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tv   Bloomberg Markets Americas  Bloomberg  December 6, 2017 2:00pm-3:30pm EST

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scarlet: we live in the next hour. foreign policy from president trump. he calls jerusalem v israel. what this means at home and abroad. they'll discuss what is driving the recent selloff. plus, tax overhaul. mitch mcconnell's latest comments on a key deduction and more. we have got the markets closing and a few hours. we have been down and up. dow and looking at the the nasdaq fractionally higher.
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remarks saying jerusalem should capital stillas a down .3%. had some choppiness. this is a picture of the nasdaq. it is a whipsaw up and down and we have had a selloff in technology recently. tech is the best today but nonetheless, the chart shows you how uncertain the testes are as they deal with issues ranging from taxes to other events in d.c.. let's look at some stocks that have been trading down all day. ahead of president of his remarks at jerusalem. these are in israel.
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all sharply lower and a really big look of -- as to what the possibility of jerusalem -- on theital weighing stocks. interesting to watch that in the future. we take a look at some of the haven assets in the rally here. we have 10 year yield. up against the dollar however, if you cancoin believe it come up 10% on the day and extraordinary. bitcoin continues to climb.
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mark: thank you. the u.s. and israeli flags are being projected onto the old city wall in jerusalem. president trump formally recognized jerusalem in capital. a long-overdue step. trump, like every other sovereign nation, to determine the capital. acknowledging this is a fact and a necessary condition for keeping the peace. it could possibly lead to
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violence. senator al franken's office said he would make an announcement tomorrow but did not offer further details. a lake of democratic senators come most of them women as well as the dnc chair tom perez have are recalled for franken to resign after the latest allegation of sexual misconduct against him. tweeted hecrat expects franken to quit tomorrow. massachusetts senator elizabeth warren has privately told franken that he should step down. prime minister justin trudeau attempts to lunch tray talks and appeared to be doomed. trudeau is again calling for china -- it usually does not seek in trade deals such as conditions for labor, gender, and environmental rights. ukraine, supporters of the foreman george -- former georgian leader -- police trying
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to arrest him at protesters were able to keep police from entering their makeshift camp. butas arrested yesterday supporters were able to free him. 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. what does it mean for the peace process? team leader from washington. did not take action on this until today.
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it is something that presidents have to deal with every six months. deadline again after promising the campaign trail direct nice jerusalem as n movie of the sea. we decided to take a step today. . they will start hiring architects. they begin planning the move. >> just to be clear, the facility in jerusalem, big enough to house the work in tel aviv? the typical aspect of this, it is a project. thing where you cannot even get the ball rolling. there is a diplomatic holding in jerusalem.
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it is much bigger than facilities in jerusalem. yesterday, just building an embassy would take three or four years. in london, they took about eight years to construct. facilitiespresident trump will g these waivers for years to come whether he likes it or not, just because the project takes so long. a tradition that has begun before him. his decision prompted out cry from the establishment. there is a lot of political down cry. what is the political upside for president trump? two declared israel's capital? perspective, he can say he is following through on another campaign promise and is addressing what he thinks is two decades of failed policy. it is the kind of approach we with north korea and durant
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nuclear deal. his of the status quo has not been working and we will try something different. he said in a speech that he believes this move has been made in the best interest of peace for the palestinians. it was not a lot for the palestinians in this speech. president said he was supportive of a two state solution and was not preemptively making decisions about jerusalem's borders or israel's. i think palestinians will view that as an offering to them. most of the speech was geared toward israeli voters. >> they said it was -- we are risking a heated reaction . , how do you see it as a leader in the process when
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they have taken this? >> the primary negotiator on the peace process says this effectively rendered the u.s. to be a moderating force or negotiator in the process. it is hard to know if this is the first step, a broader rollout in the peace plan. i suspect we will not hear about that in a few months. it is not just the palestinians and governments have proposed this move to we are heard that this is not something they see as in the interest of peace. >> we will no doubt discuss this further with you later this afternoon. thank you.
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gerald --sses of jared kushner's work. >> coming up, our investor is reinterpreting into banks. we speak to gerald lori, a globl advisor. from new york, this is bloomberg. ♪
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scarlet: the selling of tech stocks appears to be easing today. what is driving this out of technology into names like financials. was this about taxes or was this a part of a bigger unwind? joining us now is the deputy
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at global advisors. at global advisors. give us your read on this out of tech stocks? does this to find where we are out of the cycle? the momentum from trade, that has been one of the factors that has driven them all year. valuation levels are at a place where it is hard to see where they go from here and that normal year-end tax selling and things of that nature, it does not surprise me that tech is pulling back here. playing intoit is this valuation story? >> i do not think it is tax in but you get reform, the normal activity or whatever you want to call it and you look if these names america out of 74 100%. >> what about the broader tech
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story for look? global tech. opportunity? >> collectively, there is. in semiconductors, that is an area we still think there is a reallyty heard it is big story. think about china, 100 million middle-class consumers. some of those tech companies geared toward that population we think will continue to do well. >> we're at the point in this cycle where investors should be viewing those portfolios. what is your perform deck preferred form of protection? >> it means different things to different people. the downside is you do not participate fully in the upside. in 2018 should see another good year. there are different ways. if you have simple hedging strategies, that would be one way to protect the portfolio. we talked about, perhaps there is selling on the year-end.
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within equities, are there more ways to be positioned more defensively and focus on volatility and dividends and things of the nature? strategiese would be they are talking about. take the volatility or equity portfolio down. >> right. if you are talking about more ?pside, can you quantify that >> u.s. equities were probably in the mid-signaled -- single digits. and that is against a backdrop where we think the long-term return on equity is is only 6.5%. contrast that with bond yields, and that is something that looks pretty attractive. >> let's printed out globally beyond asia because a lot of it hinges on the global growth story we have all to act about. everyone is in disagreement -- in agreement it is there and it will stick around.
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inflation props up especially in the united states. where else is it at risk of becoming problematic? >> you are highlighting probably important thing spirit what are the yield levels? the discount matters. one thing we are forecasting for 2018 is central banker's will be measured in their tightening. they are still expanding our balance sheet. if you look globally at pols -- policymakers, increases in rates are likely to be modulated. our biggest concern is that you start to see more inflation. wage pressure would be one place for that to come from. we found that relationship has been broken for about 20 years now. it is not just a phenomenon that happened this year here at we do not see a lot of wage pressure. we do not want to be some sort of trade policy or something to watch.
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we're just not seeing it for 2018. >> have you worried about it? >> we worry about it. you think about the structure breaking down the middle east and nafta and all of that, these regimes have stood in many cases for decades, postwar kinds of regimes. a thing where you get susceptibility to those regimes, you have to be worried. worried, to your point. are avoiding height great -- high-grade and sovereign bonds. aher than long treasury, small position against procyclical positioning, pretty much everywhere else, not enough value is there. >> yes. firms promoting more diversity, we will discuss that next as part of our walk the talk series. this is bloomberg. ♪
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>> breaking news we're keeping track of bitcoin. we are above $13,000, julia. we zoomed past $11,000 and $12,000, and $13,000 seems like this news at this point. we'll get back to that. >> it is time for a look at some of the biggest business stories in the news right now. says the chain was approached over the past three months by six companies interested in either acquiring states or services. the deal is imminent so shares of the franchise declined more than 67% this year. the u.s. market is struggling for a year of ox office equipment. -- box office equipment. advice to harvey weinstein
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before sexual-harassment allegations forcing in this company. -- --t resigned the position in october. that is your business flash update. before>> after years, big-money finally throwing its weight in board rooms. how it is coming altogether is the subject of today's walk the talk, our ongoing series about diversity in the workforce. pay joins us now. with us, dylan of state street global advisors. that talk about big steps they are taking? >> there are threefold steps. a behemoth that provide passive products.
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for a while, they were slow to the game in terms of pushing companies. that weren funds saying, i could drop this stock if you do not conform with things i've been asking for, as opposed to an investor holding a lot of stock in index funds. are seeing a big push to now talk to companies to back shareholder proposals and in some cases management, to also talk to companies and say that you really need to do this and the third thing is not vote for board members if they are in that rubric. is, whatestion ultimately follows through here? is it investors pushing for greater diversity or a recognition that perhaps it is having an impact on results? having more women making a decision within a business. >> a great point.
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with our call,t a feedback we got was we remain activist. to hear thatsting perhaps we had not been as quick to the game. we said repeatedly it was not about that sort of thing and it was actually about performance in that our goal as shareholders was to drive investor return. way to do that. >> talk as to how successful the different funds have been the agenda for more diversity? what are we seen? -- what have we seen? >> big investors were saying you really need to add people to the a woman toe did add the board and other companies, you can see, they are made even when the vote comes through. it takes a while and may not have added the person of
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diversity. were't know if you frustrated by it, but it may not be in they act after it passes. >> about 400 companies they have not made steps. another 40 indicated they are not -- they are going to take the charge and about seven of it does take time as you mentioned we have not really seen a needle move beyond a discussion. there is a lot of rhetoric and interesting or to see that change take place, i wonder what the reckoning is a sexual-harassment accusations we're seeing, whether that adds a century of urgency. >> there have been studies that suggest it could be $28 trillion of incremental economic globally if -- anything this brings attention to will be positive.
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>> as important as gender is, no woman wants to be -- because she is a woman. >> one thing that is interesting is what does that mean? historically, it had to be a ceo, and if only 5% are men, part of this has to do with demographics. age are reaching their where they are investing and put money away. >> that is right. they not only drive the change in sheer numbers but they are part of the workforce and part of the investing landscape. as more and more millennial's become adults, they are saying hey, we scrutinize the money, where we put our money, and we want to know if this company has an onboard, if they have minorities on board, so a lot of companies are saying we have to pay attention in order to sell our products to young people.
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>> it is true but we have to be more advocates and sponsors of women. a lot of women in this industry and finance come in after , the 50% of new hires learned -- wewe lose them on the way. for all manner of reasons. we have to create a path where they are supported and they cane lose them on the way. go to these higher roles. >> thank you so much. coming up. tax reform by christmas? expecting congressional action on tax before the end of the year. from new york, this is bloomberg. ♪
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>> from bloomberg world headquarters in midtown manhattan, this is bloomberg markets. i am scarlet fu. let's look at some of the days big new -- big movers.
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you have to top it off with oil. a pretty rough day here. with almost 3%f after u.s. gasoline inventories rose by almost 6.8 million barrels last week. since january.e overshadowed a third weekend slide including stockpile -- stockpiles. coldest trading flat today and slightly higher by .2% there. silver falling by one third of 1%. some concerns that china passes economic growth will slow. silver is the most since april money 16. a quick note on soft commodities. 3% todaylining around just off session lows hitting its lowest level in more than two months. rainy weather has been boosting the sugar harvest. more supply and lower harvest. >> thank you. president trump made good on his campaign pledge to declare israel capital.
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he had other key items on his agenda at cabinet meetings. one of the hallmarks of his tax overhaul plan. president trump: we will bring , 35 isiness taps -- tax the highest in the industry at -- industrialized world. and we are on the low side. >> he mentioned 22% over the weekend. back down, it seems. joining us now is a policy director for mitt romney's 2012 campaign and he joins us from california. great to have you. a lot is going on and i think he is trying to make this more favorable. how confident are you they can reach a deal here in 2017? >> i am confident and the fact that we're in a conference committee process now suggests there is broad agreement. if you look at the senate
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version, a lot of similarities to the house version. the issue left in consideration, they are significant but they are printable gaps. there is a highlight was at we will see this out of congress and on president trump's desk by christmas. >> there are big gaps between what the senate and what the house passed. >> on the individual tax side, the first issue will be the structure of the tax code. the house version sympathize dramatically the tax structure by reducing the number of marginal tax rates and the senate version sticks with the current seven rate structure. top rate is a little lower on the senate side than on the house side. there is a question of how to this. on the house side, a little more generous. that is not even getting to the corporate side. there are a number of things to take care of.
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>> clearly more a problem for the house. they do not have senators ultimately who are looking at this and going, we come from the most high tax paying states. it is more of a sensitivity issue for the house here. how do you see them paying for diverthey try to deductions? the suggestion is we could see the corporate tax rate at 22%. where does the money come from? let think the president slip over the weekend what might be reality. if you are going to make some of the changes, if you say representatives from california and new york, and remember there are a number of those people in the house, they might need those close to get across the finish line in the house. if they need that support, the corporate tax rate going up might be a way to pay for some of those changes. they could also look at
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potentially delaying the offset of the corporate tax cut, which is what the senate did. the senate version did not have in in until 2019. >> you expect this to pass by the end of the year. in until 2019. >> you expect this to pass by the end of the year. something else that needs to happen before the end of the year is a way to fund the government. what is the best case scenario and what is the most likely scenario? >> best case likely emerging now. congress will do what it does best, kick the can down the road. the initial headline is coming up on the eighth. it makes december 22 and nice christmas surprise to deal with, the funding of government to keep government open. they will come up with another short-term solution in january and that will be a more difficult set of discussions in
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around issues like immigration and what to do illegally. it is one big issue that will have to be resolved eventually when we get to the new year. for republicans, the issue is to kick outspending issues pass the tax will -- tax bill. deal with those questions and 2018. >> house conservatives have been pushing for a three-week funding solution to go beyond december scramble arriving before christmas. concessions are being may left right and center. do you think it has any credibility? thing oner that 10 of we see the president come in if he does not have -- on side? gave folksdom caucus a scare when they said we might be willing to tie in sup over who would be appointed to negotiate on the tax will. that is where they wanted it
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for thein return solution. i think the house freedom caucus oflizes the tax bill is principal importance. doing anything that could interfere with getting that principal importance. doing anything that could interfere with getting that passed is not in their best interests. i think they will eventually relent. these twists and turns, we will these butof republicans know how important the tax till is and they will not let much interfere with that. >> we will speak with jim jordan of ohio later on. these question for you. you advised mitt romney in the 2012 election. we heard he was toying with a possibility of running for of utah.r the state have you spoken to him recently and what have you heard?i have i would bea romney
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fantastic as a senator if he would be fantastic as a senator if he decides to do that. a lot of that will depend on what happens with the current sent -- current senator and what he decides to do. one thing is clear. republicans will have it -- a significant amount to accomplish in 2019 and beyond. if mitt romney decides to run, i think he would be great and that win, but think all of that is still speculation at this point. >> is there room in the gop for someone like him, establishment and mainstream? >> absolutely, think he brings a on economicce policy issues and foreign-policy issues representing a point of view, that america needs a strong national defense and a foreign-policy that is very much outward looking. these are things he could bring. it will be a unique voice as you will get people like jeff flake and bob corker who decided to aside, and john mccain, his
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health is ailing unfortunately. aside, and john mccain, his health is ailing unfortunately. i think if mitt romney decides to run for the senate and he wins, i think he would be a strong advocate for those points of you. >> he will be a contrast to the freedom caucus and the likes of jim jordan. thank you so much. let's continue with the theme of what is going on in washington and check in with mark crumpton. mark: reaction from the middle has and the united nations been swift following president trump's decision today to recognize jerusalem as israel's p are premised or benjamin netanyahu called it an historic day. >> the decision reflects the president's commitment to an ancient that enduring truth, and -- for filling his promises and advancing peace. the president's decision is an important step toward us -- toward peace. >> the decision and the u.s.'s role in the middle east peace process and is a violation of all international laws.
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the yuan secretary general called president trump's measures unilateral and edit they could jeopardize the prospects for peace between israelis and palestinians. senate majority leader mitch mcconnell is the latest lawmaker to call on his colleague, al franken, to resign after news of another allegation of sexual misconduct against franken emerged today. he said in a statement, it now appears that senator franken has lost the support of his colleagues and most importantly, his constituents. i do not believe he could effectively serve the people of minnesota in the u.s. senate any longer. al green says he will present articles impeach -- of impeachment on president trump. the resolution accuses mr. trump of high misdemeanors citing the american society. lawmakers expressed serious reservation saying it is premature ahead of robert
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mueller's pending investigation into russian meddling. according to one aide, democratic minority leader nancy pelosi, the democrats were told they would vote to table that resolution. time magazine's person of the year was a group that has become a movement. the women who came forward and accused powerful men of sexual harassment. show's longtime anchor matt lauer was fired over inappropriate sexual behavior in the workplace last week. 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. scarlet: thank you so much. coming up, he will hear from the father of investing and why he was never in the business of empire building. we will explain. this is bloomberg.
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scarlet: it is time now for our stock of the hour. on pace for its best day since 2016, shares are soaring. joining us now to explain what is going on is abigail doolittle. the company reported results? abigail: they did. by 50%. this is a company that has really been struggling. behind the weakness we have seen in the last five years, we had investors and consumers liking flower --ic
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for 2018.o revenue that represents a 5% for -- drop is what wend that have seen in the last several years. investors are looking for some kind of turnaround here. constantly on sale for many of these businesses. they are moving toward a vision 2020 plan which focuses less on clearance. if you go to their website, the first thing you see is 30% for the holidays. you are right about that. >> behind today's, a short squeeze. .ake a look
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it was a good quarter. shortage and we have bears squeezing the stock higher. back in the day higher than 50%. here is the long-term downturn. back in thewho knows? they may get things right and this represents an opportunity in retail. >> it popped above the trendline. >> it did. it maybe -- maybe it will hold. time will tell. >> you like that. >> abigail doolittle. >> her to handle, right? -- twitter handle, right? theyding to calculations,
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taken 1.5 billion each day. i spoke with the founder to ask whether he is proud, nervous, or a little bit of both when it comes to the stunning size or .cale >> i was never in this business. i told people many times that i was too stupid to realize we gave investors the best ui whatever get, i would be building a colossus, so here we are. a 25% market share of mutual funds assets. one has ever achieved anything like it before. a rotation over the years, and 15% was three or four firms that would reach the top. >> is increasingly to firms as well. we are less than a decade away from vanguard and blackrock. risk does the duopoly create?
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i do not know, the numbers may be right, but there is no guarantee they may be right. a lot of strange things happen along the way. new products get invented and markets go up and down. tend to act badly in declining markets. i honestly wish there were more competition. trying but for some reason, their numbers would suggest they are not succeeding well. what used to be the three of us, vanguard, black rock, dominating the field, it is pretty much becoming a to properly. i say come on in and the water is fine. it is a tough business to
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compete and, and all the darn money goes to investors and money managers don't like that. they are in this business to make money for themselves and not necessarily for investors. become a marketing business. deas, you seen the new funds thatg out and we have one is short retail and long electronic marketing. talk about a product of the times. we have got the republican and democratic etf's. where it ends, nobody knows. >> clearly not a fan of those etf's. catch our show each wednesday at 12:30 new york time
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in 5:30 in london. he is 88 years old and sharp as a knife. >> time for a look at some of the biggest business stories in the news right now. the competition continues to heat up. the dynamics between china's two biggest companies. >> they are competing in over a dozen sectors. always want to be more open with such competition. been focusing our business on two main areas only. digitaledia and content. we created an ecosystem with business partners in industries such as search and finance and so on. this is just to provide them with support and assistance rather than competing in the market. >> the story continues to resonate on wall street as a cautionary tale.
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before,nal challenges during, and after the ipo. still succeed with the listing. shares are trading down more than 6% since the stock went public. in the u.k., consolidation. they agreed to buy into properties in a deal that valued the company at $4.6 billion. the deal woulday create a real estate investment trust with $28 billion of assets. fightant to increase to sluggish spending. that is your business flash update. >> coming up, a wall street veteran is being counted on to keep the peace and we are talking about alan schwartz. this is bloomberg.
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>> this is bloomberg markets. a company played with controversy and it is one man who keeps it altogether. alan schwartz faces an executive chairman. for more, let's bring in bloomberg's strategic investment banks. great to have you on the show. he was brought on in 2009 to that investment banking. he has been pretty successful by all accounts. talk about what he is dealing with in terms of drama? in 2009 when guggenheim still had a strong broker operation. he brought on rainmakers and they have worked on 472 billion worth of deals. done is pretty different than what you see out of investment banks.
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he built sales and trading operation and that is high-octane and entered markets where the banks are. huge clo's for example and an under -- underwriter on tom -- complex debt. >> talk about that drama because it does not involve his position directly. >> it is not. he has been wearing his executive chairman hat rather than his rainmaker had in this particular situation. upumber of them have put him -- it on watch with issues we have talked about regarding the ceos potential transactions with an associate. and also the cio and certain transactions that involve him. that leaves alan schwartz who has been dealing with clients been stepping and
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affiliated void in leadership and taking control. >> a course needs to be regained here. take a look at the staff turnover, lost 60 different individuals in the last two years. are these people actually leaving for other businesses? is a little of exitsed there were a few in the last several years. some of this is restructuring in the business. some of it is people who left in the middle of the conflict. when it came to the asset management division certainly. part of the issue was there are almost two to -- two dozen employees that were fired. ceo's's relationship was under question throughout the year.
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>> roughly a lot of feathers. what have you heard about alan schwartz's view? >> we spent time discussing this echoes you know, the negative tension that was relationship,ceo he was very positive on the record and the story of how respectful he is and the business market is built. >> he knows how to handle crisis. >> yes. he has been through it. this is 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
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. or a little internet machine? [ phone rings ] it makes you wonder. shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data. choose by the gig or unlimited. and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. >> its 3 p.m. in new york, 8 p.m. in london. i'm julia chatterley. >> and i'm scarlet fu. welcome to "bloomberg markets." ♪
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julia: we are live and bloomberg has world headquarters in new york over the next hour. here are the top stories we are covering on the bloomberg and around the world. growingsenator faces calls from colleagues to step down after sexual harassment allegations. and carson block, more of our interview that sent stocks plunging. plus value over volume, speaking with the ceo about funds to limit reduction. trading, wem up have a check on markets with abigail doolittle. abigail: we have the dow, s&p, and nasdaq fractionally five -- fractionally higher. a bit higher for the nasdaq, up
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3/10 of 1%, busting the tech out of the technology that we have seen more recently as investors perhaps right now still a bit uncertain as we take a look at the intraday chart and we see these moves up and down. again, investors looking at lots of different issues, tax reform, drama in d.c. after president trump said that they recognize jerusalem as israel us capitol we have seen it move steadily higher. when we go into the bloomberg and take a seasonal look at the chart, this is interesting and it comes to us from jonathan. the volatility, recently associated with the potential rotation out of technology, it's pretty typical to early december. this is a seasonal chart of the
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s&p 500 over the last few years. typicalre this hip is for the last 30 years. then it bounced back into the end of the year. right now we have the s&p 500 slightly higher. pretty evenly split between sectors that are lower. near session highs up 8/10 of 1%. investors really buying the diff we have seen recently for technology, it appears. it's worth noting that energy is down 1.3%. whathas oil is down 3% in was perceived to be a bearish department of energy report. this seems to be weighing on oil. plus there is reason to think
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that when you look at the perhapscurve, scarlet, there is indication the supply production could be much more next year than what price is telling us. that according to mike bloom. scarlet: a lot of shifting trends, abigail. thank you so much. in washington over a dozen senators are calling on al franken to resign. the senator is facing multiple accusations of sexually harassing and molesting women. he has apologized for his office says that he will make an announcement tomorrow. let's bring in the senate reporter from capitol hill. stephen, this has really grown, snowballed in the last couple of hours. this morning it was six senators who had called on him to resign, now it has doubled. steven: the count is now up to 23 or 24. it continues to snowball. you don't have any senators
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coming out and saying that franken should begin in the benefit of the doubt or let the ethics committee continue its work. so, the expectation here is that , from senators, that franken tomorrow will announce his resignation. keep in mind that this is on the heels of the john conyers resignation from the house and with one eye on that roy moore , with a lot of democrats saying it is incredulous that republicans are going in and spending money to try to elect him, given the cloud of allegations he's under as well. processake us to the here, steven. if the senator resigns tomorrow the governor appoints someone new. how does that follow through from then? does the replacement stay until the next election? scarlet: every state -- steven: every state sort of sets its own rules. we will have to see how that all unfolds. i think the democrats don't really see it as a race they
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would lose. bluish state. it they think they could have somebody named to win that race. this is something that they don't necessarily want to have to deal with, but it's not the same as having the republicans being in more of a pickle with roy moore. that's a seat they should definitely have and they could definitely lose it to a democrat for years to come. it's an easier choice here for democrats. thelet: mitch mcconnell, majority leader, has made comments about al franken, saying he would not get his support in the senate if he is interesting, julia, given that we face the prospect of senator roy moore as well. julia: you can't help but make the comparison between the difference with roy moore, of course, the candidate from alabama. we are approaching those elections very rapidly, the president coming out on monday giving them -- giving him 4 --
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full support and the rnc doing the same. double standards here, perhaps? steven: keep in mind, even though the president has gotten on board the roy moore campaign, the senate republicans have not. you have seen senate republican campaign committee not going back into that race. the chairman of that committee, senator cory gardner, says that he should be expelled if he wins the race. mcconnell has said that he would face an ethics investigation. if he wins there is no guarantee that he would be allowed to stick around. they do have to seat him under the constitution. i think a lot of republicans think that he should step aside. they called it a mistake for the rnc to support the campaign. flake, the senator from arizona, donated $100 to doug , to show howmocrat
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disgusted he is with this latest by the the president. to clarify, here, senator mcconnell saying with regard to al franken that he does not keep -- does not believe that he can effectively serve the people of minnesota any longer. talk about the bench that minnesota has when it comes to replacing senator franken. it's a: -- steven: democratic state, democratic governor. maybe he could name the attorney up there. but i think we are just starting to hear some names. tim valenti used to be the governor of that state. there could be some names on the .epublican side as well i think it's going to take a few more hours before people really process this and figure out what's next and how soon things could gear up in minnesota. julia: we should make a point that it is all allegations at this stage and he may not resign
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tomorrow. stephen, they give her a much for that update. let's get a check on the headlines from the bloomberg first word news with mark crumpton. market? mark: thank you. reacting tos is president trump's announcement that the u.s. will recognize jerusalem as israel's capital. he says that president trump has destroyed his credibility as a mideast powerbroker and that the decision is a declaration of withdrawal from the role the u.s. has played in the peace process. president trump called the decision long overdue. medical tasting -- medical testing has revealed brain abnormalities on the victims of the invisible attacks in cuba. their findings are casting doubt on whether a sonic weapon was used on american workers. 24 government officials and ill last year after loud, mysterious sounds led to hearing loss and era ringing.
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vladimir putin says he will seek reelection next march. his statement came at a meeting of factory workers, with his approval ratings topping 80%. he is almost certain to win a quick victory. thousands are fleeing ongoing wildfires in southern california. flames in venture and santa barbara counties have charred 50,000 acres and burn hundreds of homes. the los angeles fire department says that stretchers of interstate 405 have been stripped -- been shut down and that neighborhoods near the freeway are being evacuated. global news, 20 four hours per day, powered by 2700 journalists and analysts in 120 countries. i'm mark crumpton, this is bloomberg. up, a big short from carson block. why does he believe that there is corruption in osi. that exclusive conversation, next. this is bloomberg.
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♪ scarlet: this is "bloomberg markets." julia: time for a look at the biggest business stories in the news right now. cook, sunning positive about the momentum of iphone x sales in china. the fortune global forum in china is where he spoke. >> if you look at how iphone ask is doing here -- iphone x is doing here, i could not be happier. we had a few quarters of negative growth on a year-over-year basis and we returned to double digit growth last quarter, even before the iphone x ship. julia: the big attraction of the chinese markets he says is the
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quality of the people there and he praised apples ongoing partnership with tencent. veto incorporated network is this for $4.9 billion. the all-cash deal will add hundreds of medical clinics to their growing business, providing direct medical care. the takeover allows united health more control over how its insurance dollars are spent. list anza has to do more to ofer consent over takeover air berlin. people familiar with the process say that germany's biggest concessionsfering that don't yet satisfy regulators. they would need to sweeten the offer to secure landing rights to win approval. regulators have until december 21 clear the acquisition. museum in abu dhabi tweeted the message that a $450 million
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painting would be displayed there. sold two weeks ago, from new york, to an anonymous buyer. if abue's isn't saying dhabi purchased the da vinci but they did congratulate the museum for the painting. that is your business flash update. scarlet: you have been keeping track of that, haven't you? julia: i can't wait to see it, it is fantastic. scarlet: well, now you have to go to all the dobby. julia: electric. [laughter] scarlet: we don't know who bought that painting. block says he is shorting the tech and medical supplier. here is what he told erik schatzker, exclusively. carson: we think this company is rotten to the core. erik schatzker: not mincing words. have a we think is smoking gun proof that when this
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company got a key turnkey contract a few years ago in albania, one hundred 50 million to 250 million topline, that they paid a bribe or a kick act from a half of that concession. to me, this is damming evidence. they arelso look at really, the major contract that these guys have is a turnkey contract in mexico. that is up forward new next year in the early part of the year. the pricing on that appears to be egregious. a lot of investors don't understand the economics of this . the company has not been very forthright about it. we estimate that the one contract in the echo is worth company, 50 5% of the for the last fiscal year. away, that's a big deal. just to put a punctuation mark on how egregious we think the pricing is, we estimate that the margin on the contract is 55%
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ebitdaer. -- plus margin. if you own osi right now, you own it for this one contract in mexico that is up for renewal -- and should be looked at closely. erik: many be clear, you think you have found evidence of bribery or kickbacks in albania and if i understand you correctly, the pricing on the mexican contract is suggestive of something similar? so, we have carson: albania in terms of a smoking gun. we also spoke to a number of former employees who painted a picture of this company as just, division, anyway, constantly breaking rules and crossing the line. if you take a company that does business in that way and you look at this contract in mexico that is 15% of revenue and,
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again, we think 50 to 55% of ebitda, you have to ask yourself, mexico, massively fat contract, why is that contract so fat. this should be scrutinized upon renewal. you have described your approach as market taste prosecution. prosecutors have to look for motive. what's the motive here? these people, this company has a real business. carson: gee, eric, it's money. companies lie, companies do bad things. i mean it's the people within them that do that, but it's about the bottom line. erik: but what i'm getting at is, if you are right and they bribed somebody and albania, and if it's possible that something , itlar went on in mexico was because of they didn't bribe and somebody didn't receive a kick act, they would have lost
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the contract to someone else? i mean, i don't know. looking at albania, they set up a company that owns the concession. they set it up and then they transferred 49% of the company away one month after forming it to, nominally, anyway, i guy who's a doctor who the only thing we know that he does is apparently he runs some hospital in toronto. they transferred half of this concession to him for $4.50. ok? that's, of course the company didn't make a big announcement about it. roughly half the economic value of a contract worth $250 million. carson: i can't think of another excellent nation other than this is a kick back of some sort for this type of transaction. that was carson block, of muddy waters, speaking to bloomberg earlier today. we reached out to osi because of those allegations and a
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spokesperson declined to comment. from the share price today, you can see significant activity today. scarlet: ugly day. moving from an active short seller to passive investing, the etf industry has something for everyone, including someone who leans red. today we highlight the first ever politically themed etf aimed at partisan investing. >> the gop stock tracker etf has a ticker that would make president trump proud. in etf's maga invests that are highly supportive of republican candidates. the top industries are energy, industrials, and financials, with names like marathon, dear, and charles schwab. what's notable is what's not included. since launching in september they have modestly outperformed the s&p 500, but the cost is not cheap at 65 basis points.
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julia: still ahead, options insight, stocks falling on the rivals. options traders is a it is an opportunity to go no. from new york, this is bloomberg. ♪
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♪ julia: this is "bloomberg markets." scarlet: time now for options insight with julie hyman. today forning me options insight is scott bauer, senior market strategist from the cboe in chicago. scott, great to see you. we are having what feels like a pause today from this rotation trade that we had recently. when you are looking at the options market today and the vix, what is that telling you about what we might be able to expect in the next couple of weeks? more uncertainty.
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i say that because for three plus days else -- or so he had this massive rotation, very high volume and high volatility. it was very intense, the rotation that we saw, and all of a sudden it's like someone turned off the light switch. but we are not seeing a big retreat. it's kind of like you said, we are in this holding pattern right now. we are not seeing any standouts in the marketplace today. and we are not seeing anything really get hit so large today. it's kind of like everyone is waiting for the next move to see what it's going to be. youe: i'm curious how much guys are watching the tax debate from chicago. i know that you tend to look at the technical in the market, the trading flows. i'm curious, fundamentally, how much you are watching this debate and what affect it could
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have on the market. scott: i think if you talk to to a trader down here, most would tell you that we probably got a this havingbased on added so much to the market already, it's like a by the rumors sell the news type scenario. if you throw it out the window and look at the fundamentals of the economy, we are still moving around pretty good. a lot of that is based on what might happen with taxes here, but everyone here probably feels it's long in the tooth at this point. julie: gotcha. your trade of the day, you are looking at lowes, the home-improvement detail -- retailer. home depot promised to buy back but didn't give many optimistic comments on earnings, seemingly. lows seems to be falling along with it. i mean, they have been the underperformer between them. what do you think happens next?
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absolutely. it's lock stock with home depot but this is a great entry point for lows. i'm doing something going on that just a week or two, but i'm buying myself six weeks in january for the 8590 call spread. i can do that for about one dollar, $1.25 or so. around 83, 82, 80 or so, that's technically a goodbye level in the options market is pricing in a move of four to four and a half dollars going out to january expiration. if we bounce back and move up i will make a pretty penny on the spread and i like this because it is a five dollar widespread that i'm paying one dollar $.20 for an that's my maximum risk. if i'm wrong, i know my risk. if i'm right and the technicals and fundamentals hold here, this could turn out to be a pretty nice trade. soie: scott bauer, thank you
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much. looking at lows with a little bit of upside. thanks so much. julia: monetary policy as the economy struggles, we have been in the process of reducing rates by 725 basis points since october of 2016. fully expecting to take the rates to 7% on a 50 basis point cut. julia: the we might be -- scarlet: though we might be near the end of that target. are next, we speak to the ceo of the world's biggest iron ore producer about his newest strategy. from new york, this is bloomberg. ♪
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erik: -- mark: u.s. and israeli formallyesident trump
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recognizing jerusalem as the israeli capital. previous administrations have resisted moves that could be seen as prejudging final status. the president said the announcement is "a long overdue step." >> israel is a sovereign nation with a right like every other sovereign nation to determine its own capital. nationel is a sovereign with the right like every other determinenation to its own capital. this as a fact is a necessary condition for achieving peace. officials say the president will instruct the state department to begin the of moving theess american embassy from tel aviv city. holy israeli prime minister benjamin that israel is profoundly grateful and that presid


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