tv Bloomberg Markets Americas Bloomberg May 17, 2018 2:00pm-3:30pm EDT
julia: we are live in bloomberg headquarters over the next hour. here are the top stories we are covering. boardroom battle. cbs and its top shareholder is headed for a showdown is the company meets to decide whether to dilute her power. brent touches $80 a barrel. and mmusks'momentum. the billionaire has big plans but concerns continue to amount about tesla's cash crunch. u.s. markets closing in two hours time. first we have a decision out of mexico. central bankxican keeping its rates unchanged at 7.5%. that is what we expected by bloomberg's economics. the economists are also saying they think there will be a more hawkish tone in the post meeting statement.
apparently they were unanimous in this rate decision. see the dollar strengthening a little bit versus the mexican peso from where it was just before this decision came out. -- seeingt seems significant strength. because not only do you have this mexico central bank decision. you also have the ongoing situation with nafta. this was paul ryan's deadline for a nafta decision in time to get congressional ratification before the end of the year. we doe are, may 17, and not have a deal. we do, however, have more talk about talking, if you willi. we have got prime minister justin trudeau of canada pressng -- doing a conference in which he said there are tangible proposals on the table. he says we are close to a deal on nafta but he says a final deal is yet to be decided, which, indeed, we know. you can take a look at the year to date graphic of the peso
along with the canadian dollar. the canadian dollar has been a little bit more steady, than the u.s. dolar which has been strengthening more versus the peso. and something else we have been watching is the trade balance between all three countries. trade deficit with mexico substantial. we got the latest data on that. and you can see the trade deficit with mexico, the blue bars, the trade deficit with canada is a surplus, below zero, which means it is a surplus. so, dairy different negotiating positions when we're talking about these two countries as we continue to go through the nafta talks. we may hear from christina friedland, she has said to be in d.c. today to continue talks. there is a mexican representative who may be there on monday. all of this is ongoing. in the meantime, yes, we are in the test within minutes of the u.s. trading stocks or the u.s. us stocks were at their low was of the session. but just now going down to the
lowest with the nasdaq leading the declines. we have gotten some weakness in technology throughout the day today. it looks like tech fell to the lows of the session. that precipitated the rest of the major averages going in that direction. energy still holding onto gains today. but financials and discretionary stocks have rolled over as well. and, outside of stocks, we have been watching what is going on closely and other assets. that is because the 10-year yield continues to climb. straight session we had higher yields, the highest since november, 2014. the dollar continues to strengthen. crude oil rolling over. which earlier touched a high for brent, that we have not seen in a long time, $80 a barrel, in the u.s. is now pulling back, 1%.down by a 1/3 of little bit of reversinga. bout talkingalka
on nafta. >> thank you. the european union wants the trump administration to stop threatening it with tariffs on steel and aluminum. as they met in bulgaria, european commission president jean-claude juncker said europe wants unlimited exemption from the proposed u.s. tariff measures. >> if europe obtains an unlimited exception from the proposed tariffs, we are ready to engage in talks with our transatlantic partner. quoted, we will not negotiate with the sword of damacles hanging over our heads. the british prime minister theresa may is going to -- who could force her from office. according to people from light with the matter, the prime minister is preparing to keep e.u.'s tradede the
union rules for years after brexiteer to her and our agreed as a last resort, designed to solve the contentious issue of the irish border. british lawmakers investigating the use of facebook users data and political campaigns say the suspended head of cambridge has agreed to meet in front of a committee. he refused to meet with them last month. his appearance is scheduled for june 6. wnbc tv in new york is reporting that two people are dead, 45 injured in a crash between a school bus and a dump truck on a highway in mt. all of, new jersey. ripped apart and not set aside. the paramus new jersey school district said the students from eastbrook middle school were headed to the waterloo village historic site about 15 miles away. global news 24 hours a day, on by and on twitter powered
2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is the. bloomberg. julia: redstone wins round one. ares is offering its biggest decline in three years. sherry redstone has the right to protect her family's majority control of the broadcaster. says itnwhile -- cbs, remains committed to protesting shareholder interest and it may bring further legal action against the redstones. us.t to have you with let's take a step back because this is all centered around a possible tie up of viacom and cbs. what is this ruling mean? cbs directors on the week and came out and said they do not believe the merger is in the best interest of all shareholders. they were worried that sherry redstone would force the deal to go ahead anyway by -- they took
this action to say, actually, what we are going to do is dilute her controlling stake so she cannot do that. before that, we will ask the court to give us a temporary restraining order. scarlet: the judge ruled in favor of the redstone family. what will happen at this board meeting? >> they are having a meeting at 5:00. all of the directors will be there. sherry redstone thing she can vote is down because she just change the bylaws of cbs yesterday, and she now thinks that all but one director -- scarlet: i've got to interrupt it does we have to go to the white house where president met with the nato secretary-general. let's listen in. >> allies on our spending more on the fence. we're all increasing the defense budget. president trump: will you give me credit for that? >> the leadership has been
important. we see that because all of our allies increase billions to add billions to their budget. that is important because we live in a more unpredictable world, and then we need strong noat. -- strong nato. president trump: thank you very much for being here. has changed on north korea that we know up to we have not been told anything. if it does, that is fine to it if it doesn't, i think we will probably have a very successful meeting but we have not been told anything. we are just waiting, like you are. reading stories like you are. we have her and certain things from south korea. if the meeting happens, it happens. if it doesn't, we go on to the next step. >> is this a typical thing that north korea does? president trump: i don't know. i want to give everybody the benefit of the doubt. aren only say our people
literally dealing with them right now in terms of making arrangements for the meeting. thanhat's a lot different what you read but oftentimes what you read if it is not fake news is true. so, we'll see what happens. we are dealing with them now. we may have been meeting. we may not have the meeting. if we do not have it, that will be very interesting. we will see what happens. the border is still quite strong. i think things changed a little bit when they met with china. they met the second time, as you knew, kim jong-un at a second meeting with china which was a surprise meeting. hereve many of the chinese today, big delegations negotiating trade, because the united states has been ripped badfor many years by its trade deals good i do not blame china. i blame our leadership of this country from the past. we have been ripped off by china. an evacuation of wealth like no country has ever seen before country thather has rebuilt itself based on a
lot of the money they have taken out of the united states. and that is not going to happen anymore, but there has been a big difference since they had the second meeting with president xi. myh that being said, attitude is whatever happens, happens. either way we are going to be in great shape. >> would you consider a personal outreach to kim? president trump: you have to want to do it. what i do, deals. you have to have two parties. he absolutely wanted to do appear perhaps he does not want to do appear perhaps they spoke with china. that could be right. president xi, a friend of mine, great guy, but he is for china and i am for the united states. i suspect it is never going to change. but i will say this. we are continuing to negotiate in terms of location, the location as to where to meet, how to meet, rooms and everything else. they have been negotiated like
nothing happened. if you read the newspaper, i raise a lot of money that were not paying their fair share. to go butlittle ways many billions of dollars of additional money has been raised. and i really appreciate the great job that you're doing. as most people know, you have been extended for a long period of time, i was very much, with my leadership and really the fact is we pushed it very hard because this gentleman does a tremendous job at nato. i appreciate. thank you. mr.hank you so much, president, for hosting me and my delegation at the white house. let me thank you for the leadership you showed on the issue of defense spending, because this is very important that we all contribute more to our shared security. it is really having an impact, because as i said, allies are now spending more on defense. all allies are increasing the
defense budget. president trump: will you give me credit for that? >> you have helped to do that. your leadership has been important. yet has a great impact because we see all of our allies increase and added billions to their budget. that is important because we live in a more unpredictable world and then we need strong nato we need to invest more in our security. president trump: thank you very much for being here. nato: with the secretary-general speaking at the oval, just talking about the prospect of greater military spending. the president asked for the secretary-general's compliments on creating that -- he was given it by the secretary-general. liked countries germany that said they will try to raise their spending to their 2% target. scarlet: it is a common theme
with the president and european leaders and this is no exception for him to call for them to step up their spending and not leave the u.s. on the hook. we were talking about cbs and viacom and a court ruling. talk us through again that cbws board meeting today. what is expected to happen today given that the judge's ruling favor the redstone family? >> that is a board meeting today at 5:00. what is up for discussion is whether the nai, shery redstone's controlling shareholding can be done. so, the cbs directors would like to dilute her shareholding from controlling stake from 80% to 17%. broughtks that says she in the change the bylaws, that they do not need a simple majority. what they need is a super majority. and she can vote it down. my cbs sources are telling me they do not believe the revised bylaws stand. the super majority standard would not be up -- to vote on the dividend today. cbs will challenge her in
court. julia: we have to wait to see what happens as a result of this 5:00 p.m. meeting and whether one side tries to push forward -- >> we know what the outcome will be. the directors will vote to dilute her state. julia: whether or not that is acceptable. what about les moonves? he's the ultimate challenger here. he was put in place by the ultimatelynd is now challenging her hopes for a deal. we can talk about whether or not this viacom-cbs deal happens. he has put himself firmly in the firing line. >> no, absolutely. he's suing his boss. he does not think this deal should go ahead. he has opposed it for a while that. he has done a good job at cbs. a look at how cbs has done since the split, they have done really well. he has earned a massive golden parachute. julia: how much is he actually owed if he loses his job before
2021? plus options.n scarlet: you talk about the options including the perks. les moonvesout why and wall street investors oppose a cbs merger with viacom. bigt because viacom is a company or because the redstone family is pushing for this deal? >> they think viacom is a weak partner. they would like a lot of cbs partners, les moonves would like to do a deal with verizon. verizon has come out and said, they do not want to buy a content company. that deal is off the table for now. but that is what he was hoping. he said, we understand the need for bulking up in media, but this deal is not the best deal for us. julia: the shareholders also really. >> that is what he has argued. interestingly, we had our
sources saying they did come to terms, an understanding of economic terms. they had agreed on a price. what they could not come to terms on is the social issue because les moonves was to be able to choose the management team. his number two. ofri redstone wanted the ceo viacom. scarlet: she is a ready installed her managers. talk about shari redstone and whether she speaks on behalf of someone or not. not so long there was a dispute between them t,oo. i feel like their interests were not aligned back then. >> these days we are being told they are aligned and that they're in the same camp. what happens for the redstone family if cbs and bi kim do not manage to achieve iacom do notand v manage to achieve this thie up -- tie up. >> she has maintained she does not want this tie up to take
place unless both companies wanted to happen to however, she owns both companies. cbs oruld not sell viacom to a third party buyer. they would be responsible for the tax. they would offer a huge capital gains tax bill. julia: and personal financial implications of an alternative deal being done here. >> exactly. she does not want to have to pay any more tax than she already does. julia: noted. scarlet: thank you so much for sorting through all of that. we will keep you up-to-date on that cbs board meeting this afternoon. for theeal estate woes company owned by jared kushner's family may be turning run. why it's still raising some eyebrows. that is coming up next. this is bloomberg. ♪
scarlet: this is bloomberg markets. julia: while jared kushner has draama in d.c. things are looking up in new york. is looking to salvage its investment. caleb joins us now and he broke the story could you have done some brilliant work on this. an ongoing saga. i thought it was taking us in every possible direction. i don't want to get too excited but i am. >> first off, to give credit where credit is due. times got this one first. field asset management buys a lot of property. in advanced talks with geriatrician to buy out jared kushner's partners. we're told the idea is that they would then update the building.
higher rents. a complicating factor here is that the qatari investment already owns 1/4 of brookfield property partners, which th eunits which brookfield would do this deal. scarlet: how does this deal differ from the one that they had agreed to with the chinese company that ended up falling apart? >> so totally different. they were going to knock that building down. there was going to be a $4 billion construction loan. there are going to build a new tower twice as high. that is not what is happening. it is going to be an update, new hvac units, make the windows bigger, make the façade more appealing. scarlet: but the building will look the same? >> we are expecting a new façade. you can get more of the glassy, floor-to-ceiling could julia: this was a battle between the
jared kushner and boneto, they have a different views of how t he money should be used. ly enough, this was the sort of plan that if charlie kushner were to agree with it, you could see them having done this before. julia: because that is where was going. what about the handshake deals that stephen roth talked about in his annual shareholder lecture? is this part of the handshake deal or is it something different? >> when steve roth said we believe that we have a handshake deal of charlie kushner, the question at the time is where is kushner companies getting the money? it looks like they've been talking to brookfield and that is how they are going to get it done. scarlet: put it in context and term of the timeline. there is a lot of debt that they need to make good on. where are we when it comes to those deadlines? brookfield plans
to provide the bulk of the new capital going into the building. we are not sure how the timeline -- we know that brookfield plans but -- that $1.2 million mortgage comes due in february. there will be talks with lender and an agreement reached to make that happen. globally to try to get the financials. >> so, yeah brookfield is a public we traded company. the company isf owned by the qia. qatar is on the wrong side of that blockade with saudi arabia and the uae. the u.s. seems more closely aligned with saudi and uae. scarlet: jared kushner is not doing any of negotiated. is he connected to this in any
direct way anymore? >> no. as far as we know jared has had nothing to do with this deal. he creates a bright line between this job in the white house. jared is still close to his family and his family owns the company. scarlet: needed to make this clear. so much.ank you now it is time for the bloomberg business flash, the biggest business stories in the news today. jpmorgan is expanding its reach to the masses. requirement to participate in alternative investments that were once offered mainly to institutions or the rich. the new minimum buy in will be $100,000. the bank is using technology to make the shift from i-capital network. credite is calling -- default swaps a ticking time bomb. the remarks were part of the vatican's's tweeting critique of global finance. in the past, the pope has called the regulation of the financial
system absolute power. his sentiments also echo warren buffett to once called derivatives weapons of mass destruction. mortgage rates in the united states have reached a seven-year high. the average rate for a 30 year mortgage jumped to over 4.6%. still, that is not slowing buyers down. homes that sold less month went into contract after 36 days on the market. that isg to readfin, the fastest since 2010. that's your business flash update. what proportion of sales in 2017 were millennials? scarlet: an increasing proportion. julia: 36%. scarlet: they are probably moving to the suburbs. julia: leaving the basements of their parents. scarlet: coming up, brent crude is breaking above $80 a barrel, a four-year height. hgih.ur year
what does this mean for or related equities? whereead over to gtv you will find a lot of charts including plenty on commodities. here is one in inflation and commodities, something that we look at a lot. the bloombergis commodities index trending higher but not as much as that 10-year breakeven rate at 2.18%. chartsse, you have other that ran crude exports to china, india and italy. this will come under discussion. julia: from new york, this is bloomberg. ♪
julia: that is some of the tocrting from tic streaming live from bloomberg headquarters. this is bloomberg markets. scarlet: let's get the first word news with mark crumpton. mark: the european union is calling on president trump to stop threatening the e.u. with tariffs on steel and aluminum. the european council president leaders aresaid prepared to discuss trade but not at gunpoint. >> we have you -- achieve the united approach. -- only unlimited exemption.
they called on more than $3 billion to impose on u.s. billion products. that has a population of more than one moving people. it marks the first time they have encountered the lethal virus. regional spreads, but we are in the process of revising and by the end of today or tomorrow, we will have a new assessment in rating. mark: it has been reported in congo, 23 people have died.
corrupted shooting ash more than 30,000 feet in the sky. the lava has destroyed more than 3000 structures. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. >> investors zeroing in on those shrinking surfaces. the best-performing groups over the past two months. energy stocks will continue to perform. great to have you back with us.
i think everyone is talking about the geopolitical risks that are exploding, but minnesota obviously a standout. we are coming up on in opec meeting. it is going to the really important to watch. just today, we saw a headline that came out from the energy minister saying we are concerned about prices and don't want to see volatility.
want -- the linchpin in what happens next. questiona really good and i don't think anyone has a perfect feel for that. i would say politically, i think they want to stay aligned with trump to a certain degree. they probably want to see a certain sprees, but not where it .eopardizes it is kind of hard to believe. >> there was an initial knee-jerk reaction.
>> i think there is something to be said for that. it is on a 180 day timeframe. i think they have absorbed it pretty well. you look at data, it was going pretty steadily right until the beginning of may. they felt it was pretty much beend in so i think it has absorbed pretty well. significant on its own. me was whend up to thenwon the rolling and you mentioned bp and now another company looking now.
risk? underpricing the >> i don't think it is being underestimated. i will think at this point the market is underestimating. think it is going to continue to go down. >> talk us through the different legs. shortntioned that covering is part of the rally. i would say to shift is probably moving towards people who are underweight. -- i think it is a record low. >> we don't know what has happened since british we don't
know the offsetting positions. >> that is true, but the fact it is around all-time lows means there will be a performance that takes place as investors take the pain. been shorthas mostly coverings. and have had good numbers there was a low expectation point. next will when we see it play out. thehat gives investors confidence to say we see the prices reacting, now we are starting to hear it. when does the switch flipped? >> i think the situation
continues to remain unresolved. if you thought this was going to end quickly, you might have that opportunity. >> let's talk about earnings more. barrel.ove $80 per let -- >> i think most companies are modeling at the five dollars, $65 crude. >> i don't think that is there yet. >> what you seeing right now? transactionsee today. i think this is what investors have been waiting for. the companies are delivering on
>> this is bloomberg markets. time now for our reports. just keeping a spotlight on energy. we are sticking with the theme of the spotter report. it isason we have chosen because the fact that energy is the top sector by far. of 4.1%. matching a winning streak that we saw back in 2006. let's take a look back by hopping into the bloomberg. of the etf.art
with the upstream petroleum up four points -- 4%. look why, up sharply really benefiting from rising oil. valero is also a top performer. do with morgan stanley. they have upgraded valero. they are having its best day since december of 2016. overall, calling refiners going into a golden age, basically saying there is going to be a continuation of demand.
>> talk about the refiners, especially at this level. but he he will be wrong, is saying there will be margins of 30%. andlso took his own spread let's look at a chart. our viewers can take a look at this chart. tos is the spread going back 2000. last year, we had the hurricane and we are starting to move that down. it is now above that, but earlier had been low. >> in any case, it appears this
financial. companies.le is text since launching in september, they have tracked the s&p 500, but the cost is not cheap at 55 basis points. fascinating is it doesn't screen for growth or probability -- profitability. >> it is about policy. nothing to do with the policy.ration of >> the guy who came up with a fun, he thinks of it as an image yourose which is based on political ideology. rights something for the
time in in all fairness to secretary-general, they have a great counterterrorism operation. i appreciate that. this is becoming a fight all over the world the matter where you go. commitmentussed our mystopping nuclearization administration is also committed to working with the allies and they are destabilizing activities all around.
we are not going to have that any longer. must bed nations strong. the deepgth depends on ties of history and culture that have united our civilization. we must renew these ties and adedicate ourselves for heritage of peace. strength, but peace. i want to thank the secretary-general for joining us and working with us to fortify the nato alliance which has stood for seven decades. we will make nato and the nato alliance stronger.
thenses and you talk about hopes for peace. ofthere was a little bit everything. ,ith a couple of exceptions that is kind of where we want to go. we are joined by republican senator who is also chairman of the homeland security. he joins us now on capitol hill. thank you for taking the time to speak with us. as you know, the white house saying it drops its retaliatory sanctions on u.s. agricultural products. concern abouthas getting china access to their
network. >> that is and like what is wrong with china. that.ontinue to violate they ought to be sanctions and we also be working with other partners to make sure china actually abides by the rules. from my standpoint, i would like to consider the opportunity living in the roles. have them when an us lose.
passwordhat is the that this president has used, and that reciprocal treatment. we should expect reciprocal treatment. concerned that the situation is not facilitating? ultimately, it provides a broader deal to take out what you are talking about. >> i have been very concerned and vocal because of the increase in american manufacturers. is treatment back-and-forth puzzling to me because this is a specific problem that they deserve sanctions against it.
themld much rather have address it in a more productive way. -- >> speaker paul ryan, this congress would be able to vote on. if the president concludes he can't get a better deal in follow on his threat to withdraw on that agreement, would you support him in that case? >> i would hate to see that. i'm not sure the president has unilateral authority, but the fact is for my standpoint, we have a trade surplus.
the trade discussions, the lack of breaking -- bringing those to a conclusion is counterproductive. there is a right to try bill in the house will be voting next week. >> i have to give president trump a great deal of present -- great deal of credit. working tirelessly. grateful of the house leadership. it sounds like they will bring andsenate bill to the floor we will have given patients and their families and little bit of
freedom. i can't think president trump enough. >> good luck with that. >> as we have been reporting, president trump is pointing to his work to decrease defense spending with nato. reallysence work is having an impact on defense spending with the alliance. a federal judge against the case has joined a small group of americans who know the details of robert mueller's investigation. they provided the judge with a copy of the memo written by rod rosen sign last august before
market share, but 2471 to spend a lot in the technology. kills --e in berkeley beverly hills california. >> they tell investors we are trying to go in terms of serving the customer, so anyone that can help accelerate that journey, we are looking at partnering with them in multiple different ways. sometimes it is the relationship. >> let's bring you in the conversation here. how much ammunition does he really have? >> there is deathly some
ammunition he has in terms of being in the game. it implies an investment between the two companies. capitaly, there will be investment. >> just break it down for us. at this stage,t that is challenging. we talked about how difficult this is going to be and compare it. it is not an easy job we are asking them to do. >> it is not. it is the last mile which means getting the box of grocery to your door. united states is a gigantic
, so getting groceries to every customer -- dealing with the company is very different. that all remains to be seen. >> people are accustomed to the way they do things. the question is do you build your own delivery network or fortify a partnership with a third-party service? >> talk about the risk of doing the latter? retailers have a new way of operating and it is not by building stores. they are being forced into some of the partnerships, but they can be very productive by
>> as usual, you tend to look at the sector level. they were talking about what was --ng on with the brochures brochures -- up,e have seen that cost go what are investors doing with the money? they are buying a lot more of .he consumer staples when i look at it, there is over four times the amount of calls, so that is pretty telling, so the number five constituent reported earnings today and it is two times the amount of calls. todayther stock down after the company reported its numbers.
>> you want to see people putting new money, so with cisco i saw 2.4 times the amount. this month to thatase out in july, so actually tells you the bottom in here and we have seen cisco have ,n above average yield of 2.9% so this is a great company to trade. do it 44 by 48 coal spread. timesll make to an half the money. we have to leave it there. kevin kelly, thank you. you still ahead in what
kudlow told reporters that the president is "involved in every decision." prime minister benjamin netanyahu said israel's security services havece prevented terrorist attacks in more than 30 countries, including a plot to shoot down an aircraft. he spoke in jerusalem today alongside panama's secretary. a commonahu: we have battle to fight the sponsors, and we are doing it in the middle east, but it encompasses today the entire world, and we stand ready to cooperate. mark: israel has warned it will not tolerate iran establishing a military presence on its doorstep. iran is fighting alongside syrian president bashar al-assad in that country's civil war. secretary of state michael pompeo met