amount of money and hillary clinton always denied it. it,democrats always denied
and now only because it will come out in a court case they said they did it and admitted it. said theesident dossier was made up, which he called a disgrace. brazil's president has been hospitalized. newersuffering from logical problems and is being evaluated in the capital. has been involved in a five-month corruption scandal. the lower house was scheduled to vote today on whether he should stand trial before the country supreme court. is ine secretary matta's the philippines for a meeting of the association of southeast asian nations. he complimented the philippine military for its recent victory over islamic militants who seized a city. he noted the nation fought a difficult battle without having any credible claims of human rights violations against them. all incoming flights to the u.s. will face new screening procedures that include security interviews are both visitors and
american citizens. the announcement by the tsa comes after five global carriers including emirates, cathay pacific, and lufthansa said they will begin conducting interviews beginning tomorrow. the new rules come at the end of a 120 day deadline for airlines to meet new u.s. regulations falling the ban on laptops an airplane cabins. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> the gop leadership is attempting to put the attention on tax reform. headlines keep coming out of washington. joining us now on what this means for tax reform in the republican party from capitol hill is the representative from virginia. joe: congressman, thank you for
joining us. before you pass the theoretical tax reform bill, you have to pass this budget. theconfident are you that house is going to pass the budget today? budget, 12d the appropriations bills, and this is basically proceeding through the conference report to save us a little time. i think the vote is there. tight, but ie think we get through agreeing on the conference. that will enable the house to get the tax package done before thanksgiving and the senate gets it done before christmas. scarlet: time is of the essence here. your colleague has called the senate version of the budget atrociously bad, but the house would still adopted. would you make of that characterization? about thealking budget itself, so the deficit number is 66 6 million, some not
a good number for a lot of reasons. billion, so not a good number for a lot of reasons. of the aisle,ide we wish we had the democrats with us. chuck schumer was for the corporate rate reductions and now they are fighting pretty hard against it. they put in their own tax bill trillion,axes $10 spending up $11 trillion, and debt and deficit higher than the republican alternative, where we cut taxes. ourre outperforming competitor, but our own side can do better on the spending side. the american people know that is what is broken. they are sending their money to washington dc and it is not getting back to the people, so the swamp needs to lose some power and we need to send some of the money back home. scarlet: what is the freedom caucuses thinking.
are there any red lines for you? >> we had a bread line to leadership that after the senate did a total fail on obamacare, a full bill, a half bill, and then a skinny bill and they could knock at the vote there, so the freedom caucus has a sense of urgency. we want to see the bill written within two weeks, so ways and means committee will write it up and leadership has assured us we will see the full bill and we can share it with constituents back home. that is our major concern. we have agreed to the tax 25%age, 20% corporate rate, pass-through for small business repatriation from abroad, and a middle-class tax cut, rates coming down for everybody. that is what we agreed to. if that package stays in place, we are excited about it. leadership has done a good job and started communicating with
us early. we all got together, and this is a good bill. this will get the economy growing at 3% instead of 1.5%, and that is worth about $1 trillion over time, so it is good news. there is aestimates, good back-and-forth in the wall street journal the last couple of days. very high-end economists who are estimating $4000 in the pockets of the middle class, and there is a big debate on that come about read where the evidence lies and i think we have a pretty good case for the american people. joe: congressman in the process tryingrm politicians are to find areas where they can raise revenue. whenever you get into that, you people feelcertain strongly about not touching, including their 401(k) deductions. we heard the president say that
is off the table, but it does not appear everyone on capitol hill is totally on board with that. where would you stand on the idea of capping 401k deductions at a much lower level than where they are now? >> we don't want to mess around with people's 401(k)s. we are meeting with ways and means on the corporate rate and that has never come up, so i don't know the origin of that news story, but we are dealing with $1 trillion issues and the trillion dollar pay for and how we are going to pay for it, and that is why the urgency. when the swamp kicks in and k street says we want our special deal, special deductions, maintain allthey those loopholes, they will lose money that should go back to the middle-class worker back home, and that is what we are fighting for. scarlet: thank you so much for joining us today. , what drove today's
♪ markets dipped across the board today. abigail: all major index and a few overseas taking hits. let's bring in the chief technician for mkm holdings. what a day. pullback after record highs. so the question is whether the momentum is showing signs of exhaustion. a it is amazing that 10-handle dip seems like a big deal. it could be the start of a consolidation pullback.
that would set up a better entry point for a year and rally, but the big picture is that one day does not really change anything and all the primary trends are bullish. what about for the dow, another high yesterday on its own? for the dow and it has been climbing? options.dow that was up six days in a row leading to yesterday as the dow was making new highs, so the last few times we saw that were made 2013 prior to a market pullback, then more recently in march of this year we also saw a similar scenario. you can see the dow rising in the white line and the vix rising at the same time. whenever you see volatility rise
in tandem with underlying assets, it gives you pause for true concern. that is one tell. we saw a little volatility today and there is probably a bit more to come for the dow in the short term. abigail: there could be more volatility ahead near-term? toin march, there was a 3% 4% pullback. that is all we can anticipate at this point. anymore than that, you would have to see deterioration on the surface. abigail: you think that is a refresh of the uptrend? your point to reevaluate some things and trim some positions and raise a little bit of cash so you can do ploy it should we get that pullback. ofgail: speaking reevaluating, the russell 2000 about two months ago, it was the , nowndex under performing up 10% on the year. isnow that seasonality important, but you have an
interesting chart here. >> the small caps have underperformed large caps year today. we have the russell 2000 here relative to the s&p in the orange line. the white line is the average seasonal pattern of that ratio over the last 20 years or so. what we tend to say his underperformance into the october-november timeframe, then you see the small caps outperform heading into the year and an early part of next year. if you combine that with the dow overextended and small-caps consolidating, that is a trait we could see heading into year end where smalls reassert -- small caps reassert themselves. abigail: before today, the nikkei had been on an all-time winning streak. do you think maybe we are breaking out of long-term bid? >> this is the number one pushback we give to the fact the
market is overextended and we are due for a bear market. while u.s. markets have been trading higher for the last 3-4 of the world in a lot of cases has gone nowhere for the last 10 years. in the case of japan, were talking about 25 years of the base and we are just now breaking out above that phase. this is a chart you can buy on weakness. this is a trade you want to be in for the next 12-18 months. a 17 daythis came off winning streak, longest in history, that kind of strength out of a base suggests ha healthy upside for japan. abigail: scarlet, back to you. scarlet: thank you very much. coming up next, the market of truth for the iphone x right around the corner. apple setting a high bar with facial recognition technology in the but maybe it is too high tech for suppliers.
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if you're doso done... complicated, so done... call now to enroll in a plan from unitedhealthcare, like aarp medicarecomplete. [sfx: mnemonic] >> i am mark crumpton. house ways and means committee kevin brady says before a final tax plan is presented next week that he expects a deal with republicans who have expressed concerns over state and local tax to directions. does notbrady says he believe cutting the detections will four states like new york and new jersey which pay the government more in taxes than they receive and services to donors.igger net theresa may is doubling down on her promise the parliament will vote on a final brexit agreement before britain exits the block. may addressed parliament just lawmakersd davis told
there was a possibility the vote could happen after the u.k. leaves. under theetable lisbon treaty gives time until march 2019 for negotiations to take place in the but i am confident because it is in the interest of both sides to vote on that deal that we will be able to achieve that agreement in time for this parliament to have that vote. >> negotiations have stalled over the terms, sticking points include the northern ireland border and the size of the build the u.k. must pay. kenya's presidential election will go on as planned tomorrow. to getreme court failed enough judges to hear a last-minute petition to postpone the vote. free, fair,d that a incredible vote could not be guaranteed. israel has approved the construction of nearly 200 homes in east jerusalem.
the decision by jerusalem city officials follows last week's approval to move forward with roughly 20,000 new homes in the west bank. in settlement activity true condemnation from the palestinians who said the israeli actions threatened president trump's efforts to restart middle east peace talks. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i am mark crumpton. let's get a quick recap of today's market action. the kleins for u.s. stocks. .5%.&p off by a drop of half of 1% is big enough to be the biggest decline since september. joe: these aren't big moves by historical standards am a but by recent actions, the stands out. scarlet: another stock standing out is amgen after the biotech
company raised its profit forecast for 2017. there was a hit to its puerto rico operations, but cost-cutting and efficiency measures allow the company to boost its forecast. nevertheless, the stock is down him maybe because its revenue camedrug's in lower than anticipated. abigail: the success of the iphone x depends largely on apple's face recognition technology. light helpsnfrared the camera to establish the presence of a face, then there which dot projector flashes 30,000 dots on the user's face. cameraally the infrared reads the thousands of dots that helps the phone to decide whether to unlock the home screen. for more, let's bring in alex webb from san francisco. supply hearing about
chain issues and it sounds like the dot projector, there is an issue there. component that requires a huge amount of precision in the assembly, and that has been difficult for the people who take the disparate components and piece them together and make the dot projector. that is to companies in particular, lg out of korea and sharp. how has apple reacted to the difficulty the suppliers are having? >> they've done a number of things, brought in new suppliers to add more components of they have more leeway. they have slowed down some of the processes, but because the components are fragile, it requires a slow manufacturing procedure. they have relaxed a little bit some of the specifications they providers.
they said there have been to specifications, but we stand by our reporting. has used thissoft particular technology in its connect controller for the xbox, but apple is applying this technology differently. how is it different and perhaps more demanding on the suppliers? >> it is a question of scale. first, the xbox, the connect for the xbox, was the size of a book. the iphone is clearly on the millimeters scale. the other scale impact is that over two years microsoft sold 24 million connects. apple will sell about 20 million iphones on the first weekend alone. for the suppliers to ramp up production has been a challenge and one they struggled to contend with. scarlet: poll always at the
cutting edge of technology. i can't imagine this is the first time with they have pushed -- where they have pushed their suppliers to the limits of technical or throughput capabilities. are there any parallels we can cite that has stretched the supply chain like this? >> never in the flagship product. there were some issues with the apple watch, air pods, and the iphone 7. one of the particular colors was in short supply, but the product across the board having issues is the first is the iphone has become a $150 billion a year revenue driver. is there any possibility that the iphone x is not available for that november 3 debut or in enough size to
make it meaningful? >> it will be available. ,he most recent estimate taiwan-based analyst, he said 2-3,000,000 available on launch day. the thing that is different is a lot of people now preorder iphones, so the lines outside stores aren't as a telling factor as to how much demand there is. by ordering online, some of these won't be delivered for weeks or months. the people willing to wait will do so. scarlet: thank you so much. the german government wielding its influence to restrict financing to turkey. a portfolio manager at black rock's strategic fund will be here to break it down for us along with other emerging markets. this is bloomberg. ♪
scarlet: "what'd you miss?" emerging-market currencies tumbling, the longest slide in three months. the climbing after south africa's finance minister painted a bleak picture of finances. german banks are restricting financing to turkey, no sparked a selloff in the turkish lira. overshadowed a strong day for the mexican pesos and strong fundamentals for the asset class overall. portfolio manager black rocks strategic fund joins us now. turkey, south africa, mexico, let's start with turkey and the
development about german banks restricting the financing. a formal freeze, but imposing tighter restrictions. how does this play out? is a country that desperately needs foreign funding. they have a large current account deficit, probably 4% of gdp. there is indebtedness of $200 billion that needs to be refinance. foreign banks if they decide to interrupt about funding, that country is in serious trouble. hasgood news is that turkey always been able to generate that funding either through high interest rates, currency weakness. haveocal corporate seem to a significant amount of foreign assets. clear, this development
is an actual reduction of and closing turkey, turkey is in trouble. about southalk africa, where we have seen the rand tumble and yields soar on concerns about sustainability plus increasing debt. how has is caught the market by so much surprise? africa should not have caught everybody by surprise. it hasn't. today's news was a budget deficit we all thought would be 3% and is closer to 4% to 4.5%. this is a country that has given up on stabilizing its debt. they're comfortable with increasing its debt in the medium-term. this is a long-term story. this is a country not able to grow because of significant social issues, be fiscally responsible in that context, so it is very difficult for them
and nobody should assume they could. scarlet: let's bring in mexico. the pace of the worst-performing major currency over the past month. are talking about repricing the nafta negotiations and a collapse of nafta completely. whichre a scenario in nafta could collapse in mexico does not come out worse off? >> i'm sounding like dr. gloom here. we are focusing on the problems. scarlet: we are painting you in a box here. model, the development that mexico has built since the 1980's and 1990's was predicated on open trade with the u.s.. renegotiationt disadvantageous for the mexican story can be highly problematic. we still maintain they will end up with success. there is too much to lose for both sides from a collapse.
there is a possibility for a renegotiation that ends up with .ll three countries it is clearly becoming a risky position now. joe: you talk a you have been sounding like dr. doom, but the big picture is that emerging markets have had a rally pretty much for two years now and still close to multiyear highs. in this type of cycle when the trend is up, is it more specific to be country , or more important to get the big picture macro trend? isat the end of the day, it bottoms up, country by country, but i want to say the big picture matters a lot. story thanifferent
it was between 2011-2016. e.m. is doing something it has not done before. the capital inflows into the asset class are significant. are as manyre countries if not more that are going through a virtuous cycle at this point eared there are a lot of good stories to be excited about in the emerging growth,so strong extremely good technical backdrop with good opportunities , we remain invested and engaged. are a debtknow you portfolio manager, but certainly emerging-market equities come into account. the emerging market index down one point 6%, so underperforming in a big way. how do you take that into account in your decision-making? is that an early tell that some of those could come into play? >> if you look at the
longer-term performance by the month, emerging market equities have outperformed the market equities this year. today's pickup is partly an fx story and equity markets dropping in developed markets. it remains predicated on strong growth, strong earnings, higher profitability, cheap currency. that story has not changed that much. i still think it plays out. joe: you mentioned some countries are seeing a virtuous cycle right now where they are seeing real growth, real changes, fundamental improvement in their economy. can you name a few you are impressed with? >> argentina stands out. just in terms of this seachange in how the country has shifted over the past three years. just last week, the election results have strengthen the
hands of the government and allowed it to push further away with it are suggesting would be , itmportant set of reforms is a story that excites us. elsewhere there are a number of countries where the underlying story remains positive. this is like indonesia, russia. mexico if it weren't for the nafta negotiations, even india which has been a good story for the last 4-5 years has taken on a new level of excitement overnight because of the recapitalization of the banking sector. there are a lot of small stories. abigail: good stuff. thank you for joining us. next, setting aside politics to rebuild after a natural disaster, chris christie says
abigail: "what'd you miss?" massiverm sandy caused destruction and millions of dollars of damage and became a defining moment for the state government. chris christie spoke about how president donald trump should help puerto rico in the wake of hurricane maria. >> first off, to let the people know they have not been forgotten.
the politics were tense at that time in the country. the president was above it. it should not have politics inserted into it. there are things that should be done. he can go back to washington with a clear vision of what the damages, how severe it is, so to he will want him be less likely to do it. it is important to know their president cares enough about them to come on the ground and see them in touch them and let them know that he will not forget them. jersey,conomy of new one of more than 200 the put in bids for the new amazon headquarters. what is the enthusiasm say to you about the labor market today? >> it says everybody is desperate for jobs.
even though the economy is better today than in new jersey. more people in new jersey working today that any time in the states history. we are now third in the country and per capita income. things are going well in new jersey and we have recovered from the recession and are projects like but amazon with 50,000 jobs that average $100,000 a year, those are economy changers in a particular city. that's why you are seeing so much enthusiasm. it is not just the number of jobs, it is the quality of jobs come a which has always been a struggle in this economy to get people making more money and livable wage. everybody should remain calm because it's coming to new york. >> how are you on the pension
issue? as you are leaving office, to have a prescription for how to remedy that? prescription is there. there is no political will to get it done. the democratic party is captive to the public sector labor unions. billion dollars into the pension system in the last eight years. lastis double the amount five governors in new jersey put in combined. we got rid of cost-of-living adjustments to help save $120 billion over the next 30 years. we've done a lot of things to help it, but you can't keep up because the pension systems are people forget about the health benefits as well. the health benefits in new sector workersic are platinum plus as defined by obamacare. if we just took it to the gold
level, we would save $4 billion a year. we can take that $4 billion and put it into our pension system with another $4 billion a year would be good for 20 years. we have to lower benefits and people need to understand that. i suspect you don't have a pension. i don't have a pension. i have a 401(k) program. that is the way we have to get to in this country, but the public sector unions have a stranglehold on some of this and simply won't let it happen even though it is bankrupting our country. abigail: that was new jersey governor chris christie earlier today. scarlet: some breaking news crossing the bloomberg. a $1 million tax bracket is picking up steam in the house. chairs the house ways and means committee has been telling allies he does not like the idea of creating a fourth bracket the we'll probably have to do it because republicans are losing money
from other concessions. it is less about politics and more about scraping for extra cash to fund the tax cuts. we will keep you posted on any further developments as we try to get more details on this tax writing process. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪
joe: i will be watching for that ecb decision tomorrow. we will get a sense of the way quantitative easing is going for 2018. this, theon't miss numbers for initial jobless claims at 8:30 a.m. eastern time . joe: one of my favorite indicators. scarlet: that does it for "what'd you miss?" joe: have a great evening. this is bloomberg. ♪ who knew that phones would start doing everything? entertaining us, getting us back on track, and finding us dates. phones really have changed. so why hasn't the way we pay for them? introducing xfinity mobile. you only pay for data and can easily switch between pay per gig and unlimited. no one else lets you do that.
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. >> you are watching bloomberg technology failed the start with a check on your first word news. president trump says under jeff flake likely to the right thing by not seeking reelection in
arizona where the president says he didn't have a chance. against me from before he ever knew me, he wrote a book about me before ever heard his name. his poll numbers and arizona are so low that he could not win. i don't blame him for leaving, i think he did the right thing for himself. describing him as sad and a disgrace. clinton and hillary of the anti-campaign paper research for a dossier about allegations about his ties to russia. all incoming flights into the u.s. will face new screen procedures including interviews for visitors and american citizens. five global carrier said today they will start conducting interviews tomorrow. american airlines will invite naacp representative for a meeting to discuss concerns over potential discrimination against black passengers. this comes after the