tv Bloomberg Markets Americas Bloomberg December 5, 2017 10:00am-11:00am EST
♪ bonnie: -- vonnie: we start with breaking economic data from julie hyman. what was estimated and it is below 60.1 reading for october. this is the november figure we are talking about today. lower than estimated just for perspective, the prior reading was a 12 year high. see supply chains normalizing following hurricanes here. fell fromelivery october cautious 58 reading and matched the highest since november of 2005.
you do see the hurricane and justin numbers and the hurricane affected numbers in the prior couple of months. as we look at stocks, we are seeing a jockeying for a position after what we have seen over the past week. the rotation out of technology and other winners of the year and into areas like financials and industrials for example. flipping his performance as is the nasdaq. the s&p stuff in the middle between the two. we are seeing a rebound in some of the names that have been beat up in the past week or so. mcdonald's stocks, to buy over jeffries. andy bearish boost his eyes target to the highest in the street, $200. well positioned to continue to outperform, a combination of initiatives, remodeling, deliveries will make a 3% comparable usl very visible here.
with its numbers as well. comparable sales better than estimated. and the gross margin also topped expectations up to 3%. reallyductors have been beat up with -- since technology in the past week, they have fallen for private -- five of the past six, losing more than 8% of that time. now more than 1% to the stocks that had anticipated advanced devices rebounding today as well. headlines crossing on walt disney and 21st century fox. we're talking about a deal according to people familiar, may be preparing to sell assets to disney. cnbc saying the deal could come as soon as next week. disney sales down and 21st century fox continuing the uptrend gaining. mark?
session, textile falling marginally. you can see the middle of the pile right there. decades wrote 2 -- rose to a 16 year high. in 2017.by 19% third of 1%,p by a showing you one of the key pieces of data out of the u.k. today. services grew from the fastest pace in six years as the price intensified. to 53.8 versus 55.6 in october. the estimate was for a reading of 55 input costs, increased the most since 2011. prices charged rose at the fastest clip since 2008. that was not the only piece of u.k.today in the
fueled by higher food spending as black friday sales fell, two british shoppers to open their wallets, for other things. after slumping the most in seven months in october. they climbed 1.5% in total terms. the numbers suggest they are still reluctant to spend on nonessentials given in squeezing budget. brexit is creating uncertainty in the economy. let's look at sterling in the wake of the no deal in brussels. sterling wastinues by one half of 1% rising. the brexit deal remains, we're down by one third of 1%. still enjoying a rising wave of confidence among investors and
analysts. a sterling long position expecting it will rally in 2018 and the eu made better progress in negotiations than the market currently expects. would also benefit from the prospect of rate hikes according to that u.k. firm and jpmorgan and also increase sterling optimism from predictions from the currency survey. about one fourth c sterling rising from $1.40. that is a prediction for the coming year. today, we are down, a decline of 14%. vonnie: fantastic. thank you. .he investigation has expanded deutsche bank issuing a subpoena, demanding documents and president trump and his family. he and his team art investigated -- not $300 million.
for more, let's ring in the chairman. >> democrats in congress have been pushing for them, but deutsche bank has always said with a confidential relationship, we cannot just released documents. we need a formal request from, -- congress. they now have it. >> might eventually benefit the bank? >> i think it maybe someone in the banks who previously told me they would love to release the documents filling they could get out of the headlines.
trying to bring them into the headlines, to get the chest, is probably something of a relief for the bank. i'm pretty sure they are quite happy they can release is documents. mark: remind us about the relationship between the president and deutsche bank which stretches back decades. that is true. as we all know, president used to be a real estate developer and deutsche bank is a big bank in real estate finance. the two have had a long relationship, not always harmonious but it has been for a -- andme the biggest real estate developer donald trump. , his about aberg million in debt from deutsche bank today. still anourse is
important relationship for both sides. ofre is therefore a lot interest in the relationship. againstll the subpoena deutsche bank add to trump's friend trail against investigators? >> that may be the case. i'm a german banking reporter but -- so i am not entirely sure. he has said before he would not like the investigation to expand . about hisments are family. i would expect him to not be very happy about this and we will see what he says about it. mark: does it have any impact on the biggest -- bigger picture? turnaround,out the lack of ability to produce revenue growth. does this feed into the narrative when it comes to 2017?
does.hink it it feeds into the narrative of him being the one to clean up the bank. out, and over the documents and then this chap is closed and then there is another and of course, we don't know what the documents will reveal in the end and if thenreveal something more, it may come back to haunt deutsche bank. is positivent, it for the bank. thank you. we are turning to the house now, ,he house and senate, tax hills they work on creating a compromise will.
giving the 20% alternative minimum tax for reparations, that is a move tax by businesses. let's move to our white house correspondent at the d.c. bureau . the whole idea is that companies would pay which everyone is higher and if corporations get a 20% tax, why is it still in legislation? click this is being described as a drafting era -- error. over the last couple of weeks, you can expect there are a number of loopholes and errors that will be discovered as they dig in to the legislation. as this goes between the house and the senate, they will try and figure out the way to ameliorate the problem caused by the senate keeping the andrnative minimum tax making a lot of other things they were trying to do no longer
operative when you have a 20% minimum tax, that makes a lot of things you're trying to do just not add up. the numbers do not work. you have heard members of congress try and fix this. they can take this to congress to iron out details. they make sure the house and senate version are reconciled so they have some work to do. the alternative minimum tax issue is one they do not know about and it did not arise until the last 48 hours or so, as you pointed out. they will have work to do to figure out how to make sure they do not penalize the very businesses and industries, especially the tech industry, they were hoping to help. i have seen estimates between $40 billion a year. is that true? is there a reason this may not be a drafting error?
>> they removing a lot of chips around trying to make the marks and making changes to make sure they can get the 50 votes they needed and making changes to add on provisions that were requested by certain members. that is part of the reason there were so many changes at the end. a number of senators did not know exactly all of the various provisions they were voting on. 4250 or $60 billion sounds like a lot of money, and a $1.5 trillion tax overhaul, it is not a huge amount. if they feel strongly about it, they can find the money elsewhere and tweak things around as they go through the reconciliation project and physics the problem that was caused. it was likely cause because they were moving so quickly, the bill 2:00.ted on after not necessarily looking at all the details. weree clear of day, they
trying to figure out drafting errors and problems that were part of the bill taken out. mark: two key issues standout. 25, the corporate tax rate would kick in until year later than the house version. how do you reconcile those two big differences? >> they have chosen members of the conference committee to work out those issues. i believe the momentum to get things done is what is causing enough pressure that it would cause some of these members to say they have certain red lines and certain leap back off and try to figure out a way to make sure -- to make sure they have the same goal, which is to put a desk.n the there will be concessions mostly by the house because the house has a bigger margin.
the senate passed within one vote margin. they take on a lot of the things of the cent -- that the senate pushed forth. vonnie: thank you. breaking newsing are jerome powell has been approved by the banking committee and has the banking panel as the vote continues. he has been approved by the senate banking panel and a bipartisan vote of course. now as head of the federal reserve, once the full senate vote has been taken. let's take you on first word news. >> the european union says it is up to the british government to make the next move in order for brexit talks to resume. theresa may and -- broke up yesterday. political backers in northern working.jected
the officials expect to return to brussels sometime this week. turkey's president has a warning for president trump. he will cut ties if the u.s. recognizes jerusalem as its capital. linerecently quote a red and president trump had been expecting to signal his --ention at the capital alabama senate candidate roy moore after president trump endorsed him for next week's special election. they accuse more of sexual misconduct. theydent trump tweeted should look at what the 401k has done since the election. he says the average 401(k) balance hit a record in the third quarter at almost $100,000. the fed said almost half of american families -- global news 24 hours a day powered by more than 2700 journalists and analysts in more
focus. opec's production costs weighed against the prospect of a surge in u.s. supply. krish -- chris. as wecount is ever hire are now settling into a spot with oil prices allowing people to get out there and drill and explore again. >> it picked up two more. overall, production level is going to be a little less. a lot of information is coming and rigs are not producing as much. that count is overshadowed by opec really conforming and some production cuts from iraq that we have seen. that is why we are at the lower portion of the range between 57 and 59. we have been at that all the way before thanksgiving. above 59 on friday, that is why
we have this pullback this morning. >> it hasn't found a nice little hammer in here? >> there is a little bit of a pattern especially with the brexit news and the bullish sentiment with the euro. a great opportunity around 57 to 57 handle and play the range. low 57.obviously the short-term, it is range bound until we get pulled back in the equity market to drive volatility. >> today's futures in focus. mark: we will head to the fast lane to find out about lamborghinis latest offering. its first suv, we will hear from a sheaf executive next. this is bloomberg. ♪
mark: by mark barton in london. right. let's move it on. this ev model with the , to-awaited luxury brand add an suv. a chief executive spoke to bloomberg's matt miller and myself a little earlier and we asked him whether china and eastern europe -- gross market for lamborghini. >> we start with a double to mention on each single market, just to give you --
is this year,hat the third market after japan, we expect another big growth. what is more important, we open up new markets and new countries so, a lot of excitement around the world. >> when will we see that version? >> very soon. that is the plan. say that is heading around, that is 2021. that is the decision taken. mark: where will you take market shares from? where were you concert -- conquer the most customers? a time when ferrari, rolls-royce, utility cars in the next three years.
it takes the question, what differentiates for you and who will you take market share of? >> our elements are usual, strong personality, a super sport car in a super suv. technologies are speaking about the competitors with no respect. that is my approach. the others, if we are able to prove this guy is really whether it isial, for the other customer, we'll take a -- mark: chief executive there joining us from lamborghini headquarters.
john congress set to retire from congress today and is putting his retirement plans together. he says he has endorsed his son to replace him. this is after the sexual harassment scandals, which is ongoing. andh mcconnell is speaking saying the senate will vote to join the tax conference this week. we have our eye on washington. this is bloomberg. ♪
am mark barton and this is bloomberg markets. let's check in on bloomberg first word news. emma chandra has more. has subpoenaeder deutsche bank for its relationship with president trump and his family according to a person briefed on the matter. owes them about $300 million related to his role as a real estate developer here in southern california, explosive brush fire has androyed 150 billions 27,000 people to feed their homes. about 70 miles northwest of los angeles, by wind reaching 50 miles an hour. clasping down on u.s. news media in north america and and 27,000 people to feed their homes. europe, to these foreign agents. they can be banned from covering tosia passes parliament, register as a foreign agent under u.s. law. agreed on a union
tax bracket of 17 countries that could save sanctions. , and inrea, panama recent years, the eu has stepped up its fight against tax avoidance and evasion by companies and individuals. day global4 hours a news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am emma chandra and this is when burke. thank you p are was meant john conyers of michigan says he is retiring as of today following sexual harassment allegations. that news came out just under the last eight minutes. his son, john conyers the third, should replace him. he is the longest-serving house --ber and one of the house one of the memos of the black caucus. the 88 euros made the he sexually that harassed members of staff in an interview with the detroit radio station last week and house minority leader nancy pelosi and
others have called for his resignation. near-term, these are some of the factors for real estate in the united states. as the year comes to a close. let's bring in the head of america's real estate for deutsche asset manager. europe, in the u.s., in right? >> that is right. >> a fascinating of the you for you are not which that hot on commercial real estate the limit comes to real -- two retails, you are market neutral. >> yes, we are. we have been that way throughout the challenges the market has faced. if you look at the retail market as a whole, clearly there are coming as a result
of the e-commerce preference of shopping for the consumer. as a backdrop, retail comes as a private real estate market have decreased 2.2% this year. the 10 year he stole her goal average come it is equal to the 10 year historical average. there are different levels of performance throughout the retail sector. there is the high-end luxury sector, the neighborhood and community sector, and those are performing differently and we have preferences in that regard. >> geographic preferences as well. where do you like it, in the u.s., or both? what kind are you going for? >> you are right that selection makes a big deal when you're choosing retail today. the tenants that are doing the best in the current environment are tenets that are on the channel, the have brick-and-mortar as well and are
offering e-commerce solutions for their customers. they are retailers that really understand the value of the top 10% of the customer base, which drives about 50% of overall sales and retailers have figured out that if they can determine what the customer will buy before they walk into the or click on line, they can have a basket list of about 20%, which translates -- translates into significant growth for the retailer. retailers offering good apps and and loyalty, programs are the types of tenets that we like an hour retail centers. to me gateway versus regional markets. which do you prefer? >> retail is different from a
number of other sectors. the retail market has an driven by incomes in population. we prefer gateway markets as a whole but retail in some quiteary markets can be good because incomes and population will support a retail center's performance. mark: any favorite re-pick in the retail or industrial sector? >> in the retail sector come i would stick to today, the regional mall operators as well before, those focused on necessity retail. the neighborhood and community centers. market for industrial is and thesitive
challenges are the tailings for the industrial market today. i like the industrial sector from front to back. today. solid sector play vonnie: where are you turning negative? apartments, you are very underweight as well. what about apartments? is it because we are seeing new construction and these will be moving out into their own homes? will the tax plan change that question mark -- that? >> it is yet to be seen what will happen with the tax plan. the twok -- between bills, the house in the senate. but you are right that we are underweight the multifamily sector and you are right about why. it is supply. in the last 20 years, we have not delivered the type of new product into the market that we
will deliver in 2017. we're delivering our third apartments in 2017 then were delivered in any time in the last 20 years. she is having an impact on rental growth. the demand story is still quite robust, supply story is impacting the ability to grow and therefore that is driving our inability to push the return. the office sector has a different challenge. if you look at office using weloyment in the markets recover, it is at its peak if not hire and that is not translating into net new users ofn because office space are much more densely populated than in the past.
vonnie: how does 55 billion compared to other parts of the cycle? is it more allocated to real estate than it has been, or opposite, and what kinds of returns have you seen for that? >> the overall market and core real estate in the first three quarters of the year is -- has produced over 6% total return with half of that being income. it is continuing to drive a fair amount of demand for real estate from global investors. is difficult to find a replacement that generates the same level of income in total return or, said differently, that delivers the same kind of concern and risk than any other asset classes. we saw a little bit of pullback in the growthuse of capital coming in. but the third quarter picks back
up at a dramatically in the fourth quarter thus far has been pretty steady, similar to the third quarter. continue --ill continue to see flows in the next 12 to six months. real estate performs well when the economy performs well. there is a correlation of about .7 to gdp. expecting, we think we will see the real estate market perform well and we think that will drive into the real estate space. vonnie: we know what will be assuming all passes. onl it have a major impact the structure of it? >> i do not believe so. a couple of things are positive for the sector.
but there could be some positives for the multifamily sector as a result of what is happening with deductions through the current will. vonnie: all right. thank you. here, gettingp hammered again. the lender faces new scrutiny over its car loan is this. that is coming next. shares are down by 11%. this is bloomberg. ♪
markets." it is time for the stock of the hour. the worst performer in the stoxx 600 is prominent financials. let's bring in abigail doolittle in new york. his is a continuation of what's been happening all year. at ail: we are looking total downward spiral for the u.k.-based personal credit company. shares are down 70% this year. there have been downgrades, there have been concerns about the company business, the transpiration -- transformation they're trying to do. today, u.k. regulators have introduced an investigation into money bond, the company's finance unit. the three main business already a negative spotlight. they may look for a new ceo. it seems him as bit too late to downgrade the stoxx. there is some negative out there. investors punishing the stock.
this is a favorite of the shorts. mark: can you enlighten us on the company's debt structure and why it is such an issue. abigail: a few weeks ago, when we were talking about provident, there was an analyst at park west -- barclays talking about the fundamental business and a major concern is outstanding debt. this company has nearly $2 billion in debt, they have a little more than $200 million in cash. that is not a great equation. if we take a look at the debt structure for this company, here in 2018, they they relatively small amount of debt. 2019 and this is where the analysts are concerned. if more than $250 million in debt. right now they are fundamentally having issues not performing in terms of cash flow the way analysts would like them to. they don't have enough cash on
hand to retire that debt. if they are not able to come of their liquidity concerns and a big revolver in 2020. a lot of concerns about whether they will pay -- be able to make us credit payments on time. reason as to a big why hedge funds are shorting the stock. vonnie: abigail doolittle with our stock of the hour. mark: time for the bloomberg business flash. a look at some of the biggest business stories in the news. bank of america says it will repurchase an extra $5 billion of its shares. that will loss of additional stock after warren buffett and berkshire hathaway issued outstanding warrants. the were acquired after financial crisis is an estimated $11.5 billion investment game. -- asset management is betting on a recovery. it started two funds that will bet on greek assets.
it is try to stem an investor exit us. shrunk about three quarters to $10 billion. that is your latest bloomberg business flash. dalio has been writing at the gop tax plan. he says "we haven't talked enough about the tax migration that is taking place because of growing differences in faith and the -- state and local tax rates. these rates will prompt more people in high locations to consider moving. it would increasingly lead to more prosperous states that are catered to more rich people and more depressed states that are occupied by an catered to more poor people. an increased polarity between them. oh that is -- increased polarity between them." no idea whether he is considering moving.
we will continue to keep you updated. our investing team will be on top of that. nato foreign ministers are meeting in brussels with secretary of state rex tillerson who says the u.s. is committed to the connected defense goals. we will talk to the former nato secretary general and former prime minister of denmark. this is bloomberg. ♪
♪ live from new york, i'm vonnie quinn. mark: from bloomberg's new european headquarters in london, i'm mark barton. .et's get back to brexit theresa may is telling her cabinet the deal is very close. she expects to reconvene talks with the eu later this week. joining us for more insights on euro paschi to after brexit, former nato secretary-general
and former prime minister of denmark. thank you for joining us. let's start with brexit. blip or was it something more serious in the -- in this attempt to move on to the next round, the next big issue that is trade between eu and the u.k.? i do believe that the eu and the u.k. will move forward after the summit next week, i think the most difficult issue right now is the irish border. because it is like squaring the circle. how can the eu -- u.k. leave the eu and still have a soft order? i guess they will find a
two-step solution. they will find some language to satisfy all parties and then a final solution will be found once the long-term agreement between the u.k. and the eu has been found. vonnie: we're just here -- mark: we are going from theresa may that she is confirmed talks with european commission will be taking place by the end of the week. the options you have given, is that palatable to the northern irish party that is propping up the conservative right now? anders: yes, i think so. they will have to find a solution and some language can theound that will satisfy dup party and then i do believe then a final solution cannot be a more firmwe have
solution as regard to long-term trade agreement between the european union and the u.k. because the border between ireland and the u.k. will very much depend on which trade agreement will be found. what language or what situation do you think what actually satisfy everybody? checkpoints? i did not hear the last part of your question. vonnie: i'm asking how you achieve a hard border and a soft border at the same time. that is exactly the question. how can you leave the eu and still have a so-called soft border. i think all parties, both the
u.k. and the eu and all parties involved in the irish question want to preserve what has been called the good friday agreement. however, i am a bit surprised that this question has been foot -- put in the first basket of issues to be solved because it is to square the circle. but, i think some language could be found here now and then we can move on to negotiate what would be the long-term agreement between the u.k. and eu and then a final solution to the border issue. vonnie: i would love your thoughts on the infidelity in germany. -- instability in germany. is the franco german alliance in trouble now? is angela merkel's chancellorship weakened? anders: no, i think angela
merkel is still one of the very strong european leaders. french andk the german model will remain the driving force within the eu. here now, the germans are focused on the coalition talks. once they have been concluded and the another -- new government has been established, the german french motor will this again and i think speed will be higher thanks to president macron's reform proposals. i would expect the eu to move fast forward. mark: on germany, you said this -- two an interview that
is a germany -- trapped germany is walking into ended could have consequences for its neighbor. is germany to naive in its dealings with russia? thats: it is my clearview it has no commercial purpose, it is a clear political project and it will contradict all efforts to make the eu less dependent on imported russian gas. i don't think it will be appropriate to move forward on a project in the current environment of sanctions against russia. we all know that germany's neighbors to the east and north are very much concerned about this project. i am here in germany to appeal to the german politicians to stop the project. mark: thank you sir for joining
us today. , former natosen secretary-general and former primary -- prime minister of denmark. we are following stocks, we are less than 35 minutes until the end of today's session. check out the ftse 100 trading lower. european stocks falling for the third day in four. sterling is down today. rows ahead of that brexit lunch yesterday. theresa may spoken there will be a further meeting with the european commission further this week. this is bloomberg. ♪ retail.
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
mark: let's check out today's top stories. u.k.ressure right back on prime minister theresa may. ahead of the summit she is facing pressure. can she hold her tory party together? then, in u.s. tech shares rebounding today after a last-minute change. we will look at just how rough it could get if the legislation is not changed. it has been smooth sailing for the most part for equities in 2017. next year could be a different story. we will tell you why there are 98 trillion reasons