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tv   Bloomberg Markets Americas  Bloomberg  December 8, 2017 12:00pm-12:31pm EST

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shery: from bloomberg world headquarters in new york, here are the top stories. report november jobs reinforcing the possibility of a december rate hike next week as u.s. payrolls rose 228,000. bitcoin interest intensifies as traders prepare for futures sunday by demand for the cryptocurrency not just limited to the u.s. why bitcoin is getting love in latin america. the ceo of rbs does not see settlement with the u.s. over a mortgage investigation this month. part of our exclusive interview with ross mcewan later this hour. vonnie: julie hyman is with us, halfway into the friday trading session. what have we missed out on?
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,ulie: stocks holding steady coming down a little bit off their highs of the day but the s&p and the dow has traded at closing highs over the session. i need to call up another chart. to see what groups are doing the best today. health care is leading the pack. energy outperforming with telecom and consumer discretionary. only two groups lower, just marginally with consumer staples and utilities. driving health care higher seems to be individual stocks doing particularly well. let's highlight a few. alexion pharmaceuticals surging 7% after a report in the new york times that elliott management had built up a stake in the company. elliott could start a proxy fight for a board seat if the government does not take steps to raise stock prices. stock down 26% over the past
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three months through yesterday. a turbulent year marked by a series of management changes. lgene is rising ahead of presentations at this week's american society of hematology annual meeting and an analyst says it is positioned well going into that. gilead making a small acquisition with a barclays analyst positive on that deal. and what it means for the pipeline over at gilead. .et's look at other assets crude oil is higher with chinese import data of oil positive for oil. little change in gold as the u.s. dollar is on the rise. as the dollar has its best week going back to april -- i should say december of 2016, gold is having its worst week in seven months. -- in may and this
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week a negative week for gold. among other reasons, as we have seen the dollar rally. vonnie: thank you. shery: the latest snapshot of the american economy is showing signs of strength. the u.s. economy added 228,000 jobs in november, beating estimates. the unappointed rate is at one point -- 4.1% still but wage growth below expectations. the underemployment rate picked up to 8%. joining us to discuss is t. rowe price international head of multinational solutions, great to have you with us, lowell yura . will this affect rate hikes next year? >> if you look at the full picture, i do not think it will meaningfully affect what we see with regard to what is priced in two central bank hikes. not only in the u.s. but overseas.
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we see a quarter-point hike next week at three hikes in 2018. yes, i do not think it will have a meaningful effect, particularly what is expected. and to that element, we do not see it having a meaningful effect on the long end of the curve. vonnie: what does that mean? do you imagine that the terminal rate is what? >> we will see the long and move up a little bit. this will be a catalyst that will insight confidence and economic growth and believed to inflation that we typically lead to long entire. -- long end hire. we believe that the tax incentives that are there to stimulate tablets managers are a bit overblown. andout that economic growth the reality that the fed can really only control the short
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end of the and the long end of the curve is mostly a global , that limits the abilities of the fed to control the long end of the curve. shery: we are hearing from administration officials that we could see and infrastructure plan in january. how will this combined with tax cuts affect the economy? --you have to ask yourself who will pay for the infrastructure? you have a balance of the budget combined with a tax issue, and we are trying to thread the needle on how much tax cuts we can have with a balance the budget. -- balanced budget. if the plan is to have private investment invest in infrastructure, that will be much more difficult sell for the market than people think. vonnie: you sound has a mystic about -- pessimistic about things, what are you doing at t. rowe price as the head of multi-as a solutions -- multi-asset solutions? >> a lot of options, we see the
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focus on tax reform provides a huge opportunity in a couple of areas. number one is active management. we are seeing a lot of wholesale comments on broad sectors and broad parts of the market. the reality -- to understand the impact of tax reform, you have to roll up your sleeves and go down to the individual stock level to understand the impact on individual stocks. you could have two stocks in the same company that are getting hammered because of this or doing well because of this -- the market view on tax reform. they could have wildly different that structures and wildly different profits and cash offshore. that means that those analysts who can roll up their sleeves and do good, solid fundamental due diligence can succeed. what is fascinating is that there is a scarcity of good analysts because of all of this movement into etf.
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we might look back at this in a year and say this was one of the best opportunities for good, solid, fundamental research. shery: do your due diligence, when you compare available in the u.s. and companies abroad, where would you go? >> that is the second area. we have taken our eye off opportunities overseas. we see a lot more upside in europe and particularly japan than in the u.s. in europe, we are much earlier stage than in the u.s. example, infor europe, where the u.s. was two years ago. they are at least one year or 1.5 years away from raising rates and will shrink the balance sheet, but that will not start until maybe september of next year. that provides a much more attractive opportunity for upside in europe. you look at japan. japan just had a string of economic growth that they have
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not seen in 16 years. abenomics is working. the first two arrows are working and now the third arrow with more corporate reform and focus on shareholder equity and return of capital, those are starting to show signs of optimism. the other element is worth noting that historically immigration has been quite low. you are seeing a big pickup in immigration into japan. that is providing a good workforce and also spending by immigrants. the story in japan is as good as it has been and probably 20 years. vonnie: what are you doing in japan? i cannot count how many times i have heard that this week. >> what are we doing in japan? see -- the same thing we always do, fundamental research, we never have a portfolio that is done passively in japan and there are winners and losers.
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you want to avoid -- vonnie: give us some of those, purely equities? the yen? give us examples. >> focusing on japanese equities. jgbs do not provide upside. we are talking about opportunity primarily on the japanese equities side. we want to be careful to focus on companies that will benefit from strong domestic growth and global growth with less perhaps sensitivity to potential risks in china. , t. rowe priceu international head of multi-asset solutions. vonnie: it is time to check in on the first word news with mark crumpton. has signed atrump short-term continuing resolution to fund the federal government through december 2 -- december
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22 as lawmakers averted a government shutdown by passing the two week extension last night and face a deadline for deciding what to do about spending on defense and domestic programs. the president has also approved an emergency declaration in california where wildfires have raged for most of the week. the declaration orders federal assistance and aid for state and local response efforts. wildfires in southern california now stretch for a couple of hundred miles from san diego to north of los angeles. the biggest fire has burned almost 180 square miles in ventura county destroying more than 400 buildings. former minnesota governor tim plenty says he is considering running for senator al franken's senate seat as franken announces resignations thursday following allegations of sexual misconduct. cap hollande is a former president to candidate and the last republican to win a statewide election in minnesota when he secured his second term in 2006. after six months of intense
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negotiations between the u.k. and the european union, both sides of the deal in place to move ahead to the next phase of the breakup. theresa may arrived in brussels today to announce that breakthrough which she says will be welcomed by the business sector. theresa may: millions of jobs to attend on the future trading relationship we determined and i am optimistic about discussions ahead. in the meantime, reaching this agreement now make sure businesses will make investment decisions based on an implementation time that offers welcome certainty. >> the agreement paves the way for european union leaders who have a summit next week to open the second phase of brexit negotiations covering trade, and the transition. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. shery: thank you. coming up, the climate for bitcoin in latin america is heating up, why the region
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middle-class are flocking to cryptocurrencies. this is bloomberg. ♪
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♪ shery: this is bloomberg markets, i am shery ahn. vonnie: i am vonnie quinn. bitcoin futures market is set to go live sunday, still weird to gets to newbitcoin heights as the demand for cryptocurrencies increases, especially in some latin american economies bitcoin where many are flocking to to protect their savings from rising consumer prices and currency controls.
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more.e how did you come upon the story? where did you think to go looking for when it comes to bitcoin and latin america specifically? >> we have been covering emerging market for many years together and recently she now covers bitcoin. -- ine talking about argentina, way before bitcoin rose to the level is at common 2012-2013, we knew people trading bitcoin back in because of severe capital controls. as it is starting to take off and a lot of people are talking about it, circle back to see how it is spreading in latin america and how it is taking off along tech savvy people and middle-class people or wealthy families. as an alternative to stashing their money away in an offshore bank account like they normally do.
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shery: when i was growing up in bolivia and i have family still there, we used to record gold or dollars -- poured -- hoard or gold and dollars, you never knew what would happen, this is safe and their minds, when there is no were else better to put it in an offshore account and for people who do not have those skills to set all of that out, it could be an alternative. >> it is part of the appeal, instead of stashing bars of gold in your closet, you can invest it in this. .hery: we were robbed all of our diamonds and gold are gone. >> one thing to do than mine is that hacking is still a risk factor. a one hand, it seems like better option than stashing it away in bars of gold, on the other hand, all these other
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risks like volatility of the market and the packing risk -- hacking risks. vonnie: there are other as they -- assets, real estate was the thing. >> in miami, going into private banking funds, and storing it there. by no means is that not still happening but this is an alternative asset class. , thepeople we spoke to say ones running the funds say we recommend you only have 1% of your assets in this because it is so volatile. it is something to keep in mind. cripples some of these countries like venezuela, and the capital controls are so abundant, this is norv turner familye and it's -- offices are being established her.
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to cater to latin american families to trade in this. vonnie: cannot point to a chart is jpmorgane line latin america currency index and the white line is bitcoin. that is all very well and good and funny until it reverses and suddenly bitcoin is well underneath the blue line. >> if it reverses -- >> what could make it turn around? shery: how resilient latin americans are to risk is higher than in other places. because the currency itself reverses all the time. >> in which countries are cryptocurrencies becoming popular? >> and venezuela, argentina, brazil, costa rica, panama.
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panama is often used as a tax haven and people do sketchy things that are. -- sketchy things there. vonnie: they make paper there, right? >> we spoke with one individual who has a crypto exchange based in panama and he said it was taking off there. even in hotels, because more and more wealthy individuals are inquiring about it and hotels are saying, he just about this -- teach us about this, maybe we should expect -- except bitcoin instead of credit cards because people in panama do not want a paper trail. vonnie: going forward? >> tevo watching bitcoin features on sunday, interest all over the place, both from mainstream investors like taking an approach of maybe we should be exploring this, as well as an
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explicit retail interest coming up. -- explosive retail interest coming up. shery: i am also south korean and they take up 20% of bitcoin trading volume. what makes these countries more susceptible to cryptocurrency? >> it is twofold, first is the natural instability in the currency, domestic currency. a historical, and latin america, i cannot speak to south korea, hyper inflation has hit many countries. it is now right now just in venezuela but there is a history across the region. in general, people want something like the dollar to keep their savings and, especially wealthy individuals with access to it. also, a risk appetite, they know the deal. they have to diversify and a
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cannot trust their local currency. they think about things in a way we do not in the united states. they are trying to diversify away from their domestic currency and maybe they have a stronger appetite to go into something like this. vonnie: i think they gold is still in your basement. for joining us and check out their story as part of our two week teacher of investing series. shery: coming up, conversation with royal bank of scotland ceo the mcewan, why he thinks likelihood of settling a u.s. mortgage bond probe before the year ends is waning. this is bloomberg. ♪
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shery: the ceo of royal bank of scotland sees little chance of a settlement with the u.s. this year over mortgage bond investigations. speaking exclusively to us, ross mcewan discussed the banks
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capital position to settle. >> we are pleased with the progress with the -- we are pleased with the progress the bank is getting back to a more normal position. the would struggle to sell stock before the settlement with the department of justice and that is something we want to get tidied up. that impacts whether we can pay a dividend. no one knows how big it will be or how -- when the fine will come. >> the dialogue had picked up last time, what does that mean? is it the first quarter? will it be done in the first quarter? what israel best reasonable assessment -- what is your best reasonable assessment. >> i thought it would be this year. there is still a chance, but a diminishing chance.
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this is something we want to resolve and we have made it quite clear we would like to resolve it. it is the last major -- and i say major thing standing between us and being a much more normal back being able to get into a position of talking to regulators about paying a dividend which would signify this bank has gone through a major recovery over the last 9, 10 years and is back into a more normal position. >> that is about building capital. the numbers change between single-digit, high single digits and double-digit hits from retail mortgage backed securities here if you took a double-digit hit from the doj, 15.5% capital, have you got enough capital to deal with that without coming back to the market? >> i have been promoting since i took over in late 2013 is we need to build a capital position so that no one ever worries about us ever again. -- we the market down damaged reputation and should we
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did not have enough capital. today, we are in a strong capital position but i do not know how big the fine will be. there are many guesstimates and until we have the conversation with the department of justice, we cap capital. -- we have capital and hope some will be retained to get back to shareholders and use it to grow our business but we have to hold onto it until we have done the segment with the department of justice. shery: rbs ceo ross mcewan. vonnie: next, real yields, do not miss it. we will see you on monday. have a great weekend. this is bloomberg. ♪
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♪ jonathan: from new york city, at jonathan ferro with 30 minutes dedicated to fixed income. this is "bloomberg real yield." ♪ jonathan: payrolls beat expectations, the wage growth leaves economists disappointed. bond issuance explodes for a record month as investors try to get ahead of a tax bill. wall street pushes back. the first junk-bond deal of december. we start with the big issue, payrolls delivered, wage growth disappoints. >> this is a solid report. thin


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