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tv   Bloomberg Markets Americas  Bloomberg  November 21, 2017 2:00pm-3:30pm EST

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scarlet: we are live from bloomberg world headquarters in new york. here are the top stories we are covering. at&t's bittersweet week, the sec proposing ending net neutrality rules, while the doj tries to block their takeover of time warner. the focus for amazon, we speak with an analyst that sees the tech drive doubling in value by next year. plus, angela merkel's message, she says she would rather hold new elections then lead a minority government. u.s. markets close in two hours. let's get a check of where the stocks are trading. julie: to the upside and records again for all three major averages, all intraday records at some point or another during the session, on track for the record closes as well. russell 2000 joining the party
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also, also trading at a record. small caps lagging recently as investors try to flush out with the prospects are for tax reform, because this is seen as a group that is particularly receptive to any kind of tax cut. everything since last year's elections, you saw outperformance initially and through the long fade. particularlynce, in the last week or so, this is -- i should imagine the russell 2000's performance relative to the s&p 500 -- so we are still positive post the election, near breaking even or even with the s&p 500's performance in august. one proxy we are watching for tax reform. as for what is leading large caps, technology is the big winner, up over 1%. they are performing well in the session. the only group down on the day
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is telecom. health care bouncing back, i will talk about that today. bounceig cyclically led we are watching in today's session. take a look at one stock that is a standout, whirlpool. you can see the lake up -- leg up. that appears to be connected to the international trade commission, members calling for tariffs on imports of washing machines, above 1.2 million units. it was a case brought forth by whirlpool. so that will benefit them and it is advantage some of their foreign competitors. that is what that is tied to. finally, take a look at the bond market as well bid we continue to see this climb -- well. we can today's -- can continue to see the climb. a basis points in the two-year -- 8 basis points in the two-year and we having o --
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have a nine-year high for the two-year as well. julia: it has been a bittersweet week for at&t, the fcc looking at an end to net neutrality rules. meanwhile, the justice department is attempted to block at&t's takeover of time warner. the ceo randall stephenson sharply criticizing the move and questioning the motivation behind it. >> there has been a lot of reporting on whether this is all about cnn, and frankly i do not know, but nobody should be surprised if the question keeps coming up, because we've changeed such an abrupt in the application of antitrust law. 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 in us forfeiting control of cnn, whether directly or indirectly,
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is a nonstarter. partneroining us is a and global chair of m&a at jones day. he has worked on hundreds of deals as a corporate lawyer. great to have you with us, bob. you say this is not political. i was going to ask if further question, but i will stop there. bob: i would've said before yesterday i would not say policy affecting things. i do not think there would be a litigation. i think many people are surprised there is not a solution. you have heard it over the last 24 hours, there is vertical transaction and it is rare that they are blocked, because behavioral remedies are usually the answer. julia: and is not get to the court stage. why do you think we are here? with all your experience, can you lay out this deal, perhaps it needs to be in some ways
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scrutinized more deeply? bob: it is a very large transaction, for one thing. there is a lot of content in play right now and when you think about technology, technology is a means to something else, it is the content and that is what matters. obviously, that is what at&t is looking at. it is not the telephone company that we grew up knowing, it is different. an internet of things idea. scarlet: do you think it is objectionable because of the size of the players? we are talking about the number 9 distributor and 8 content provider. bob: the higher you go up, the higher the concentration the market is. again, it was a vertical deal. we were thinking there would be a solution. do not rule out that there could be a solution, although obviously at&t is taking a very tough stance. when the ceo says over our dead bodies, which is basically what
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he said yesterday, it is hard to move. it remains to be seen. the justice department has advantages in litigation. it is the government and there is a prasm jen they are acting -- presumption that they are acting properly. but you know, this is a formidable opponent. scarlet: randall stephenson says he sees a change in the application of antitrust laws. do you see that? bob: it is hard to think of a major vertical transaction that has been blocked before. if you had a department of justice person here, they might say we offered this and the other thing. we do not know the backstory, so let's not jump to conclusions, but i know that guys like me have spent the last 24 hours thinking, holy smokes, what does this mean? vertical transactions, there is usually presumption that they are ok. you have to do things and you know, but you did not think this
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way. now everybody is saying, is this going to matter? way for m&a ine general? julia: is that what you think? you think it will put it chill across it? bob: we are in the first or second inning of a nine inning game. i just have to believe that somehow something will happen, but both sides have dug in. julia: does it surprise you that this could be a turning point where we see broader scrutiny of tech in general, because now everything has a shifted -- the growing power and changing nature of what these businesses represent. amazon is possible, when acquired whole foods, everybody said women, this is a grocery space. what are they doing in the grocery space? it is a tough business. whole foods is a great company,
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but it was, you know, it was starting to squeeze and everybody said well, it is a vertical deal so no problem. does it mean size alone is a factor? i sure hope not. that is not the law. julia: find a diagram where amazon is concerned about -- bob: yes, but there is a lot of competition in the grocery space. you can put lockers in there, but it is a grocery store. scarlet: we look at the food in a moment, but let's wrap up the conversation on at&t. if you are representing these firms, what would be the best argument but ford? -- put forward? bob: yes, time warner is a big one, but it -- there seems to be an infinite amount of content. you have got to get the right content in all the rest of it and this issue with a cnn, i
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hope it is a sideshow. i hope it is not about politics. i would've said a week ago it was not, now i am just hoping it is not about politics. these are tough issues. hard to come to judgments from the upside. julia: if you look at comcast and universal as well. bob: everybody looked at that and said how could they stop it? julia: but look, you will still allow it to be distributed. why will it not work in this case? bob: we are not sure if it was offered and rejected. we will know more as time goes on. this one will be quick, but no litigation is quick, maybe 45 days at soonest that it will start. scarlet: the details are in will we -- what we do not know yet. we will continue our conversation with robert. in the meantime, first word news
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with mark crumpton. mark: fascinating. pbs has joined cbs and terminating charlie rose's employment. reportings follow a post in which eight women claim of the television host made with a term unwanted sexual advances toward them. in a statement, rose apologized for what he called his inappropriate behavior. bloomberg has terminated their agreement of the charlie rose show. there is a report that john connors of michigan -- sexual-harassment case two years ago. according to buzzfeed, a former employee complained she was fired after rejecting the congressman's sexual advancement -- essential advances. he says he is not settled any claims. paul ryan called the report troubling it is said reforms to the system are being considered. the un's secretary-general said terrorist groups and criminals are capitalizing on conflicts with "innocent civilians" in
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ways that would constitute war crimes and crimes against humanity. speaking at a meeting today, the yuan chief called for -- u.n. called for urgent action to combat trafficking. broadcast on cbn. -- and president trump pardoning turkeys today, he continued the annual tradition during an event in the white house rose garden. they actively nancy means -- act of leniency means that they will get to live the rest of their lives at a virginia farm. first lady melania and their son joined in on the ceremony. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. thank you so much. comment, nestle weighs a deal
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with hains celestial. we get more insight on this particular tire. from new york, this is bloomberg.
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♪ julia: this is "bloomberg markets." scarlet: nestle said to be among
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the companies exploring a purchase of hain celestial group, which makes organic and vegetarian food. the two companies holding preliminary discussions. we're back with robert. and joining us is the reporter that broke the story, ed hammond. ed, tell us where we are at in this potential tie up, because what i am reading is nestle would be paying quite a bit and at the same time you have investors pushing on both sides. ed: that is right. you have a small percentage position in nestle's side. they get on well, those in the company. on the other side in hain, about 70% of the stocks, in huge position and i do not think of a get on well with the management and they have been pushing to sell the company and hain said they will be exploring, so not a huge shock that they are looking
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at the spirit we reported yesterday -- at this. and we reported yesterday that there was contact between nestle and hain. whether they are trying to cherry pick the assets or take the whole company, it is to be decided. it is interesting to see what price point they will do the deal. hain up today, but looking going back in the last two weeks it was around 20%, so the stocks have a lot of heat in them. the food sector is up slightly, but hain has been running ahead of everything else. scarlet: bob, you have talked about the food sector and how it is hot. this is only back to amazon and whole foods. bob: and before. there have been very large consumer-oriented companies moving out of the food space, and on the other hand you have big food people like nestle, they have a lot of wonderful brands, but they have a lot
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where there is not a lot of growth. you look at organic and the healthier things and it makes sense if you earnestly, -- if you are nestle. julia: it is interesting. if they do this around $50 a share, 30 times -- for the most recent 12 month numbers, which even the -- deal we saw as well. i want to ask about a common thread between hain celestial and what we talked about earlier with the shift between at&t, even whole foods. hain celestial is a supplier for whole foods too. what about activism and the role of activism in these deals? bob: you can understand the business. people think they can understand the business. it is a tough business. we are going through a transition, we are not eating -- a transition, we're not eating green beans out of a can anymore. and -- in.azon steps
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of course, all this stuff with technology and these changes, if you have a huge infrastructure and a huge base, you take a little bit out of the margin and all of a sudden it has a big impact because the base is so big. of course it makes sense. there will be a lot of interest in this business if they put it on the block. you know, even private equity, they love food brands. julia: it is not just about nestle. scarlet: exactly. ed: you can see that somebody like nestle could be the ultimate acquire, but they could offer assets to private equity. white with had some nice stuff in there. scarlet: nestle has already made quite a few acquisitions. they already shelled out for blue bottle coffee and freshly. ed: this health and wellness trend is very much the direction of travel, in the food industry,
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people moving away from confectionery and-toast syrup -- foods.uctose syrup nestle is getting a little of the confectionery business to some extent, some talk they will invest in other stuff in the u.s. this will make sense to them in reshuffling their portfolio. julia: you said they want to go into the consumer health care space, it makes sense for them to do something like this, rather than perhaps buy a chunk of pfizer or something like that. ed: look, nestle i am sure will be among the big food groups looking at the -- coming out with pfizer, or it has been announced that is coming out pfizer. that would be huge. it could be a $20 billion -- it could be a $20 billion deal. but if they want to move the needle, they need to pick things up piecemeal. julia: thank you very much. thank you to bob and ed.
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still ahead, angela merkel's clear message. she says she is open to new elections. you will hear from the former ambassador to germany. from new york, this is bloomberg. ♪ this is bloomberg. ♪
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♪ scarlet: this is "bloomberg markets." i'm scarlet fu. julia: i'm julia chatterly. angela merkel says she would prefer new elections to leading a minority government. it comes after coalition talks collapsed. david westin spoke with u.s. ambassador to germany, former ambassador to germany, -- >> i think there is a chance that a coalition can be formed. even the former jamaican
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coalition. i think there is a 40% chance of new elections and a 20% chance of a minority government. david: go to the 40% chance you think there might be of putting together a coalition one way or the other, who will have to give on that? there is bad blood between angela merkel on the one hand and the head of the ftp at this point. robert: i have seen the reports. what i would say is, do not underestimate the role of frank -- the german president. the german presidency, like many presidencies in constitutional democracies, is largely a figurehead role. it is really the voice of the nation, but at this critical point the german constitution has put together in 1949 - that was put together in 1949, requires the president to look for every way possible not to go
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back to new elections. and steinmeyer not only was the foreign minister into governments, but also the head of the chancellery under schroeder. he is a very respected man, very respected more broadly in europe and elsewhere in he had discussions with angela merkel yesterday and he will speak today with the greens. and tomorrow with the social democrats. i would wait until he has finished that first round of talks before concluding that there is not a chance for a new coalition. david: you know germany well, give us a sense of what brought us to this place. this is unprecedented for this to happen, as i understand. is it a rise of populism, is it because of the immigration position that although merkel took? robert: immigration was a critical role in the election. angela merkel's party got their
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lowest figure since world war ii. they dropped a points. and immigration along with taxes and energy were critical parts of the coalition discussions. i think on friday, when they extended the deadline until sunday, most people thought that they would be really close. i think a surprise observer said things broke down largely p could nott the fd get what they wanted on key issues to modernize germany, facing a strong demographic challenge that needed to innovate lower taxes and take other steps that they campaigned upon. julia: that was the former ambassador to germany robert kimmitt. scarlet: a look at some of the biggest stories right now. a group of automakers asking the transportation secretary to support the talking cars rule. general motors and delphi requesting vehicle to vehicle
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systems to be mandatory for all new passenger cars by 2023. and these systems make it safer by allowing cars to talk to each other and worn drivers of -- warn drivers of road hazards. those countries that fish for bluefish tuna agree to expand their annual quota. it will be raised from 24,000 tons to 20,000 tons in 2018 reflecting an increase in the bluefin population which is considered a delicacy in sushi. that is your business flash update. julia: still ahead, the critical shopping season upon us, but will jeff bezos be the grinch that steals christmas? the amazon affect in this week's bloomberg. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered.
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comcast business outmaneuver. ♪ bloomberg world headquarters this is "bloomberg , markets." i'm scarlet fu. commodity markets are closing, so we will get started with oil .i'm david gura.
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and forecast to show the first drop in crude stockpiles in three weeks. up by three quarters of a percent. investors getting rid of the opec meeting where the state -- the extension could be agreed upon. gold rebounded today, up by 4/10 of a percent as the dollar declines. investors waiting on the lettuce fed minutes out tomorrow at 2:00 p.m. they are also weighing the chair's announcement actual step down after jerome powell is sworn in. big picture view from jpmorgan, analysts noting it has been a lackluster year for commodity returns and they predict next year will not be much better. you are looking at the commodity % after a big dip in the first half of the year. julia: now to more lackluster, retailers getting
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a glimpse this week as we get into the holiday shopping season. in the meantime, check out this chart. this is on the bloomberg. you will see retailers actually outperforming the s&p 500's numbers today, despite what you may think. compared to amazon, the yellow line, performance looks suspect. joining us is an analyst betting that the amazon grinch will still christmas again, brian nowak of morgan stanley joining us from new york. great to have you. thank you for joining us. clearly, the fourth quarter is critical for all these retailers and you say that if your numbers are right for this off-line retailer numbers, this could see a decline in the fourth quarter so numbers since the recession. caucus through it, it is -- talk us through it, there are other things going on.
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brian: thank you for having me. -- with a hard-line team and the big punchline is we think that amazon is the main winner this holiday season when it comes to retail space, because in the fourth quarter you typically see the acceleration of dollars moving online and given the fact amazon is approaching a third of all e-commerce, amazon is taking a bigger share of the overall dollars. to your point, it is impacting soft lines, hartline, you see the growing share of the dollars in retail money coming toward amazon's coffers. scarlet: scarlet: one thing that will not be flowing toward amazon is anybody spending money on the iphone x. even though we think there's limited supply of the device, the price tag is so big it takes away from people spending on other items. brian: that is right. there is a series of other headwinds we have detailed that we think will impact the overall
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expenditure and we think the iphone is one of those. anytime you have a large ticket item, they do take up a disproportionate share of that. it will put a damper on the overall dollar expenditure outside of the iphone category. julia: you think that amazon is one of the topics for the holiday season, but what else do you like and who might perhaps apprise us? brian: i cover the u.s. internet space and i think amazon is actually the main way that i play the holiday retail environment. i will tell you why, we have gotten to a space where amazon's ise consumer expenditure about $2.5 trillion. about $.50 of every dollar of growth of the $2.5 trillion all my and off-line is going toward amazon. we talk about other retailers getting share here and there, but from the bigger picture perspective there is more and more dollars going toward
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amazon. in my world, in the u.s. internet space, amazon is the one way that i have played the holiday sector. julia: and in the fourth quarter is where you see the dominance of e-commerce in particular. brian: that is right. if you look over the years, you typically see further acceleration of dollars moving off-line to online during the fourth quarter. people are shopping more on their phones, they are finishing thanksgiving turkey and they are immediately going on to their funds for the black dollar -- black friday sales. amazon drives on that and they drive it and ultimately the capture more dollars. scarlet: it is not just e-commerce with amazon, it is the season to talk about e-commerce, but lately they have been scaring a lot of people in the health care space because we have heard that they are trying to get pharmaceutical licenses here. you write that drug distributors are most at risk should they
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enter the health care market. assess the threat. how far away are we from that? brian: we wrote a big collaborative report with the entire health care group this week and we see them moving in on the business supply-side, selling commoditized goods into labs and doctors offices. think of gowns and gloves and things like that, selling them on the business-to-business side. that is happening now, but secondly if you think long-term, 3-5 years, we make the case of how they could move into the pharmacy space and consider opening a pharmacy into the whole foods stores and to change the model in the way that people get prescriptions. julia: how would they actually drive pricing, because if you compare with a of done with whole foods, they went in instantly and they started chopping prices, can they do the same thing in the pharmacy
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sector? what kind of mechanisms can they use? where do you see it going? brian: health care is more complicated. there is no question, but we see amazon driving adoption of the pharmacy product overtime for convenience. because, first amazon can offer a pharmacy in the whole foods stores and offer shoppers the addition of the pharmacy, but secondly the addition, the combination of whole foods plus prime now, which is one-to our shipping, would enable them to bring people prescriptions in a one or two hour window. overtime you have a situation where you open up the prime now app, order your prescription, and it comes in about 1-2 hours, and they might bring other amazon goods as well. convenience is going to be the bigger driver than price if they go into the pharmacy space. scarlet: i like how you brought in prime. how does it fit in with other
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business for amazon, i am thinking about echo or even web services, which seems separate but maybe there is a tie in? brian: it is all intertwined. from the echo perspective, you can see a situation where you can say, alexa, reorder my prescription. or it could remind you when you need to reorder the prescriptions or automatically do it for you. the internet of things plays well into this from the pharmacy angle. and on the web services side, we already see instances where hospitals are adopting amazon web services. it is almost like amazon web services is a shoehorn for them to begin to penetrate the health care space. julia: it is interesting, when amazon purchased whole foods we were asking if they could succeed in the retail space, because it is not a given and it is the same kind of questions we are asking in the pharmacy space
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and we already see consolidation with cvs -- so what is the defense here against amazon, in light of everything you said and the power of what amazon has? brian: you are seeing some reaction. our health care team has written about this. you already see offerings of the next day shipping coming to new york, 1-2 shipping -- day shipping coming to cities throughout i2019 coming from cvs. as traditional pharmacies try to counteract the amazon threat, they are likely to offer more convenience and more offerings. scarlet: is there anything or anywhere where amazon could stumble along this route? where could it mess up? julia: where is the flaw? brian: the most difficult part of entering the health care
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space is how it are tangled it is, there are so many contracts and players. there is also regulation to work through. when you think about industries that are more insulated from amazon, regulatory hurdles, existing contractual relationships make it relatively more difficult. that is what we are watching for in the smokescreens, how they can get new licenses and develop new relationships, and eventually crack into the industry. scarlet: a good way to measure their progress, or perhaps not progress. brian nowak, thank you. julia: i think brian concluded that amazon will be the grinch. scarlet: for the likes of cvs, maybe years down the road. now i check of headlines with mark crumpton. as expected, the u.s. has announced new sanctions on north korea in the latest move of isolating kim jong-un's regime.
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steven mnuchin said that the penalties also affect shipping and transportation companies that have engaged in large-scale trade with north korea. the democratic congressman john connors of michigan, the longest-serving member of the house of representatives has acknowledged settling a central harassment complaint against him, but denies the accusations in the case. he says his office acted "to avoid litigation." it was reported that commerce may connors had been accused by a former house employee who said she was fired after she rejected his sexual advances. buzzfeed says the complaint, filed in 2014, resulted in a settlement of $27,000. at least 50 people dead following a suicide bombing at a mosque in northeastern nigeria. a police spokesperson said a teenage male assailant entered the mosque and detonated
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explosives as people gathered at don for prayers. boko haram militants are suspected in the attack. police declined to comment on who could be responsible. more than a dozen lawsuits have been filed by victims of the las vegas shooting that left almost 60 people dead and more than 500 wounded. police say that stephen paddock shot people attending an outdoor music festival from the 32nd floor of the mandalay bay resort on october 1. the latest litigations target the entertainment company that puts on the show into the hotel, alleging that they acted negligently in the run-up to the mass shooting. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. ♪ julia: thank you. stocksup, a rally in after maintaining its outlook. the stock of the hour is next.
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this is bloomberg. ♪
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♪ julia: this is "bloomberg markets." i'm julia chatterly. scarlet: i'm scarlet fu. julie hyman is looking at health care shares and with one outperform in particular. julie: we will start broad in looking at the lxv, when of the best-performing in today's session, just behind technology. up 9/10 of a percent and extending its gains. it is not a record today, but up 17%. if you look at the groups within the s&p 500, health care is the second-best performing group behind technology. what is interesting is if you look at the bearish and bullish options activity in the xlv.
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take a look at the bloomberg. we saw some spikes in bearish to bullish options a couple times this year when there were threats of health care repeal, then they have come back down again. we are running around 1.25, so bearish to bullish options. we do not see the same kind of reaction to the potential threat of the individual mandate repeal as we did to the wholesale of repealing of the lot earlier in the year. the to today, one stock of hour that is the best performer within the group. it is medtronic, a device maker. the company had a run of a combination of bad luck and execution. so it had manufacturing facilities, four of them in puerto rico, so obviously hurricane maria disrupted those. wildfires in california closed for facilities there as well. the company has been trying to
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bounce back as well from that. and they had a computer outage earlier in the year, then a shortage of diabetes sensors that hurt supply, so obviously a tough time. the company is now maintaining their outlook for revenue growth and earnings growth for the second half of the year, 45% for revenue,- 4%-5% for for the full year, not the second half. julia: so it has taken analysts by surprise, given all the issues you have mentioned, they were anticipating something perhaps softer. julie: perhaps more caution on the outlook. some analysts are saying they can achieve it, but others are more doubtful. among the doubters, those that jpmorgan. they point out without revenues up 3.5% constant currency youier in the year, so if see 4% or 5%, it would represent
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acceleration. they are asking about the fourth quarter. and we are looking at the graph here for medtronic showing different measures for the stock.. this is the earnings-per-share estimate for the full year. what medtronic's on forecast is as high as 481, but at the same time they are trading 42% below the peer group. they are trading at a discount at the present time, which can help account for the bounceback that we see in today's session in reaction to the earnings outlook. scarlet: remarkable given all the disasters it has faced. julie: we will see if it can actually deliver on the outlook. scarlet: now is the time to lowball. julie: one would think so. pile it all in. scarlet: thank you so much. julia: average price at $89, just above where we are trading. bloomberg business flash, a look
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at some of the biggest stories right now. according to bloomberg data, tesla is spending an average of $8,000 a minute. as it ramps up production on their electric car, putting it on track to exhaust cash by august, so the pace is not expected to continue. they say they have ample money to meet their target. and jason -- will pay one and a quarter million dollars for lapses in background checks at the brokerage unit between 2009-2017. the financial regulator industry workers were not fingerprinted and time to determine hiring a liability. four individuals were found to have come in the convictions that would disqualify them. and that is your bloomberg business flash update. scarlet: staying with the jpmorgan, banks and watch a, we will tell you how the parent is
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coming into the financial sector one equity swap anytime. this is bloomberg. ♪
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♪ julia: this is "bloomberg markets." i'm julia chatterly. scarlet: i'm scarlet fu. let's talk blockchain. banks initially treated it with skepticism, but now the big players like jpmorgan and goldman sachs are getting in on the action. they have completed a six-month test with blockchain in the swaps market. the result may wonder percent success rate. is on the program. great to see you. , isn't solving problems -- talk about the problems blockchain solves when
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it comes to equity transactions. >> it starts with the complexities of what goes into an equity swap. you are a green on a contract -- agreeing on a contract that will involve hundreds of different equities, so over a given month you could be tracking thousands upon thousands of online data forms and then putting them through consolations come and it means if everybody is trying to process that you to store the data independently, it means by the time you reach the end of the month and he tried to understand who owes what, it leaves a lot of room for disagreement. so what the blockchain does is we have a synchronization network where we will print the data and we can run calculations on the network and all times this will be connected to and reconciling and make it or everybody agrees on the state of the transaction. julia: how long do the trades currently take to settle versus how quickly it can be done with blockchain?
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>> mchugh thing is the risk on settlement -- the key thing is the risk on settlement could be on what is owed. to the point that you would send cash, this is about what is owed to him and when you disagree on that you have to go backwards in time and delay. julia: so the critical asset is blockchain allows us to track the equity swap live and the ongoing valuations as time passes throughout the life of the swap. everybody is using the same data, so rather than one bank using their data and another bank using their own system, this is in real-time all the same people using the exact same data. is that how you see the feature with this? greg: also you have mathematical proof they are seeing the exact same thing. julia: if there are any discrepancies that may come to light maybe weeks or months later, this solves that.
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greg: absolutely. scarlet: there is a track record, like a receipt. julia: you have done this already. we were going to ask how quickly it would be up and running, but you have it already with credit products. greg: we are getting there. we are re-platforming the trade information warehouse, the data and all the calculations for about $11 trillion of derivatives including swaps. about 55 different products. we have been working on it for close to a year. and it is slated to be finished in q1. julia: what about goldman sachs and jpmorgan, how did the -- do they use the technology and the other banks use older forms? will they have to join the party too? greg: there are two ways to look at it. the key thing is you want to be as minimally disruptive as possible. one way is there is optionality.
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julia: you can back up in the short term. scarlet: and so people see the benefits of it and it becomes the primary form. talk about costs, there is cost savings involved but what is the investment cost in adopting the technology? greg: it comes down the building of technical expertise at this stage, that will be abstracted out over time as the ever structure is pulled out -- if a structure is pulled out. and there is also the implementation and business sign off on these kinds of things. we are implementing it and our costs are not terribly high. julia: you are not the only people doing it, there are other competitors out there. scarlet: there are digital asset holdings, for instance. julia: 10 different banks use a different system, or does one winner take all in the end? greg: i think we will see it on an asset by asset basis, it will
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be divided up like that. if you look at the markets today, that is not uncommon. what we will see is people will start to talk less about blockchain and there is a loans network or whatever it might be. technology will be less of the conversation. julia: they say it could save about a billion dollars for investment banks. -- $8 billion for investment banks. scarlet: you would be excited about that. julia: greg, thank you. a win for the wealthiest tax loopholes, we will discuss the tax overhaul, coming up. this is bloomberg. ♪
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julie: it is 3:00 p.m. in new york, 12:00 p.m. in san francisco, 8:00 p.m. in london. i am julia chatterley. scarlet: i am scarlet fu. welcome to "bloomberg markets
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♪ we are live in bloomberg world headquarters in new york over the next hour. your other top stories we are covering on the bloomberg and around the world. why good use in the tax bill could benefit investors and fund managers. betting on bitcoin. white manager tells us the latest rally has serious legs. and political uncertainty in the heart of europe. chancellor merkel says she is ready for new elections. her backers hold out hope that a grand coalition in germany may still come. let's get a check on markets with julie hyman. julie: we see a market that is consistent today, julia. all averages are trading at records for the intraday, and on the closing basis, the russell
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2000 joins them for the first time since october achieving a record. it seems like there are a lot of folks with positive outlooks out there right now. one of them a long time there -- a long time bea at goldman sachs. rhis suv forecast is among the lowest in the survey, but he is 2850ng his forecast to from 2500. he is looking at an expansion in profits and valuations, not something we are looking for from all of the strategist out there. at anly do we see the s&p record today, but also a round number. look at the bloomberg. this shows 4 times this year that the s&p 500 has reached these round numbers. in other with, 2600 is where the index briefly traded today. it is below that. we saw the other times when we get to 23 and 24, the velocity with which we have seen the
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gains in the multiple times with seen the record thus far this year. getting to the winners and losers we have been watching, earnings-related, that is, we have hormel foods, the maker of spam, coming out with earnings that beat estimates. company,ction services did there. on the flip side, campbell soup seeing lower demand for soup in general. finally, signet jewelers is on the downside after the company came out with same-store sales that missed analyst estimates. a lot of the strength today is within technology, big cap tech. thesee apple, microsoft, giants of tech have been rising. h moven the bloomberg an for the s&p 500, and there i see a similar picture as to the stocks that have kendrys did the most to the s&p's -- that have
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contributed the most to the s&p's gain thus far. microsoft, facebook, amazon command that you have google as well. when you look at what has contributed to the gain, the index point that they have contributed to the s&p 500's gains this year. interestingly can we have johnson & johnson and boeing as the others that are rounding out the top gains in the s&p. scarlet: thank you so much, julie. lawmakers who rushed eight tax bill through the house on thursday may have handed wall street's wealthiest more goodies than they realize. joining us now is bloomberg investigative reporter and pulitzer prize-winning journalist. the question i had after reading your story was are these loopholes intentional or accidental? they are rose from the ashes. >> right, it is always kind of hard to tell. but usually when you are putting
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a bill like this together, there are so many moving parts that it is difficult to consider how all the parts affect each other. it is pretty easy for loopholes to show up by accident. scarlet: let's talk about one that may not have been by accident, the estate tax. you highlighted this one because for you spoke to said it is harder to see how they couldn't have missed this. obviously, republicans for years have tried to get rid of the estate tax, no surprise there. but they're also talking about not changing the step up in basis for assets. if you inherit assets nowadays from your parents might pay the estate tax when they die, but you don't have to pay tax on the accumulated gain of the stock warehouse or whatever that the committed during your parents' lifetime. they will keep out the way it is now. it is almost like a twofer. for people in the estates business come it is kind of mind blowing that congress would be considering this. julia: when you look at estate taxes under the house bill right
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now, it would be limited to fewer estates and then eliminated entirely by 2025. how might this change just in light of the comments -- we will talk through other elements that are quite eye-opening in terms of benefits for investors and for the wealthy. how might this change when you compare it to the senate version? zach: senate version wants to increase the exemption, but with an overkill overtime. that would obviously be something where there wouldn't be this kind of loophole that i talked about with the step up in basis. if they preserve the estate tax, there wouldn't be a way for a superrich family to never pay income taxes for generations. julia: it feels like between the house and the senate they have caught onto something -- scarlet: maybe they will close this one a little bit. but this is the talking point for republicans. they have been going on for the estate tax --about the estate
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tax for decades. zach: that's right, and it is a popular not just among republicans. people don't like the estate tax, although almost no one pays it. julia: talk about the shift in the corporate landscape, because for these people, right now they are taxed at the individual tax rate. opposing this tax overhaul, they say it would go to 25% and be or aligned with corporations in which should see a corporate tax rate of 25%. however -- zach: right, so the question is if i'm not a small business owner but just an investor in a hedge fund, can i get the 25% pass-through rate? it is not look like the way congress wrote it in the way they intended that, but changing the way it allows them to get the rate, so if they are trading assets rapidly combined and ,elling stocks all day long
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they're generating income that could be taxed at 40% on my ill, but i tax b could get that lowered to 25. julia: some of the hedge fund guys and bankers who are so irate about carried interest -- and suddenly hedge funds are getting this similar kind of benefit. scarlet: i'm glad you brought up carried interest, because that is another thing -- donald trump was very explicit about getting rid of tax loopholes for the wealthiest, the hedge fund many years, and yet the way that carried interest is treated in the senate and house bills suggests appeals. -- suggest something else. zach: they're both try to slightly reduce the benefit that fund managers get from carried interest. they pay a lower rate than you and i pay. but even that slight change, there may be a simple way around it. apply to carried interest owned by a corporation. escorp,, create an
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and have happy the entity that owns your carried interest in the fund you manage. the way the law is written right now, it looks like that would work. i was a, somebody might have a chance before the bill becomes law to close the loophole. that would be a one-word fix. julia: there was a big saference and the house is in this case involving period, that will go from -- involving the holding period, that will go from one to 2, tyooo. zach: right, that was never the concerned people had with carried interest. capital gains is supposed to award you for investing money in the economy, but private equity managers who take the carried interest tax break are not investing their own money. it is other people's money being invested, and they are getting a piece of that as a fee for their
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work. they are paying the lower rate. extending it from one to three, it is hard to see how it addresses the fundamental. scarlet: but it sounds good. julia: just depends who you are. [laughter] we willes, no doubt, get you back on to talk about the latest iteration -- scarlet: it keeps changing. julia: great to have you on, zach mider. let's get a check of the "first word" news with mark crumpton. mark: we just got tax overhaul education, didn't we? a suspecte arrested in connection with the attacks on "charlie hebdo" magazine and a kosher store. they were taken into custody as part of the investigation as to who supply the weapons to the attackers. after 37 years in office, zimbabwe's president robert mugabe has assigned. he gave into overwhelming
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pressure from the military lawmakers who were preparing to vote on a motion of impeachment. last week the military took control of the country. mugabe has been under house arrest since then. brexit secretary says good progress has been made. he did teleconference in london, however, that just tell a conference in -- he did tell a conference in london, however, that there was unfinished business will > -- >> we must start talking about the future relationship. we must take into account the shape of the future partnership of the european union. the financial settlement depends on it. mark: the secretary added that both sides have positions to defend and aims they are trying to achieve, and again quoting, "nothing is agreed until ." thehing is agreed t
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talks to rewrite nafta are said to be sputtering. mexico and canada are portraying to u.s. demands as unworkable. meanwhile, the u.s. is frustrated that the two countries won't come up with counterproposals on issues such as regional content rules for cars. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. scarlet: thank you so much, mark. coming up, bitcoin bouncing back , hitting any record high as hacktors shrugged off a on a rifle. from new york, this is bloomberg. ♪
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julia: this is "bloomberg
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markets." i am julia chatterley. scarlet: i'm scarlet fu. it has been a tumultuous day for bitcoin. it tumbled 35% after $35 million was stolen from a smaller rival. but that the government didn't last long banks to bullish bitcoin comments from a hedge fund manager. here is what he had to say to bitcoin skeptics out there. all of those guys are over 60, and i am not. and there is some truth to that in that it is really difficult for someone who did not grow up in a digital world to start understanding how we could be moving into a digital world. bitcoin you can look at as digital goal. what is gold? it is a precious metal and could have been copper or lots of things on the periodic table, but way back, people chose bitcoin. gold has value and it has value -- solelycause
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because people said it had value. people are trusting. this whole revolution came out of a breakdown in trust. it came out of the 2008 financial crisis were people said, , we don't trust financial institutions, we don't trust governments. and in parts of the world -- if you are in venezuela, it is hard to cost the central bank, or in zimbabwe. the centralized revolution, which bitcoin is really the poster child of, is a response to the breakdown in trust. david: is it investment or is it trade? just overnight there was a cryptocurrency i've never heard of them actually, and there was some theft of that, and bitcoin was down 5.5%. it has come down since. >> we are in the second or third ending of this revolution. these are young experiments. each of these coins are individual ecosystems, with
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their own use case. bitcoin is the largest. it is a decentralized system of money or decentralized system to store well. there are 30 or 40 decently market cap coins that have earned system. because the prices have moved so far -- like anything, people are nervous. you want to book your profits and get out -- alix: but to be fair, people lost millions of dollars they are not going to get back. how does that not the whole model into question? >> the total market cap of the groupis a quarter-trillion dollars, and $30 million got hacked. it has people nervous. we spent a lot of time thinking about security of our coins and how to keep them safe. two years ago, i had a smaller amount invested and i spent a lot less. david: just to look at the chart, this is the market share of the different cryptocurrencies.
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that is not total value, that is market share, basically. it looks like it has receded a little bit. >> for a while it had an amazing run. it went from a dollar to use ago -- and went from a dollar 2 years ago to $4000. and then bitcoin had a move. i think right now, for first-timers entering the market, bitcoin is the name they have heard of. that is driving that move. just in the last few days -- i think is going to put a new height. there is a lot of positive things happening in the ecosystem. alix: what is your bitcoin call for 2018? >> we ended the year at 10,000 at bitcoin. how much have you been able to raise for your fund? >> the sec does not allow us to
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talk about fundraising on tv, or i get in trouble. alix: better or worse than you thought it was going to be? >> people have been interestingly receptive. alix: interestingly receptive. have you been betting on the ico's at all? >> sure. alix: which ones? >> a token that is going to try to decentralize the marketplace shieldns, the clothing buyds, helmets, that gamers to make their avatars look prettier. alix: well, you will have to explain that in the break. that was like woosh! >> how about this, there is more people that buy and sell digital clothing that people who buy and sell bitcoin and the other cryptocurrencies combined. alix: what? scarlet: that was the founder of
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jealousy investment partners speaking exclusively on bloomberg about cryptocurrencies. julia: time for the bloomberg "business flash." campbell soup saw the worst drop in nine years after the company cut its annual profit forecast. campbell has been heard by an ongoing pricing dispute walmart stores. the company's push into fresh foods has struggled with whether in california hurting the carrot farming business. the customers will miss dallas cowboys versus los angeles chargers game on aanksgiving, this do to a dispute with cbs. 18 wereations in discontinued as of midnight monday. .ish accuses cbs of greed cbs accuses dish of punishing customers instead of negotiating a new contract.
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and that is her "business flash" update. he said, she said. president donald trump has been speaking to reporters. he and first lady melania trump will be heading to join -- george air force base andrews. mar-a-lago for the thanks giving holiday. scarlet: i was just going to say, we have headlines from that is not speech, the conversation he is holding with reporters. he is talking a little but roy moore -- i'm sure people asked him roy moore -- and he says, " roy moore denies it, and that is all i can say." for now the president sticking with roy moore. we will bring you any other details on anything else he says , grinning tax reform, which is going to continue while he is on holiday in florida. julia: what is thanks giving? scarlet: thanksgiving is thursday. julia: what we did do this spend a whole day parting of turkey.
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scarlet: pardoning turkeys? that means they are not going to kill the tricky to get that turkey and the tricky gets to live free. york, this isw bloomberg. ♪
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julie: you are watching "bloomberg markets." i'm julie hyman. for "options inside" is a strategist at trading advantage, joining me from chicago. forher day, another record the major averages here. we have tech particularly strong. we have the russell also confirming the major averages move. what are we seeing in the options market? are you seeing anything that gives you any reason for pause?
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>> it is early christmas across the board. volume is incredibly low, as would be expected. this would typically be one of the most thinly traded weeks of the year. ,he overall macro market nothing confirms anything for me here. ,e have stocks with earnings but overall, the markets, not really. maybe some of the underpinnings of the market -- gold is up a little bit today, not much, but gold is up. typically on a big rally you might not see that. there might be some short covering. this is a week and the gains are great and everyone loves them, but we have to focus what happened after black friday and next week going into the end of the year. you areight, and focusing on regional earnings, not necessarily for holiday shopping at the footage of the year, but the reporting on the 30th. a really fascinating company has seen really rapid growth. what is your take on what we will see with earnings reaction?
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this stock has been pummeled since june, down about 40%. he has put in a nice base around the 200 level on high-volume. i'm looking for some really good comps and guidance going forward. the ratio seems pretty high, but compared to other stores from other companies and, it is actually not. i'm playing the upside here. 227.5 call spread. i can do that for $1.20, $1.25 or so. risk.e great reward to the option market is expected to move about $18 or so between now and earnings next thursday. that puts us at the target of 227.5. i know what my downside and risk is, but tremendous reward to risk on the call spread. julie: going long makeup.
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thank you so much, scott bauer of trading advantage. we will be watching the figures on november 30. a big still to come, win for broadband providers as the fcc proposes ending net neutrality. we speak to tom wheeler. scarlet: staying on that idea and he says that the at&t-time warner deal is not good for the country. this comes out after the doj has sued. julia: from new york, this is bloomberg. ♪ is this a phone?
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a new kind of network designed to save you money. call, visit, or go to julie: i -- mark: i am mark crumpton with news. word" cbs has fired charlie rose after
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eight women told "the washington post" he made unwanted sexual advances to them. pbs and it is sealed to carry his -- his deal to carry his long-running show. in a statement, rose apologize for what he called his inappropriate behavior. "the new york times" is reporting that state government officials have accused secretary of state rex tillerson of a violating federal law. officials say that secretary tillerson excluded myanmar, iraq, and afghanistan from an annual list of countries that use or fund child soldiers. the department previously acknowledged that those three countries were conscripting children. any nations on the list are prohibited from receiving financial and military aid from the united states. german chancellor angela merkel appears unfazed after a coalition government -- after coalition government talks broke down. merkel's singling she will run in any new election,


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