tv Bloomberg Daybreak Americas Bloomberg November 21, 2017 7:00am-10:00am EST
alix: political problems -- at&t prepares for a battle in court. the justice department goes against the bid to buy time warner and running with the bulls. goldman sachs joining the running list of banks forecasting another year of gains to bull markets. david: welcome to "bloomberg daybreak: americas." i am david west in right here with alix steele. jonathan ferro will join us later. alix: it is risk on. it is a risk on field to the market. yet u.s. equity futures turning higher. the dow futures are up by up about 52 points. euro-dollar flat on the day. not a lot of action here in the u.s.. the action overseas in the european bond market strong buying in the periphery. yields moving lower by three basis points over in spain. five to 30 spread continues to
flatten. the currency move of the day is what is happening with the turkish lira. a huge move today. we will discuss that later on in the show. because there's a war going on between the president and the central bank. the last 24 hours hasn't brought much certainty and who will govern germany. chancellor merkel's largest partners expressed no interest in coming together and she said she would rather have new elections they go forward without a majority. matt miller has been covering each development and we welcome him from berlin. bring us up to speed. what is going on? matt: you summed it up quite well. the key is she doesn't want to go forward without a majority. the form still prefer a majority coalition with either the ftp and the greens or with the std her current coalition partner.
that seems so unlikely, the ftp having to walk out of coalition talks. the stp saying it is no way interested in prefers to stay in opposition. now the president whom you see here is going to try and force a coalition over the next few days and if he can't, he has a series of parliamentary moves he has to make. ftp ands not just the stp has said they did not to do it, there's a history. they didn't think it worked out very well. matt: that is right. they feel really burned p she has been in power for 12 years, so when you have been rolling a large country like germany for that long, you make some enemies .ecause you win and they lose
they were kicked out of parliament. the stp ruled with her in the last term. they got the worst result they have had in postwar germany. nobody wants to go back into government with her except for the greens. it is interesting that the makingwere so good at agreements with the cdu and the csu because really merkel's party needs to skew a little bit to the right since it lost votes in bavaria to the afd. it is going to need to try and get those back. alix: such advocacy in terms of politesse such interest see in politics. matt: for now, markets don't care. the german economy is so strong. unemployment is at a record low. business low that's business confidence is at a record high. -- business confidence is at a
record high. we have seen a history of governments around europe that under caretaker administration still do economically well. he saw it in belgium, the netherlands, spain, ireland. in the longer term, this could have real implications for europe. merkel needs to weigh in to help macron push through his reforms. theresa may would appreciate her health and brexit negotiations. how does this turnout longer-term if merkel is indeed at the end of her career? david: you will report it. thank you so much, matt. matt: i will be here. because before he was number two --the treasury, but kimmitt robert kimmitt. thank you for being with us. good to have you.
let me go to the ultimate question about angela merkel, what is the likelihood that he from now, she will not be chancellor? robin: i think that is a low likelihood at this point. i disagreed just a bit with matt and that i think there's a 40% chance that the coalition can still be formed either the so-called to make a coalition or another grand coalition. then i think there's a fortune chance of new elections and about a 20% chance of a minority government. david: who will have to give on that? there is some bad blood between angela merkel and the head of the fdp? reports.ve seen this do not underestimate the role of steinmeyer, the german
president. is largelypresidency a figurehead role. it is really the voice of the nation. at this critical point, the german constitution was put together in 1949, requires the federal president to play a key role and that is to look for every way possible not to go back to new elections. steinmeyer that only was the foreign minister into government he was also the head of the chancellery of the gerhard schroder. he's the most respected man in germany, very respected more broadly in europe, the notice states and elsewhere. he had his discussions with ms. merkel yesterday. he will talk tomorrow with the social democrats. i would wait until he has finished that first round of talks before concluding there is not a chance for a new coalition. david: bob, you know germany so
well. gives a sense of what you think what us to this place. because of the immigration position of angela merkel? bob: all of those are factors. emigration was a critical role in the election. merkel's party got 33%. their lowest figure since world war ii. they dropped a percentage points. .- eight percentage points emigration along with taxes and energy were critical parts of the coalition discussions. on friday, when they extended the deadline until sunday, most people thought they were quite close. sunday night things broke down because of the fdp thought it cannot get what it needed on key issues to modernize germany come to look forward to germany-based in a strong demographic challenge they need to integrate
challenges. alix: a fortis and chance to get a coalition, that doesn't happen. what does a angela merkel government with a weakened mandate look like? bob: it depends on the coalition. i think the coalition partners serving what some of the key ministries most important the finance ministry recall that in parliamentary finance -- the finance ministers do what the financial sectors does, -- mrs.cial secretaries do -- merkel still would be quite strong externally, both in europe and globally. that is where her points are highest. internally is where she will have to work very closely with
our partners, and in particularly to keep growth from taking place at the extremes, either far left or far right. david: tell us about her position and how it has been affected, particularly externally in europe. is it inevitable that she has been diminished because of this? does it mean that macron may be stepping in more of a leadership role in europe? david: you have an economy growing close to 3% this year. the kind of other assets that germany brings to the table. german representatives always play an exceptionally important role. clearly the results of the election and the breakdown of the coalition talks have put her in a position which is to spend a disproportionate amount of her time. she had to cancel a meeting with the dutch prime minister and
we've got critical things coming up in europe. we want to suggest a germany coming together on an outward looking basis. it is on the quite inward. it presents an opportunity for mr. macron to step up but even he said that he cannot step up without germany. he is looking for germany to solve its internal political disputes as quickly as possible so germany and france can get back to being the engine that drives, not only the european union but european policy. alix: ambassador robert kimmitt, you are going to be sticking with us. coming up, the senate may be in recess for the clock continues to tick on the gop's efforts on the tax overall. this is bloomberg. ♪
alix: segment to be very ugly day for dsw. it missed on top and bottom line in the quarter and on comp sales . it was the guidance that was really rough. misty average analyst estimates. this 12% move is significant for the retailer. david: let's turn to tax reform. during his career of government service, bob kimmitt was the deputy treasury secretary and ambassador of germany. the for all of that, he's general haussler of treasury in
a teenage six. --se the last time ambassador kimmitt is still with us. take us back and draw a comparing contrast. we're looking at a willingness from congress to really accrue some deficits in exchange for a larger corporate tax cuts. is that parallel at all to 1986? bob: there was a lot more attention to revenue neutrality but i would also say things were pretty partisan back then it we had a house controlled by the democrats. senate controlled i the republicans. ronald reagan was in the white house. they found a way to move beyond their political differences to come up with the tax reform act of 1986. a lot of strong personal relationships there between the president, tip o'neill, jim baker, dan rostenkowski and other key people.
what i would say is they had to surmount some of the same substance and political concerns but directly to your question, from the start, it was being very important that it be revenue neutral. david: in was bipartisan which is what we are not looking at right now. they took a lot longer time to work at all through. how concerned are you that we haven't had an opportunity to really think through what is being done and the ramifications? how confident are you that we will get the kind of growth that they are predicting? bob: even though there was a great number of tax reform done in the first reagan administration, the great amount of work was done after bigger got to the treasury in 1985 and the bill was passed within a year. a good amount of time has been spent by the administration. i think we are at the point where it is likely we will have tax reform.
more than 50% likely that it will be this year. david: give us the growth of predicting. bob: it will certainly boost growth in the near term. i think we need to watch very carefully, the mid-to long-term effects and personally in that regard, i think we have to go back to doing what we can to keep our deficit debt under control. that is certainly part of the text debate but also the budget debate. .ax is a starting point it looks like it is going to widen the deficit for a while. i don't think that is going to be a problem in the near term. david: thank you so much, ambassador. alix: here's the market reaction. he of the russell in the financial and those high-tech companies. this is how they performed over the last month. the only one in the green is the
s&p. joining us now, bob doll. bob, great to see you. bob: good morning. alix: why are we not pricing and more tax reform? bob: number one, people are saying i will believe it when i see it. i'm from missouri. health care was promised. we are going to get a bill, not convinced it is going to be this year. there are so many listens to it. the market is saying, what is the reaction going to be. it is a corporate tax cut. the individual stuff is getting moved around. the net for the individual is not a big impact. alix: taking a look at all of the -- goldman the latest upgrading to 2850 to the end of next year. yet deny 50 from brian belsky. is this what we are going to be seeing without tax reforms?
>> the earnings picture is dominant. that what is what is going to continue to move markets. the icing on the cake is the tax bill. that does boost earnings but a lot of people are baking that into their assumptions. david: do we need the tax cuts to keep the earnings picture growing robustly? i don't want to take anything away from repatriation. lots of cash in cash flow to hiring another worker, spam capacity, buy back some stock, raise dividends, engage in m&a. all these things are likely to be constructed -- constructive for markets. alix: talk to me about how you want to position for that. you have seen a rotation into companies that i spent more money in capex rather than buybacks. bob: more broadly, it is who is going to grow?
we have been through this eeo where margins have improved and are pretty high levels in most places. from here, it is going to take revenue growth. yes from u.s. but also the effect of the world growth that is happening. that is a big plus for the s&p 500. alix: biggest risk? bob: biggest risk is inflation. someday it will pick up. alix: that is the risk? bob: i believe that is the risk. they forced the hands of this is a banks quickly. multiples are high. when inflation comes back, there will be a little pressure there to go -- too. david: bob doll, please stay with us. legal showdown, the u.s. justice department sues the at&t deal with time warner. that is coming up next. this is bloomberg. ♪
mick the department of justice has done what everyone thought they would do. it sued at&t and time warner to block their proposed merger. in a news conference, at&t's ceo was emphatic that the company would not give in to request that it divest itself of assets like cnn. >> there has been a lot of reporting and speculation whether this is about cnn. likely, i don't know. nobody should be surprised that the question keeps coming up because we have witnessed such an abrupt change in the application of antitrust law here. the bottom line is we cannot and we will not be party to any agreement that would even give the perception of compromise in the first amendment protections of the press. any agreement that results and thus forfeiting control of cnn whether directly or indirectly is a nonstarter.
david: joining us now is jennifer rie. bob doll is still with us. jennifer, is it an abrupt change? janco just jennifer: it is unprecedented and it is very odd coming out of and are cash out of ever broken administration. coming out of the republican administration. begun this merger was under the obama administration and the staff at the working on it quite a bit. they're working on some haverhill remedies. then there seemed to be a right turn. what happened? jennifer: obviously because of exactly what you just laid out, a lot of people think this is political because it looked so odd.
suddenly that changes when you get trump sky in office. -- trump's guy in office. there's a history of being against this behavioral remedy. is notggests that it necessary political. alix: bob, if you were an investor, what about at&t? bob: visit the question. most of us thought this was going through. alix: you are going to see more consolidation in the space as well? we don't know what is going to go through and what is not. is it economic? is it political echo -- political? david: jennifer, you're known as a private interest lawyer. and says theyn want to buy some fox, what do you tell them? jennifer: i them you have to wait and see what happens here.
what kind of law comes out of this, whether they win in court, what did the areas. it remains to be seen. alix: you have an idea of the -- well whether this will spread or this is going to be immediate issue story echo jennifer: my feeling is if it spreads, a consistent application of the law then it is not an issue -- a political issue. jennifer: -- alix: bob, you are shaking your head. bob: i agree with jennifer. the politicians should stay out of this. we will find out over time with the real issue is. david: what happened to the d regulatory trumpet magician?
-- trump administration? jennifer: i see that differently. but is a really big deal the united states, the way they look at semiconductors is very narrowly. i see that deal going through with divestitures. dole jennifer rie and bob -- bob doll is sticking with us. janet yellen's decision to step down and what it means for the future of monetary policy. this is bloomberg. ♪ is this a phone?
germany getting a boost despite all the political headwinds. you can see that in a weaker euro helping the dax attire. -- dax drift higher. no action in the bond market here in the u.s. peripheral spreads continue to tighten in the currency, the interesting one to watch is the lira. dollar year at is 394 on the print. we are going to break down that later on the show. david: let's find out what is happening outside of the business world. a:gelang: angela merkel -- m to -- instead of forming a minority government. in the u.s., the trump administration is ending a temporary program that would allow overseas he doesn't haitian's to live and work in
the u.s. the begin emigrating after a devastating earthquake. the government says conditions there have improved and haitians in the u.s. will be allowed to stay until july 2019. wealthy families in saudi arabia looking for ways to protect their assets from the anticorruption crackdown. according to people with knowledge, which studies who happen to implicated are talking to banks and lawyers about restructuring the emphasis. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i am emma chandra, this is bloomberg. alix: that is a fascinating story about the saudi's. that saudint is aramco ipo going to be? and brings into a lot of questions. david: they are in a lot of pressure under their budget.
alix: there like, don't take my money please. janet yellen will step down once or successor is sworn into office. it is all the key question as to whether she would stay. us.doll is to with mike, there was a note up from unicredit saying you cannot relate just rely on the power of expense, you are losing 33 years of experience. you are going to see more market volatility. michael: you're not losing bill dudley redouane. -- right away. you've got six months of him being around. we don't know where the trump administration is on appointing a new vice chair and other members of the board. they do have a lot of openings. according to steve mnuchin, they help they will get them
appointed which might get them into office by sometime in the spring. don't forget the tank presidents. very highly respected. you won't see as much volatility is people think. much fed policy is driven by their forecast. not expected to change a whole lot. it would only be a real question if there were a significant change in the economy. if all of a sudden inflation started shooting up. alix: bob, do you agree echo bob: absolutely. the economy is readable. it is business as usual. they are going to follow the curve. that is benign at the moment. david: are we encouraged by the fact that we are pretty mainstream. it hasn't been radical people he has appointed. direction --o in a
jay powell is about his mainstream as you can get. the names that have been mentioned for the vice chair spot while some of the little more radical in the sense of john taylor or kevin warsh, they're still seen as widely respected mainstream people, especially john taylor. mohamed el-erian, people like to talk him up. david: bob, it is not only jay powell, it is randy quarles. everybody has enormous respect for him. he has a lot of experience. and we all just mentioned, the marks will say, i can relax now. we cannot forget the hundreds of phd's at the fed are still there. they are not changing. they're the ones getting information. alix: it is a totally different world. look at the yield curve, it keeps getting fatter.
bob: it is not a totally different world. greenspan fed wasn't raising rates significant lead in the yield curve was flattening. for those who are visual learners, i brought a chart. the yield curve goes back to 2000 14. these are not bright enough of the align is the green -- is yield curve. alix:n see other your -- after bring in this note. he had a great comparison about how you treat the curve. we have seen it before but still, is that forecast anything different? crating -- trading a flat curve should feel like buying bitcoin. you're meant to feel every dip. you've still got to buy it.
bob: there is some wisdom there. flattens yield curve to the inverse, it is coming so hard and so fast. alix: so what would change that? you meant inflation in terms of equity? bob: my buy it now is short-term. inflation, not yet, will eventually come back to some degree. that will push the whole curve. david: you are seeing a little bit of the volatility is people are worried than people who are buying sovereigns of of the end of the credit cycle. any little movement is sending their spreads gyrating a little bit because they are so tight right now. treasuries could still go farther. >> that high-yield widening because the whole 2% decline in equities as people got scared.
david: mike i want to question you a little bit. the thing that is different is a very big balance sheet. be fact that there seems to going off that balance sheet, rolling a balance sheet and we have not had that experience before. >> we haven't seen a real reaction yet either and those who are worried about a reaction suggesting is going to come when we get deeper into 2018. remember the fed is going to be raising everything months. once you start getting a lot of roll ups, you may have more of reaction and you are having right now. alix: duration risks or credit risks? bob: duration risks is the bigger risks. is it a negative telecom-utility story? not the defensive stuff they work so well when rates came
council of economic advisers. this is bloomberg. ♪ now to your bloomberg business flash. toyota is one of workers at his kentucky factory to cut costs are faced an uncertain future. it can build a camera in japan and ship it to kentucky and make more money selling the car then the one built at the toyota factory there. toyota is not planning to close that plant. verizon are close to a deal to stream football games to tablets. that would expand on verizon's previous contract. verizon would lose exclusive rights to air games on mobile devices. it is up to transcanada to decide whether to go ahead with the keystone pipeline. state regulators in nebraska have given transcanada a green light to proceed but they rejected the company's preferred route saying the pipeline had to
be built along the ultimate path. transcanada says it will review the decision. the coup are not how much you are interested in the keystone pipeline. yesterday i got a chance to talk to don stier. he is quite the environmentalists. i asked him about the decision. >> of course we think that this is a dangerous pipeline from the standpoint of leaks. we saw 200,000 barrel he and the keystone pipeline that is already built last week. every time they tell us that these pipelines are all safe and then it turns out we haven't and again it -- have a gigantic leak, of course they're not safe. question conditional based on some suppositions as an is there a link to stand on. i will have to look and see. i think this is a tragic
mistake. i really do. this is absolutely the wrong way to think about the united states. david: tragic mistake, he says. alix: that is a great question and you totally stumped him. does make an interesting debate in the energy community because if you wind up getting a lot of pro-energy policies and roll back to regulation, it could do the industry into service because you the environmentalists so agitated that it may not make for long-term investments or energy growth. david: i also wonder, who does it help more tackle canada? or the united states -- help more? canada? or the united states? alix: canada is way more dependent on us. if something happens to the pipeline, becomes a significant
risk to canada. we are still going to need that oil but we can get it from other places. david: it is going to be a while before we know the effects. nonetheless, more interesting developments. unless you are jiving ev, you need oil. off my soapbox now. turn: want to make a big from oil to the u.s. opioid epidemic. it is one of the leaders causes of death in the united states suppressing hiv aids, auto accidents and gun deaths. it is costing the united states have to train dollars a year and it is taking a real toll on the labor market. newly half of the meant for no longer participating in the labor force on pain medication. one of the main ways first responders a plan to save those
expensing an overdose is administering narcan. shamus mulligan, welcome to bloomberg. narcan? whohat is uses it? -- shamus scope -- in your brain if you take an opioid, the receptors that allow you to breathe its overdose with the opioid and you die from lack of breathing. that is what actually causes death. the lack of breathing. when you take not can which is our form of naloxone, the rapid absorption and taken up into the brain. the kicks off the receptors, the opioid that is there and allows you to start reading and the patient gets a second chance. that is what we do.
we are there to provide the patient an opportunity for second chance. david: this is a rapidly growing crisis? is your supply of narcan phone c-suite? -- not can following suit? this is an epidemic that has been 15 years in the making. it has been 15 years building to the depths that we have now. half of those are related to prescription medications. what our approach to ensure that narcan is distributed as widely as possible across the net states. we work with -- across the united states. we work with many agencies to provide not plan. just to provide narcan. we work with the retailers so that narcan nasal spray is in every store and you can go in and get that product.
david: narcan is a way to save a life in their overdosing. it is not a solution to the crisis. where does the solution line? to what extent is the farcical companies responsible? >> our focus is on narcan nasal spray. we have no other product. else.'t sell anything we don't develop anything else. our role is to make sure the product is there. in the event they witness an overdose. the vast majority of overdoses occur within the home. they are not summer under a bridge -- they are not somewhere under a bridge. they need to have the product readily available. if it is there, you can access it and the person who has overdosed may have an opportunity for second chance.
alix: how much does it cost? seamus code which just our product in 2000. -- seamus:o we firefighters, police force, can access it at $37 a dose. we don't think that is an excessive price for something that can give somebody a second chance at life. david: there's talk about amazon going into pharmaceuticals. is there a world where you could have an amazon of something like narcan? desk andnyone who can get narcan out there, we are
going to evaluate. we've had great support from cvs, all grains and other retailers to ensure not can nasal spray is in the store. to go intoempowered a store to buy narcan, you want to make sure it is there. david: seamus, thank you. you may know it as the maker of james bond go to car. aston martin is looking to build an everyday car for some consumers. we will see how everyday it really is. we will have an exclusive with laura schwab. alix? alix: is it still six digits? check out tv . you can watch us online. interact with us directly. it is a great product. this is bloomberg. ♪
david: most of us know the it as the car the james bond has always driven. aston martin is known as a car you want to drive if you want luxury and you want to go really fast. aston martin is instituting a new model that is for some people more affordable. to introduce it, we welcome laura schwab. good to have you here. explain to us this new car and how affordable it really is. laura: we are so excited to show it for the first time here today . as far as a fort ability, it is priced at $150,000. david: we are seeing it for the first time. there it is. laura: gorgeous, isn't it? i can't turn around but it is behind me. they took give us some specs. it is $150,000? secondsero to 60 in 3.6 over 500 horsepower.
it will get you there on time, i promise. david: how much does it weigh? laura: i don't know off the top of my head but it is a v8 twin turbo engine. lighter than in the 12. david: what are you doing this? that's $100 less $100,000 less. what is the strategy? laura: we are in the process of our plan. aston martin has been around for 104 years. this is our second product and this is the entry point for our brand starting at $150,000. the new vantage is the one we revealed today. years.ars in seven david: is this for europe? the united states? laura: we want to sell them everywhere. i'm here today to talk about
selling them in the united states. you're the first people see the car which is excellent. the car appeals to everyone around the world. it will be very successful here in the united states. alix: we have seen this big push in driverless car's, how does that translate into the luxury market? even at 150, that is still a luxury market. laura: we are in the luxury market. as technology transforms is really exciting, we have talked about electric vehicles. we have announced that we will have an electric option on all of our vehicles by may 20 20's. we will be introducing an electric vehicle in 2019. david: aston martin is trying to expand beyond automobiles. you have probably seen some of the things we have
announced. a yacht, submarine and we even have residents down in miami. people are buying a luxury product, there really buying into a lifestyle. martin, it is about is providing those opportunities. >> how is aston martin trying to hedge itself for brexit? laura: for brexit, there's a lot happening in for us, we want to make sure that there's a sensible solution and more confidence. david: give us a sense of success with this new vehicle. if it does everything you want it to do, how do you measure success? always desk is a car business so we are going to focus on the success around our sales. successful also come from providing our current customers and new people that we bring to the brand into our business.
really excited that this product is going to bring a lot of new people to aston martin. equity.t so much brand alix: laura? is james bond going to drive in the next movie? laura: i wish i could answer the question for you today. certainly the two brands are synonymous with one another. coming up, asset allocation strategies will be joining us. this is bloomberg. ♪
at&t prepares for a battle in court at the justice department goes after the telecom giant's $85 billion bid to buy time warner. cryptocurrency slipping from highs renews security concerns over bitcoin and political problems. angela merkel says she is ready voters again to break the country's political stalemate. david: i am david westin alongside alix steel. jonathan ferro will be joining is later. alix: we have a risk on rally underway. s&p futures around the highs of the session. euro-dollar a little but softer. not a lot of action happening in the bond market. 2.36 on the 10 year. the real action has to do with the pro-left alone -- peripheral bond market. the spread continuing to flatten and a record low.
david: a big headline, the lira. a little tricky, right now. who want to find out what is going on outside the business world. we turn to emma chandra with our first word news. emma: angela merkel says she is open to having new elections. she has made it clear she plans to serve out her four-year term -- for fourth term. -- her fourth term. russia's president plans to pull president -- call president trump today about the situation in syria. putin had a surprise meeting with bashir assad. the trump administration is ending a temporary program that allowed almost 60,000 haitians to live and work in the u.s. they began emigrating after a devastating earthquake rocked
haiti in 2010. the government says conditions have improved it -- have improved significant lead -- significantly. dayal news, 24 hours a powered by more than 2700 journalists and analysts in more than 120 countries. david: some of the biggest news in washington yesterday did not come from the white house or congress. it came from the federal district court where the justice department sued to stop the proposed merger of at&t and time warner. we welcome kevin cirilli, our chief washington correspondent. let's talk about what this means inside the beltway. does this cause a lot of problems for the white house because all the speculation is the reason they are going after them is because the president does not like cnn? kevin: the department of justice filing a suit yesterday against the $85 billion deal, the
potential vertical merger between at&t and time warner. there are severe political implications. antitrustf the doj division is a republican and a former corporate lobbyist. said, several democrats have had concerns about these types of mergers. while president trump has been critical of the media and cnn in particular, it comes at a time in which democrats have also raised concerns. mark cuban tweeting out that this is ultimately going to spell trouble for silicon valley because if at&t and time warner are doing that this vertical merger is needed as the result of over concentration by the likes of google, facebook, twitter and others. david: you make a powerful point, which is everybody is on the wrong foot because it is the liberals and democrats who would be against this merger. file trump and his a administration are actually doing what a lot of the left wants to do -- donald trump and
his administration are actually doing a lot -- doing what a lot of the left wants to do. on the campaign trail, canada donald trump was campaigning in gettysburg, pennsylvania. it was the first time he spoke concentration and it is something we have heard from them across including the likes of elizabeth warren and bernie sanders. that said, we should note that if you get away from all of this, the back and forth and the politics, if you are an investor, let's note that the department of justice antitrust division has not filed a lawsuit of this nature since 1979. it was relating to truckers and wheels. they lost that case. the antitrust division is historically very separate, similar to the way the federal
reserve or the fcc is, in relation to the person sitting behind the desk at the oval office. david: great reporting. for more on this at&t time warner merger, we welcome jennifer reed, bloomberg intelligence senior editor. talk about the law, here. what does the law say? jennifer: if you look at the complaint that was filed, a traditional vertical theory of harm. the way it works is in the long run, it would -- the company would profit from holding that content or raising the prices to rival distributors because ultimately, if those district readers refuse to pay those prices, they lose subscribers and many would move over to at&t. either way, at&t benefits
through the strategy. they either get to raise prices or the prices are not accepted and they take a short-term hit by losing some content distribution but they benefit because they gain subscribers. david: doesn't this go to the essence of the deal? at&t would not do this if they did not believe they could make more money. by definition, doesn't that mean they can charge more money? jennifer: that's right. the concept with a vertical deal is the way that companies make more money is internal efficiencies. they are cutting out a middleman. many efficiencies that come with that and they save money that way. david: not much integration when it is a vertical merger. --people doing the same job two people doing the same job. jennifer: distribution and content coming together. you bring it together with benefits through advertising, synergies that allow them to better compete with google and facebook. alix: and if it gets cut down,
what happens? >> i think it goes to court and it will be a proper fight. on the other side, you had randall stephenson come out and say essentially that this was going to breach american first amendment rights and very strongly felt there was politically -- political interference at trump's behest. alix: what would at&t and time warner do? a telecom industry needs to consolidate in order to compete against amazon and apple. what is the alternative? ed: there isn't really an alternative. one thing they have been clear on is selling cnn is a nonstarter for at&t. the landscape they compete with has changed so much. it is no longer just putting content and distribution
together as they are saying we have to compete with google, facebook, the next big thing that none of us are seeing which will inevitably disrupt this industry. you come to this question of what is the right test of market power? should they be looking at concentration or absolute power where you start to look at the amazons and googles and facebook's. alix: does absolute power hold weight? jennifer: i think what they will do is look at the precedent. this is a speculative theory that is difficult to prove. you have to look at the economics and economic modeling and this is speculative. you have to look at how this has been handled and behavioral conditions can fix these issues that the department of justice has. just to come back on that. stevenson added that they offered behavioral remedies and
they will continue to offer them. david: is there a deadline? ed: essentially by mid-april if they have not gotten this deal done, then they can vote without paying a fine. of bloomberger rie intelligence and ed hammond of bloomberg news, thank you very much. over uncertainty hangs europe's biggest economies but that does not stop the market from charging higher. live from new york, this is bloomberg. ♪
after meeting -- after leaving the european union. the government unveiled its new budget tomorrow -- unveils its new but it tomorrow. thes and amsterdam are winners to host european union regulators once they leave london. start innks will london will start their move, soon. one of the people said there is little british prime minister theresa may can do to ease bank concerns about praxis -- about brexit. alix: staying in europe, we have two big stories we are watching. philip hammond will unveil his
budget on wednesday and german chancellor angela merkel says she prefers new elections over a minority government. we are joined by david merritt in london. looking we expect in the autumn statement? there are a few things we are hearing bits on, but most of it remains at mystery -- remains a mystery. the labour party at the polls, they fail to get a outright majority. we have had austerity in the u.k. for quite a few years now. at the government tries to get public finances under control, you will see the argument shifting a bit with increasing clamor for wages, public-sector workers, teachers, nurses. the big context is brexit and
the forecast for an economic impact from that and the chancellor never wanted brexit in the first place. he was a very strong pro-remain person in the cabinet. in placeto him to put strategies to mitigate the effects of this process. alix: and what it means for the gilt market. a look at what is happening over in the rest of europe, it is a risk on field. peripheral spread continues. while we seeing it so divorced from the markets right now? -- why are we seeing it so divorced from the markets right now? sorry, i had to listen. , it seems to be really disruptive from economic reality.
party politics playing out, but i think we can be sure that merkel will stay in power over this. alix: why? there is no competitor -- why?arne: there is -- arne: there is no competition right now. she is still really popular. she seems very determined to run again. alix: thank you for the set up over the next 24 hours. here on set, kathy jones of shargh -- of troll schwab and philip camporeale of jpmorgan -- of charles schwab and philip camporeale of jpmorgan. strong growth in germany and france. what part do you rethink as the political world in germany unravels? philip: when you buy in europe,
you are buying 17 parliaments. lined up wethings continue thinking about, the first is the fundamental story. this is the best fundamental growth story we have seen since 2007. the second is the valuation. about 280%. run we have an incredible amount of underperformance, everywhere else versus the u.s.. third is the technical. you have major underweight in most parts of the world and people want to get involved. there is so much cash on the sidelines and the dollar is the last piece. if you don't think dollars going to run, that is nice for u.s. investors investing abroad. asymmetric risk on the downside? philip: there is a interesting
way to play some of these markets. if something unravels and unix goes down by 20%, the asymmetric return on the downside, you are only -- despite all the headlines we are seeing, volatility is still very cheap. buying that kind of downside risk protection is smart right now. david: if phil is right and people have not come into europe the way they should, why not? what is keeping them out? kathy: i think there is a feeling amongst investors, on the retail side that everything is expensive and they are worried about the political things going on. we are positive on the dollar. we think that not it is going to theback to new highs, but
upside as much a policy titans. david: if you look at price-to-earnings ratio. kathy: our equity strategists like to look at sectors rather than just countries. they will argue that you should take it on a sector by sector basis and they are in favor of having a neutral base. of peripheralld spreads continuing to tighten. is that the right trade? kathy: we don't think so. alix: should we be shorting peripherals right now? kathy: we don't short. spreads are too tight, the yields are too low, there is potential upside for the dollar and if the growth story is true and we are looking at the positive growth story, those rates are going to go up faster. alix: we will be discussing that internet segment. kathy jones of charles schwab and philip camporeale of
david: the turkish lira fell to a record low overnight and turkish bonds fell. to explain what happened and why, we welcome an executive producer who covers turkey for us over in istanbul. what happened overnight and what caused it to happen? >> the turkish lira has hit a record low against the dollar, currently at 3.95 against the dollar and as they were hitting record lows, the central bank announced it will be tighten --
tightening liquidity, effective tomorrow. tois going to cut access cheaper funding for fang -- for banks, forcing them to borrow at a more expensive rate. in effect, it is raising the cost of lending by 25 basis points. this wasn't enough to stop the lira slide. investors want more action from the turkish central banks. bonds also at a record high, past 13%. what is first -- what is hurting investor sentiment? last week, president erdogan came out and criticize the turkish central bank, saying it was on the wrong path. investors,cerning saying he should have a putting political pressure on central banks which is supposed to be independent. the lira is also being affected by political spats that turkey
is having both with the u.s., europe and nato. investors are very concerned about the situation in turkey. alix: thank you very much. ,athy jones of charles schwab the chief fixed income strategist and philip camporeale, jpmorgan vp. is turkey making the right call? kathy: we don't like underweight em bonds. turkey would be part of that call although it is a small part of the index. the major reason is valuations. yields are low, relative to what you can get at home and you are taking in an inordinate amount of risk. we just don't see the risk reward balance very attractive right now. alix: you like equities. how would you view something like turkey to question -- like turkey? philip: kind of the low interest
rate that cap he was talking about -- that kathy was talking about. separating the politics from the fundamentals. we believe that the dollar interest rates are going to behave and in that environment, that is a good beta story for emerging market in total and then you rely on the active management to try to get you in and out of the idiosyncratic risk. david: which do you favor more and which are you more skeptical love? philip: it is the manufacturing story. china is a big part of the index and it is that manufacturing growth and momentum and earnings story. we are not talking about gimmicky things. we are talking about equity analysts going back to their day jobs of predicting earnings. there are not good at predicting
things like brexit and u.s. good ats, they are predicting earnings and that is what we are focused on. alix: kathy, what would make you more positive? how do you play that if you are not interested in em? kathy: better yields than elsewhere in the world and we are probably less leveraged to the global growth right now because the fed is already tightening. we are staying domestically will stop it is not that we are underweight. em, but giventing that we are going to have stronger global growth, that means interest rates in those countries are going to go up faster. alix: credit risk or duration risk? kathy: it is tough because everything is expensive. at this moment, i would be more comfortable with duration.
credit spreads are very tight. philip: that is a good way to manage downside risk. if there is something you want in the portfolio with duration, if you are playing these higher risk markets like em. managing offense and defense is important. alix: kathy jones of charles schwab an philip camporeale of jpmorgan, both staying with us. the senate bill challenges and expectations of the new fed chair, jerome powell and what the next choice to fill some of those seats could be for president trump. and we haveloomberg this risk on day in the market. s&p futures up by about nine points. ♪ retail.
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after a sorted trading week in trading -- sordid week in the u.s.. whohave richard burr is low wrote a piece that says, if you want to consider where there are signs of unease despite a day where you are going to hear risk on today or other such nonsense, watch on days like this where stocks are up. you can see that play out in europe. you can see money going into the peripheral debt market. nothing really happening here in the bond market, but that risk buying continuing. the exciting move in the currency market comes from emerging markets. a record low at one point as the lira was making against the dollar. , sovereigns over there
hitting a record high. not dissipating, relatively stable, up by 1/10 of 1%. emma chandra is here with the "first word news." talks to rewrite the north american free trade agreement is said to be fluttering. mexico and canada are portraying key u.s. demands as unworkable. the u.s. is frustrated at the two countries will not come up with counterproposals on issues such as regional content and rules for calm. administration may had a victory to broadband provider such as at&t and comcast. the head of the federal communications commission will propose getting rid of obama era net neutrality rules. one of the rules that would be lifted blocks so-called fast accesshat gives quicker
to provider to pay more. in a statement to the post, charlie rose apologized, saying -- apologized for his inappropriate behavior. roseas suspended charlie and bloomberg which has a production and distribution arrangement with charlie rose has suspended the show from airing on bloomberg television and radio. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than. 120 countries i am emma chandra -- in more than 120 countries. i am a charter -- i am emma chandra. david: the senate is focused on the proposed tax overhaul because when they get back to town, they will have to vote yes or no. we will come the man who advise the president on the economic effects of the tech system, kevin hassett, chairman of the council of economic advisers --
tax system, kevin hassett, chairman of the council of economic advisers. simple questions, what does the tax overhaul have to do with growth? how does it affect wages and how are we going to pay for it? how do you get from the proposals to the sort of growth that the president said he wants and is going to deliver? kevin: on the individual income tax, we have a middle-class tax cut which means if you do overtime, you get to keep more of that money. the history of things is that increases labor supply and increases output because people were carter. on the corporate side, the lower rate and the new international tax rules is we end this game were people locator factories offshore and move jobs overseas and then ship products back into the u.s., rather than make them here. both of those are positive for growth.
people say how positive and we put out a study where we estimated that 10 years from now, gdp would be between 3% and 5% higher. kimmitt andve bob we have -- we asked him about the growth and he agreed with you in the short-term term but he had concerns over the long-term. bob: i think it will certainly boost growth in the near term. where i think we need to watch carefully is the mid-to long-term effects and personally in that regard, i think we have to go back to doing what we can to keep our deficit and debt under control. david: when he was saying is in 86, they were much closer to revenue neutral than what this proposal looks like. should we concern -- should we be concerned about its of --
it's effects on growth? kevin: the deficit matters and anyone who says it doesn't is wrong. the numbers we have been banding about about the cost of this -- aresenic numbers static numbers. firms are not creating factories much in the u.s.. we are barely getting any revenue. we have the highest corporate tax in the developed world but almost no revenue. the idea that if we become an attractive location, it is going to blow a hole in the deficit is one that i don't accept. the joint committee -- tax committee score is this forward this tax revenues on a static basis. the cbo estimates that gdp absent the growth effects of this bill will be $28 trillion. it is not a stretch to think you can get enough growth to cover the little bit of a hole that is left over. david: what are the effects on wages?
that is one of the things the president said is important to him. why do you believe if we put more money in the pockets of corporations, that will turn into wages? kevin: it goes back to when i was a kid, i read a lawnmowing business and i started mowing lawns with just a push mower that did not have any self-propelled engine. that i got a self-propelled mower and it moved a lot faster and i could no more lawns and made more money. if you get a better machine, then you become more productive and your wages go up. the contributions of better machines to wage growth went negative because of president obama. we were so harsh towards business. it is such an unfriendly environment. let's go back to -- philip: we are saying -- kevin: we are saying let's go back to normal. david: on your website we have taken a look at and i wonder
about the connection between productivity and weight growth. i wonder if it would be supported by most labor economies. and say wesit around have more money, let's give it to the workers. that is not the way it works. kevin: there is a strong link between productivity and wage growth. and harvard professor -- productivity has slowed down to almost nothing and wages have slow down. your right to worry. say kevin is right and we get all this productivity, how to i know that is going to go into wages? it is possible it won't but in a world where a dozen, what has to be the case is the guys who created higher productivity don't have to compete for workers. since they have to compete, wages go up with productivity. countries that have done what we are proposing have seen productivity growth and wage growth. david: thank you so much. we hope you have a great thanksgiving.
kevin hassett, chairman of the u.s. council of economic advisers. alix: here is where we stack up in terms of where the market is. s&p small-cap stocks, high cap stocks. daily one agreeing is the s&p, up 3/10 of 1%. kathy jones of charles schwab and philip camporeale of jpmorgan. what do you think? philip: tax reform for us would be nice to have, but not a linchpin to our outlook. we have high single-digit earnings growth in 2018 and if you get tax reform and pencil in 13% on earnings growth. this is a pretty good outlook that we have, that the valuation for us is going outside of the u.s. for more risk adjustment. in the end, we would like it. if we don't get it, there will be a pullback. is not a linchpin to our outlook. alix: if we wind up getting the
past -- the pass-through for wages, what happens to the curve? kathy: people believe that would happen, that curve would be steepening. pass-through wage increases get more inflation and spending and growth in the market is not priced for higher inflation or stronger growth. how do you account for the disconnect, because clearly people like mr. hassett really believe in this and you have a number of economists saying they don't believe in it. you say the yield curve does not seem to reflect it. who is right and who is wrong and how do we prove it? kathy: we will have to see the wages come through. beenonger-term yields have suppressed by the fed balance sheet and what is going on around the rest of the world. that has been a factor as well.
i think if this story takes hold and people believe it, they will see rates move higher. are people going to spend money on or buybacks and dividends? philip: i think it is going to be capex. it leads to better productivity. alix: what is the single biggest thing that could hurt? philip: a slowdown in the economic data that hits earnings. alix: not inflation? philip: i think jerome powell would say, where do i sign up for more inflation? i think it is the economic data slowdown that hits earnings you realize that 85% of returns have come from earnings this year. if you get a pullback in earnings, that is not priced into our constructive outlook. alix: kathy, 10 year yield call? kathy: looking at close to 3%.
equity strategist. now to your bloomberg business flash. at&t is telling the trump administration we will see you in court. the justice department has filed suit to stop at&t's $85 billion takeover of time warner and -- time warner. the ceo is vowing not to sell cnn to appease the administration. nestle is among the companies exploring the purchase of pain celeste deal which makes organic and vegetarian food. nestle has had talks about buying all or parts of it. the american company has a value of $4.2 million -- according to people familiar with the matter, harvard is in talks to run a portion of his real estate investments -- the school endowment has
produced mediocre investment results for the past decade. are serving ae six part series on cryptocurrencies. over the coming weeks, we will be hosting special guests as we dig deeper into digital currencies like that point -- like bitcoin. here is what some wall street skeptics have had to say. >> i could care less about that going. if you are stupid enough to buy it, you will pay the price for it one day. the only value of bitcoin is what the other guy will pay for it. >> i think it is a scam for criminals around the world. i think it has no credibility and if you have no electricity or wi-fi, you have no value. blocking technology is interesting, but the actual cryptocurrency is irrelevant. >> the interest is not in
bitcoin but in block chain. is in my view, clearly in a bubble. we don't know what the market driver in value is. we are keen to invest in block chain technology. >> bitcoin shows you how much demand for money laundering is in the world and that is all it is. it is an index of money laundering. david: joining us now is someone who has a different view, mike , cofounder of fortress and now running galaxy investment. he was one of the first investors in ethereum and is starting a $500 million hedge fund to invest in crypto. explained to us why you have a
different view about cryptocurrencies. mike: you might have noticed all of those guys are over 60 and i am not. there is truth to that. it is difficult for someone who did not grow up in a digital world to start understanding how we can be moving into a digital world. bitcoin you can look at as digital gold. what is gold? it is a precious metal. could have been copper or lots of things on the periodic table. way back, people chose goal to have value. it has value solely because people say it has value. bitcoin is built on amazing technology. there is a limited supply. this whole revolution came out of a breakdown in trust. came out of the 2008 financial crisis were people say we no longer trust financial institutions, we don't trust governments and in parts of the world, in venezuela, it is hard to trust the central bank. the decentralized revolution
which that point is kind of the toter child of is a response kind of the breakdown of trust. david: is it investment or trade? there was a cryptocurrency i never heard of called tether and there was some theft of that and it drove bitcoin down 5.5%. it has now come back. there seems to be a lot of volatility. mike: we are in the second or third inning of these revit -- of this revolution. each of these coins are individual ecosystems, their own use case. is a decentralized system of money, but there are a thousand other decent market cap coins that have their own system. because prices have moved so far, people are nervous. you made a whole lot of money
and you want to book your profits and get out. alix: to be fair, people lost millions of dollars they are not going to get back. how does that not put the model into question? mike: the total market cap is about a quarter trillion dollars and $30 million got hacked and stolen. it certainly gets people nervous. we spent a lot of time thinking about security of our coins and how to keep them safe. two years ago, when i had a smaller not invested, i spend a lot less time. david: this is sort of market share of the different cryptocurrencies with the bitcoin being the top. ethereum is orange. that is not total value, that is market share. it looks like ethereum took some but receded. mike: for a while, it. had an amazing run. $400nt from a dollar to and bitcoin kind of stayed on the sidelines during that move and then bitcoin had a big move.
now, for first timers that are entering this market, bitcoin is the name they have heard of so that is what is driving that move. in the last few days, tether has started to move. there is a lot of positive things happening in the ethereal ecosystem. alix: what is your call for 2018? mike: i think we literally end the year at 10,000 in bitcoin. alix: how much have you been able to raise for your fund? the sec does not allow us to talk about fund raising on tv. alix: better or worse? mike: it has been that people have been interestingly receptive. alix: any of the ico's? mike: sure. each ico -- alix: which one? mike: a token that is going to
try to decentralize the marketplace for skins, which are , shields, swords, helmets that gamers by to make their avatars look prettier. alix: that is over my head. david: a brave new world. mike: how about this? there are more people that buy and sell digital clothing that there are that buy and sell bitcoin and all the rest of the cryptocurrencies combined. it is a giant market. alix: that is a call and $10,000 bitcoin for 2018. mike novogratz from galaxy will be staying with us. coming up, brevan howard is heading toward services to boost revenue -- whose revenue. -- boost revenue. check out tv . you can watch us online at interact with us directly.
alix: alan howard is trying to find a way to offset losses on macro bets for his brevan howard company. he is considering offering services to other funds in a bid to increase revenue. mike novogratz of galaxy investment, why is it so hard to be a macro guy right now? mike: the big funds have had a hard time because when you get to a lot of assets, you are forced to cheat the rate. we have had very low volatility, partly because central banks have flooded the markets with liquidity. there is a ton of liquidity out there and it keeps a bid do everything. macro guys at their core are speculators. when people call macro debt, it is -- when people call macro
dead, it is the time when macro is not dead. david: people have access to data around the world. everybody gets the same data and you have algorithms that can process it. mike: that part of the market takes out a piece of the return structure. at its core, macro makes money when things are in trend and win -- it is a speculative business. because inflation has stayed low and because there is so much liquidity, volatility has come down. the moment that changes, macros going to be in its heyday again. alix: is that the tray we are -- the trade we are going to see play out? it is not completely true. a lot of people start the year bullish the dollar. alix: and shorting 10-year. mike: i remember the first macro advice i ever got, my parents in
germany bought their first mercedes and it was a big deal in our family. it was a used station wagon. the dollar for the deutsche mark was the highest it has ever been and a mercedes dealer said we invest in ronald reagan. i don't know anyone around the world saying i want to invest in donald trump. not one person. part of the selloff is our politics are not looked at so nicely. alix: mike novogratz of galaxy investment, thank you so much for stopping by. -- shift in value from growth. 2450 is his call for the s&p.
preparing for a battle in court after a bid to time warner. and running with the bulls, goldman sachs joins the banks forecasting another year for the bull market and german shares leading the gains in europe even as a political stalemate continues. from new york city, good morning. this is "bloomberg daybreak." i'm jonathan ferro alongside david westin and alix steel. i will be so sick just running back and forth between tv and the radio. market action my 30 minutes away. futures are up by about nine points on s&p 500. fx, a little bit of weakness for the euro, nothing significant. 117.23. the curve is flattening in the bond market. 2.36 on the 10 year. the60 basis points in
nymex. alix: you should buy equities, apparently. lows off by 2.5%, third-quarter profit more than doubled and it beat estimates, but it did indicate the full-year earnings would be on the high end, $.87. it was on consensus. 2.5%.'re looking at maybe should rise by about 2%. not a huge boost. home depot just crushed it because of the hurricane and rebuilding effort. so it is it wishy-washy time for the lows -- for lowe's. higher estimates for revenue and full-year profit and sales for the full-year. raising customer account by about 6% after cyberattacks. peers also rising, like checkpoint. 17%, already 19% so far
this year for -- jewelers. it will be the fourth double-digit earnings loss in the last seven quarters. comp sales are down. earnings, the hurricanes. anywhere you slice it, it was a rough day for segment -- signet. department of justice filing a lawsuit to block the deal with time warner and at&t. the ceo said that he would not sell cnn as part of any compromise, but that he is still looking for a way to make the deal work. >> despite our disagreements, we have offered concrete and substantial solutions and as we go to court we will continue to offer solutions that will allow the transaction to close. jonathan: joining us is kevin cirilli. around the table with us at hammond -- ed hammond. we were prepared for this, but
historically speaking it is surprising. ed: i think you need to go back in 1979 to find a deal like this. jonathan: it was a trucking company. and they were merging with the will producer. they did not get it through. take a look at what randall stephenson, the chief executive of at&t just said and compared to what we have with the department of justice from yesterday. we listened to both called and the view seems to be that the head of department of justice is saying that this is common across for a week, he sounded like a complete idiot summary, this morning. he was not really making any good points. i think it is interesting to see how it is playing out in the market, time warner is up this morning to make credibly bullish if you think about in less than 24 hours after the department came out to say that they would
be suing. jonathan: before i get to the white house, the essence of the argument, enforcer, regulator, forced to be in enforcer and not a regulator, that is fine. can you make the argument to this deal? ed: he certainly will try. one thing they are looking at is the comcast abc docomo it happened under obama in 2011, that did go through and it with through with some behavioral remedies. comcast said we will do the deal, but we agree to allow competitors to do x, y, z. the department of justice says they have not lived up to the promises, so we want to be tougher on the at&t deal. turner, seeking from with cnn, directv as well, both of which at&t has said will be a nonstarter. david: this decision was influenced by the president said, he does not like about
cnn, but the white house says it has nothing to do with it. at&t says the first thing they will do is ask for communications backwards and forwards. how much will it interfere with the with what the white house have to do elsewhere in the world? kevin: get ready for a legal battle. canada donald trump spoke, pennsylvania on the campaign trail, raising concerns about the merger between at&t and time warner worth $85 billion. he made a case against the media concentration, similar to what folks like elizabeth warren and bernie sanders have consistently said, so the political battle i've are mixed and crossed -- li nes are mixed and crossed. while donald trump is bank reticle the news media, particularly cnn, the antitrust department of the department of justice is its own entity, similar to what happens with the fcc.
you cannot ignore the political theater washington, d.c. these days, but the antitrust division is definitely trying to position themselves as a separate entity. whether or not it will hold, remains to be seen. mark cuban tweeted yesterday, noting that in another potential loser could be silicon valley and the implications and havs on the tech titans. david: you have said that though i have kept -- has kept away from antitrust enforcement, but this president is not shy about getting involved. fbi director because he was interfere with the russian it investigation -- russian investigation, so well this white house understand that relationship? kevin: i think you are already seeing this with those folks that support the deal, they are raising the concerns. i think anytime they are going to continue to hammer the point about freedom of speech and of
the argument of cnn. i think that will be a definite legal strategy that will emerge. the second point i would make him over concentration as an argument and the reason that time warner and at&t feel like they needed to merge, was a result of over concentration and san francisco. david: kevin, thank you. for more on this justice department lawsuit we are joined by barry sign, with equity managing. and ed is still with us. very -- barry, how important is the deal the at&t? we know time warner wants to sell, because they have a good price, but if at&t does not get to do this what is the strategy? barry: good morning. i do not view is that negative if it was brought in the court. liquid at&t has been able to accomplish. they have tremendous negotiating clout, they are the largest video distributor and the second largest wireless carrier in the u.s., so they can use that to
negotiate very good media deals. for example, they have the exclusive nfl sunday ticket, hbo toe offering free wireless customers in a allows them to charge the highest unlimited prices in the industry. they can use their clout to buike exclusive deals if -- if theyt own to time warner, i do not think they would be a lot to strike these deals. they continue to be successful, they can continue to bundle content with distribution, and they do not need to spend $85 billion to take on $40 billion in debt doing so. blocked or ifl is at&t decides it is too much of a headache and they walk away, is there an attorney of -- an alternative that they can buy so they balk up in the video space? barry: how much vertical integration is allowable would be the question. as you mentioned, a flatbed
truck manufacturer and a wheel butfacture is permissible, we do not know how big of a content company can they buy. i suspect they would be allowed to buy a smaller content company. they have their own content partnerships. they can certainly develop their own content the way that netflix is doing, so they are certainly not -- from partnering for content, but i think the issue in this case that is drawing the eye of the regulators is you have the largest video distributor attempted to merge with really a dominant content creator, of both theater and television production. alix: that is ed hammond and barry sine, thank you. we are joined by tobias levkovich, chief equity try to just -- goodies judges at cit i. if you started by a lot of at&t
stocks, what do you do now? wondering people be if you have this working for the people who feel somewhat, not being, you know, being heard in washington, that that was part of the donald trump vote. this kind of sense that the corporations are taking over and the small guys are getting squeezed. it is not that shocking in certain respects. i listen to one of the partners of one of the law firms doing m&a saying they were looking for signs from the administration, how would they handle and address and a bunch of other issues, and it is preventing a lot of m&a. many people will be watching the deal to try to understand where the administration position is on the spirit and the idea of the administration challenging -- on this. the ativan menstruation challenging these decisions is
not new. there is an expensive power of the white house and a lot of arrows -- areas. david: the obama decision -- and ministers was not known for deregulation. president trump has embraced it and it is a form of regulation, so why is that not surprising? why isn't the business side saying, we thought we were not getting more regulars and? >> i think it is a difference of how you think about relation. regulation as stifling economic opportunity, creating jobs, that is where the m ministration seems to be focused. if they say we will lighten up on regulation with dodd-frank and it is preventing money going into the system, creating new jobs, that is what they want to focus on. the fear is you create more m&a and jobs get cut because you are doing consolidation of companies that do not need to really have these back-office departments. that is something they are not
mr. matthew horne back likened it to bitcoin. it should feel like trading bitcoin, if you see the value proposition, even though you have missed what seemed like a big move. us.as levkovich with ed hammond here. it's there anything to take away -- is there anything to take away from what is happening? >> you still have a lot of central bank liquidity around the world, even if the u.s. is pulling back me of the bank of japan interested in expanding their program, ecb is very involved and you do not see the global central bank purchasing winding down. it is still strong. it is affecting the u.s., because it is an attractive bond yield relative to other parts of the world. the bund yield about a 4.5 and the u.s. is at 2.4, that is
attractive for foreign investors. alix: that could be a problem when it comes to value versus growth, because u.s. financials like rising yields, but growth is all about technology and they are dealing with a weaker dollar. both stories make sense. notas: the question is where we will be today, but maybe six months from now, that is much more important to me. and in that case you are looking at economic indicators telling you that we will get continuous growth into the next year. there is indication that wage inflation will be coming back. you have heard a lot about tightening in the markets, some of our predictors looking at the gap with the unemployment data. this time next year versus today. i think it will affect the bond market irrespective of some of these issues we are talking about, we are talking about the fundamental things that tend to be more important as a lookout 3-6 months. it changes the nature of the
market, because when body yields go up, value does better. investors are so caught up in momentum today, they are looking to chase the winner. and sell some of the losers that could work in a year from now but if it does not work in the next three months, i may not have a job, so it is nice to talk about a year from now but it is not relevant. alix: what about cost sentiment? tobias: it is getting more bullish. i will be careful in not saying that the red flags are waving, run for the hills, but we have seen the painted before in our before in ourc metric move up into caution territory and we need to be a bit more selective. do not purchase everything. and i described it to a client a couple days ago, saying you are driving your car, you tend to be careful. now it is raining, the road is a little slicker.
you take extra caution and you should think about it that way. do not get off the road. it does not mean a blizzard is coming. do not pull up to the house and get the hot cocoa. alix: maybe some wine. tobias: it is 10:00 in the morning, not ready for the wine yet. jonathan: can you walk me through the market? tobias: i think a lot of investors have on one side the balance or scale, and the other side is the fear of messing up. so do i stay too long? have a made enough money? should i take something off in the market rally, have i blew my bonus? or i did not participate the last 10 months, should i jump in now and if it goes down i will really lose, because i missed it both ways? so this is that tebow the area.
one client said it means meaningfully underperforming. [laughter] the same conclusion. but the quandary is still there. jonathan: you will be sticking with us. political uncertainty over the continent, but it is not stop in the markets from charging high. 11 minutes away from the opening in new york city. and the close on wednesday. features up. and dow futures up a third of a percent. in your city, this is bloomberg. ♪ -- in new york city, this is bloomberg.
by a because people say it has value. bitcoin is built on amazing technology, there is a limited supply of it and people are trusting it. alix: that was mike novogratz from galaxy investment partners. with us is tobias levkovich. he said $10,000 for bitcoin. what do you think? >> look, the only thing i can say about the coin is my 91-year-old father is asking me about it, that worries me. myself a i am finding lot more, people actually in this industry and on wall street are asking me more about it and having a conversation about is sparked by people who work on wall street. >> it is the cocktail discussion today, like tech stocks were in the 1990's, that kind of stuff makes you a little uncomfortable could i do not have a view -- little uncomfortable. i do not have a view on it.
i will leave it to mike novogratz. jonathan: take a listen to what he had to say about the breakdown in trust between financial institutions and the government. >> it came out of the 2008 financial crisis, people said we do not trust financial institutions or governments. today still, if you are invenezuela it is hard to trust the central bank, or in zimbabwe, so the revolution that bitcoin is the poster child of, it is a response to kind of the breakdown of trust. jonathan: the breakdown of trust for market participants, they are ignoring the politics. full stop. that is what it feels like in europe, things are not looking good politically speaking, maybe with the exception of france, but everybody in europe -- this is how it feels like. what do you think about politics short and a longer market?
tobias: earnings are the most dynamic part of the markets and they have been strong. so investors are kind of responding to that dynamic and but nos a second -- alternative, i can get almost a full percent yield purchasing dividends are the latest stocks and get the economic growth story. are not thatments critical in a weird way. belgium went for two years without a government formed and the economy did not fall apart, the country did not a war with itself, despite the french and the belgians having disagreements. we were able to do it in the past when you think about the late 1990's and the challenges that president clinton was facing under the impeachment proceedings, and the economy went along in the u.s. as long as you have the economy growing, they will not be as focused on the political dynamic, as long as it is not
disastrous. as long as you are not talking about leaving the euro, creating dysfunction or disruptive structure, then the market can look past it because it is ok. even in the u.k., we have a moment doing well despite brexit. david: how about the central banks, getting into the game. more important than what is going on in congress? tobias: those banks are making the decisions easy, when you have zero cost financing and you are friendly with corporations come into think you do have to be -- jonathan: will we wake up with a misallocation of capital at some point, companies that should not have gotten this money for like a decade? >> i have a client who told me one of the greatest misallocation of resources, where is the most ridiculous aspect is you and i have sitting on our cell phones, smartphones come all these apps we do not pay for, but we use them.
that is a misallocation of resources. there is no free lunch, yet you can finance things so cheaply today you are creating free lunch and ultimately that will come back and it will kind of bytes us -- bite us. jonathan: the smartest people on the planet getting us to click on apps. >> how many have you clicked on purposely? i am not talking about when you accidentally click on it. alix: what about facebook? the shopping aspect. jonathan: we have to let you go. [laughter] jonathan: four minutes away from the opening bell. we are up over 100 on the dow. this is bloomberg tv. is this a phone?
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. ♪ jonathan: in the u.s., you are guaranteed and he were hoping for a quiet one. this is what it feels like. features positive -- futures positive.
and a nice ton for a second and perhaps on the equity market here in the united states. in the bond market, this is what things look like. yields lower by two basis points at 234. south ofer, flatter, 60 basis points. with that in mind, not much action for the fx market. we reclaim on the dollar index in yesterday's session and we're treading water around that point. and let's get to the cash open with alix steel. alix: potential for record highs , the nasdaq hitting a record high of 68.21. s&p 500 up eight points and the dow jones up by 96 point. the risk that we saw over in europe and the bond market continues to spread in the u.s., despite the fact we have retailers on the up and down side of the vix. urban outfitters up by 1% and
solid earnings. the idea that younger people are spending that is helping urban outfitters, abercrombie & fitch and gap. and -- raising full-year earnings. outlier, down 13%, related -- the latest retailer to miss. they are blaming hurricanes, dragging down those shoe suppliers. stocks down as well. the bullish calls continue from analysts. yesterday, 2950 for the year and target of 2018. uso had parker of -- -- you also had parker -- and goldman sachs, 2850 for the end of 2018. what will be the driver? this is a fascinating chart we want to pay attention to. this panel, the stocks with high cap, and those with high cash
return are the blue bars. you can see we started to see the stocks spending a lot of time on starting to outperform those that push more money into buybacks and dividends. similar situation for the bottom panel, the spread versus capex and cash returns, and the spread is pretty wide, the whitest we have seen -- widest we have seen since 2009. are we going to see a real cycle lead of the stocks to the 3000 level that many are calling for? or will be live support from the buybacks that have been so critical since the financial heiticize that crisis? -- t financial crisis? jonathan: we are bringing in tobias levkovich. i remember when it first started doing this, the bond guys will always be negative and -- will always be future and the positive and what will have a with economic positive growth. of course i am hearing no different this time around. also is on the target, but
i think some of that umph for next year is being brought forth by tax reform expectations. and as he go through the various things, the senate close to a vote on their bill then they will have to reconcile differences between house and senate. the fact we are moving at a faster pace, people are convinced that it would be more of a first quarter 18 phenomenal rather than a fourth quarter 17 phenomenal. if it does happen this way, the market is pulling out for would. i am less convinced you keep chasing. some of the sentiment metrics as we discussed are suggesting a little more caution. you cannot make the argument that valuation is cheap anymore. earnings really have to come through and come through big. jonathan: let's see what -- had to say. take a listen. >> we think 2018, you can still get solid growth around 8%,
valuations cheaper than you think where we have the higher rates priced in, expectations not priced in, and the upside case hinging on corporate tax cut, which we see as likely. jonathan: one of the brilliant things you see on bloomberg is you read all the research that comes through from pretty much everybody like tobias, and you put all together and you look at the because. do -- at the cost. -- cause. do you think there is euphoria creeping in? >> i think the rational exuberance the same rights. the barricade seems a smarter, but all the top down guys see the same thing and it is earnings growth. i think one thing where they differ is, what is the potential for rising yields, something we have not seen over the period two kind of work your way into that capital as set -- asset pricing model and expected returns, what is the trade-off and does it affect the
multiples? that is the big question that will separate some of the plus 3000 calls from people who are modest upside on the year ahead. alix: some questions on the capex. do you agree those companies that are investing will do better than those buying dividends? >> you have to be careful, because what has been happening, this is where i am different from some, i think we will see the pick up in bond yields, you will see rotation away from growth and value. value is more cyclical and the growth guys have a lot of excess cash to buy back the stocks. are they as attractive when you can get growth the summer else, economic growth somewhere else, at cheaper prices, which is what value provides? the point luke made about the pricing model structures based on the discount rate you are using for the present value calculation starts to benefit the value as well away from growth, and it does limit how much the market goes up because you get rotation as opposed to
just directionally higher and higher. jonathan: the equity market making new record highs, the equity market marches on and the bond market, we cannot stop looking at a going lower. 2'se a 57 handle now on versus 10's what are people -- 10's. what are people saying about it? >> we are at or lowest level since november 2007 today and i think right now you have people for a while wondering if this is a broken indicator from both maybethe broken yields, the fed weighing it down, even though expectations rose for inflation. and some people thinking japan -- we do not even need the inversion to get a recession. i think it is a two-sided argument, but remember that stocks have continued to go up. and the inversions have not necessarily been coincidence. if you sold the last time, you
are probably missing on the upside. jonathan: a contentious debate continues. tobias, great to have you guys. david: we are turning to the biggest antitrust case since microsoft in the 19 that is, the justice department suing at&t and time warner to stop them from urging. we are welcoming allen on the telephone. welcome to the program. give us a sense of what the markets are telling us about the lawsuit, whether it will succeed or fail. >> i think you have got to look at, what does time warner -- what is time warner worth if it goes through or if it does not go through? i think it is a win-win for the shareholders. i do not claim to be in antitrust lawyer, but it is interesting that the stock is up 1% this morning after the news broke. i'm not surprised. this street was expecting the doj to come down with a lawsuit. i think that people are buying
on the news. but the value of the deal is about 103 and a half as it is currently construed and if the deal does not go through a thing year,arner earns 685 next 14 multiple and gives you a price target in the 90's. fundamentally it is worth more than the current stock price. in terms of the antitrust lawsuit, i am not antitrust -- an antitrust attorney. i think the doj has a tough case. it looks like they are working backwards in terms of regulation, the world is changing dramatically. i do not see why you cannot use the same sort of decrease that usedst and -- that they with the acquisition of nbc. david: you have a one of three price tag as a way to value time warner, does that indicate to you that if the deal does not go forward somebody else will come along and pay that amount of money? it does not appear like they want to -- the company.
the dealelieve if falls apart, you certainly have more interest in the media space, you have three players supposedly looking at fox assets that are for sale, you will have more consolidation in the industry. it is a logical result of the dramatic changes affecting the media ecosystem. david: if the deal does not go there because of the antitrust division, does it cast a shadow over others that could try to come in and buy time warner? alan: if it is vertical integration because of size, perhaps a horizontal immigration data integration could work again. horizontala integration could work again. take a look at disney. it could go through in his regulatory environment. let's see how this litigation turns out. david: fair enough. thank you very much allen gold. jonathan: i love the only
example of this commander was a truck and wheels company in 1979. david: when jimmy carter was president. it was a very different time. you can imagine jimmy carter going after trucks. alix: it makes sense. jonathan: the equity market rising higher, over 100 points on the dow. and gains around 1.5%. and solid gains in europe. angela merkel struggling to put together a market. over one fourth of a percentage point. and we keep getting tighter and a narrower. we are down by two basis points. and in the fx market, nowhere on the euro-dollar. about 117.32. you are watching bloomberg tv. ♪
♪ >> this is bloomberg debris. i'm emma chandra. coming up on bloomberg markets, representative -- republican from ohio and tax policy subcommittee member. ♪ it is that time of year, as the holiday season kicks off, the take shopping season is not far behind. the question is, how will black friday, focused on brick and mortar stores, stack up against cyber monday? we welcome joe grommet, the former ceo of -- welcome back. >> good to be back. david: there is a report out today saying that compared to last year a smaller percentage
of people said they will buy online over the weekend, as opposed to last year. is there a chance the tide is turning? >> i do not think so. i think that the shift has taken place and the buying online is a huge part of the business today. it continues to grow and i think in fact that the mall traffic has been going south for a long time, fewer shoppers out there and in the end e-commerce will grow dramatically. david: how much can a girl? i think -- it grow? i think it is 20% online of retail right now, it is not the majority. >> that is correct. david: will it take over 80%? >> i think people like to go and shop and a touch and feel, so there will always be brick and mortar retailers. however, when you look at the fleet of shopping centers in the united states and is a there are maybe 1000 of them, there are 300 that are outstanding.
so that will really continue to grow and prosper, about 300 of them at the bottom of the list that probably will close over the next horizon, 5-10 years. in the middle, about 400 or so that will continue to exist, but they will be repurposed overtime. so there will be continuity of retail shopping, but it will be different. jonathan: i want to pick up on one of the things you said, people want to go in and look and to touch and feel. what if the consumer goes into a shop, bloomingdale's or macy's, looks and feels, and then goes and buys elsewhere? it is not good for macy's or bloomingdale's. >> it is exactly what they do. they are shopping for price. if you are competitive, you can take it home immediately. it is all about the e-commerce initiative, online shopping is about price equalization and it fits the consumer with demand. david: is there a hybrid play?
you hear about walmart saying, you can order it and pick it up. >> walmart has done a brilliant job of transforming themselves. 1.5 purchased jet.com years ago in a meeting difference for them. they are in a transformation, the gentleman from jet.com, he is a disruptor and he is an innovator and he is moving them in new directions and has been working for them. alix: breakdown different segments of the retail market, because jcpenney, macy's, we know they did not do well, walmart is holding up and home depot is holding up, but the younger segment is doing pretty well, like urban outfitters, gap, walk us through the trajectory of those groups. joel they are doing -- joe: they are doing better against the low comparisons. where are they doing better? they are not saying with a brick and mortar penetration is, they are looking at the total mix of channels. they are looking at domestic
business, international business, online business, wholesale retail -- i think companies doing those things have a good opportunity. if you are just a vertical retailer in the u.s. selling apparel you are in a difficult place. alix: ok, joe, they could very much. are you doing black friday? >> no. alix: on my ipad i have my windows open and my stuff in the cart so i can go online on monday and on friday and i see the sale prices come down and i pull the trigger. david: all online? alix: of course, i have a three-year-old. david: black friday is supposed to be in the store. alix: it is all online. >> i hate shopping. [laughter] >> it is all price driven. alix: 100%. david: there are boxes coming in and out of my house every day, i feel like i am part of the warehouse system. alix: retail stocks, with the think? oe: about 50% is e-commerce
today in terms of market and 50% is still the traditional brick and mortar. tobias: apparel that was mentioned, just under pressure. there is no easy outlook for them. in the homebuilders, which are in there also feeling the pressure as they hit the labor cost increases in more challenged markets. but we are kind of hedged in that retail is overweight. at this point it is attractive enough. and there was a recent -- that did that in october. joe: you might also see opportunities in the luxury sector with the stock market reaching all-time highs and people are feeling better about themselves. you might see those companies outperforming. alix: with a value play, was that what made you upgrade? >> there were two reasons, the valuations that started to signal performance. we do it differently. we look at which metrics have
been the most predictive of stock price performance, not what is cheap or expensive. we were looking at earnings revision momentum. and wasy plummeted balancing off the bottom, so we came off the bottom. you typically get that with stocks as well. alix: how do you hedge that interim of other sector allocations? >> we do it at the industry group level. we are overweight financials across the board. we are overweight energy. again, more value orientation. we are overweight with most tech areas and we are more mixed on health care. with farm and biotech. alix: thank you so very much. tobias levkovich. and joe. inside the bloomberg terminal, check out tv go. interact with us directly. jonathan: we are short of an intraday record high on the s&p 500.
and we are through it on the closing basis. another record on the s&p. similar gains on the dow, over 100 points. up.urope, the dax and the markets continue up there as well. and effects, -- fx, minted price action in g10. in the bond market, grinding lower. down by three basis points. flatter yield curve once again. this is bloomberg tv. ♪
>> a two-part harmony. i hope. probably not a lot. janet yellen only has two more meetings to go and she has already trained to raise rates in december, so washington will see if she backs it up or if there is any kind of signal that she would not do that. i would not expect a lot out of it, it may be more retrospective . this is why we did it. and why it works. jonathan: we have learned that she will not remain on the board, not surprising to most people. there were some hopes that she would, because we have witnessed a loss of inflation capital on the federal reserve board in the last couple months. >> we will be down to three members, one of whom would be serving after his term, that is allowed. randy quarles's term is expiring. he has to be renominated. there will be a lot missing. summer in the summer, bill of they will be gone. you have a lot missing the good
thing for the fed -- missing. the good thing for the fed the economy is not changing very much at this point, so they can go ahead probably with airplane. jonathan: i wonder if keane has anything to say but the recent rate hike. christina,don, monetary policy move. we are lifting rates by 25 basis points. anything on the fiscal side of the budget that will offset it? >> you know, i think people are hoping for the best, but keeping expectations low. i think hammond, known as a fiscal conservative, not really expected to change anything from the fiscally conservative line he has been touting. i think there is not much in terms of divergence from that sort of conservative party line of being fiscally conservative at this point. alix: will we learn anything about supply in the short and long-term tomorrow? >> absolutely.
i think the expectation is gilt issuance for the coming year is going to be -- and it is expected to be a boost obviously, because less supply mains that securities are currently in the market, they become more -- to investors. jonathan: something i have been thinking about, the fiscal hawks in the u.k. maintaining the ideology once they get into power, and once they leave power . the conservative power calling for it when they are not empowered. very different compared to the united states when a fiscal hawk goes missing when they get into -- david: i do not think we have any right now. alix: we had them during president obama's presidency. jonathan: bob corker is probably the one right now. >> we will see. we will see when it comes time to vote whether he is all talk. as they say in texas, all head and no cattle. alix: they say that? david: they do say that.
[laughter] jonathan: ok. black friday. 26 minutes into the session, wrapping things up for us here on "bloomberg daybreak." more records on the s&p 500, nice little bit, up by a half a percent on the s&p and the dow. bond markets, the most contentious debate happening in global fixed income. a flatter yield curve. we are down another three basis points on the 10 today. is there a signal, or is it nothing at all? from new york city, for our audience worldwide, this is "bloomberg daybreak." ♪
vonnie: u.s. stocks are in rally mode today, but we start with breaking economic data out of the u.s.. julie hyman has that data. it is just out. existing home sales. 5.4 8 million is the figure on the annual pace, little better than estimated. we saw a little bit of a downward revision, but not a huge change either. again, seeing this number gain 2%. october is the month we are talking about the october existing home sales up 2% to an annual pace of $5.48 million. it says we start as a the effects of the various hurricanes fade, particularly across the south. we will keep an eye on housing numbers it