tv Bloomberg Markets Americas Bloomberg March 20, 2019 1:30pm-2:01pm EDT
rejected twice. may'says theresa withdrawal date of june 30 and set a march 29 poses legal and political issues since elections for the eu parliament are being held may 23 through the 26th. r ak is set to chai summit of leaders tomorrow. if president trump does not release his tax returns, he could be left off the ballot in some states. 18 washington post reports states are considering legislation that would require presidential and vice presidential candidates to post their tax returns in order to appear on the ballot. mr. has long insisted he will not release his returns because they are under audit, but that would not prevent him from doing so. in houston, all the fires at a petrochemical storage the silly have been put out. sendlaze began sunday and a plume of smoke a mile into the sky. authorities say there is still a
chance that the fire at the intercontinental fire facility could reignite. in the hay, united nations appeals judges upheld the convictions of bosnian serb leader. he had appealed his 2016 convictions as well as his sentence for masterminding atrocities in his country's 1992 through 1995 war, europe's bloodiest conflict since world war ii. other appealsll and remains the conviction for genocide, murder, deportation, and other inhumane humanity,imes against as well as for murder, terror, unlawful attacks on civilians, hostage takings, violations of the laws of the customs of war. mark: separately the judges rejected a prosecution appeal against and it fell of a second
count of genocide in the same war. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. shery: live from bloomberg world headquarters in new york, i'm shery ahn. amber: live in toronto, i'm amber kanwar. welcome to bloomberg markets. we are now joined by our bloomberg and bnn bloomberg audiences. shery: here are our top stories from around the world. stage as thethe fomc wraps of its two-day meeting. we will find out the fed's interest rate decision in less than 30 minutes. justin trudeau's government releases its budget.
what it means for the canadian economy. and we have an interview with as an sea level and president neil that hasthe firestorm been engulfing the engineering and construction giant. let's get you caught up on the markets. we are on the back foot right now. if you look at the major averages, on town ahead of that fed interest rate decision. financials are leading the way and it is actually being exacerbated somewhat by headlines we have seen from donald trump, saying the tariffs on china could be in place for a long period, and until they comply with a trade deal. not enough to see a trade deal done but perhaps looking for them to comply before taking off tariffs on some $250 billion worth of goods. a rally in the u.s. bond market, yields are coming down.
this of course, coming to the lowest levels we have seen since the beginning of the year. shery: investors focused on those brexit headlines as prime minister may just asked the eu for a short extension of three months for the brexit deadline. a surprise move that increases the risk of a no deal brexit. the fact remains, it seems the markets are not too concerned about a no deal exit. take a look at this chart on the bloomberg. we are seeing the pound under some pressure today, holding at 1.31 level but the forecast for the end of the year is much higher, 1.35. theres are optimistic could be a perpetual extension. in the meantime, given the brexit chaos that we are not expecting the boe to move at all, even despite the fact that we see inflation in the u.k. unexpectedly accelerating in february 2 1.9%, which is close
to that 2% inflation target from the boe. the candid budget doesn't quite have the drama that is circling brexit right now, but certainly the budget table yesterday was not without fireworks, especially when you look at the different ways that the government is planning to spend ahead of their election. including measures for the housing market that is getting some criticism, as it was a year ago, the government moved to cool the housing market, and that introducing measures to really aid millennials -- first-time homebuyers to get into the market. critics say that does not address the issue of affordability. deficits will be higher than projected a couple months ago. one thing that we did not see, shery, and we talked about this yesterday, corporate tax cuts. something canadian businesses have been calling for to give an edge versus u.s. competitors that have benefited from trump
tax cuts, however, we did get an increase on a certain levels of stock options. high paid executives that make above two 4000 on stock options will now be taxed at a higher rate. leaders weress expecting some measures to boost the economy, when canada has look more uncertain. when it comes to the bank of canada, it seems the budget will not make much of a difference, 02 percent of. canada's gdp, but as you say, this has to do with elections coming up in the fall. an election budget, for sure. amber: it is enough to anger the deficit hawks do not enough to move the needle on it being stimulative enough to change the bank of canada's more recent dovish stance. that's get some perspective on this with the head of canadian strategy portfolio management at pimco. thank you for being with us. let's talk specifically about housing. isund the world, canada
known for its high debt levels and its fast-growing housing market. moves the federal government a year ago tried to curb. here they are introducing measures that will stimulate demand for those that are under 35. would start by saying as you would expect, a highly political budget. millennials, people that the liberals want to vote for them. as much as they are doing that, b,should be expected, and, it is not affecting the main overheated markets of toronto, vancouver. not really concerned about it. is it time for fixed income investors in canada to turn defensive and run for cover? >> i wouldn't say defensive and run for cover, per se. thet pimco did not believe
right hikes that used to be priced into the markets a few months ago, and the markets have come around to our view because we did not believe in this handoff. i would say the market father of the curve, 10 year interest rates, are starting to look pretty low. from being overweight, probably more underweight these days. amber: a couple years ago, christine lagarde at the imf was encouraging these countries with the fiscal space to spend more, stimulate the economy, to take up the baton from central banks who have been propping up the economy worldwide since 2008. do you think canada is prudently following that prescription? slowere are looking at economic growth this year versus last year, global slowdown, that it is actually included to run into the red a little bit? if the economy needs a little stimulating, i have no problems following a recommendation. heading into the last few months, it it looks like the bank of canada was hiking rates, slowing the economy down.
as much as and need a fiscal stimulus, that is debatable. the problem is, as i would look at it, there are two things government can do, redistribute wealth, or growth the pie. in a perfect world, you would do both. i would say a few of the past budgets have been light on growing up high in terms of creating incentives for investment, productivity, so that we can pay for these social programs that we would like to have. amber: does that mean that the bank of canada will not get help from the federal government if it wants to get off of the hamster wheel of lower rates? >> i don't think it moves the needle in this particular budget. no, i don't think it has changed much at all. shery: thank you so much for that. we have some breaking news on the bloomberg right now. we hear the eu's biggest group has suspended hungry's prime
minister's party. viktor orban was suspended from the european union's biggest for two monthsy before key legislative elections. hearing their biggest political group has suspended the hungarian prime minister viktor orban's party. spoke a short time ago saying a delay would require a deal to be done. remains open as to the duration of such an extension. proposal ofer may's the 30th of june, which has its merits, creates a series of questions of legal and political nature. leaders will discuss this tomorrow. shery: let's go to london for
the latest. what does it mean for a potential no deal brexit? this is a very short extension, isn't it? >> that's right. theresa may has not asked for the long extension that some exit tears. she might. she said the 30th of june. as you heard task saying, that leaves questions about whether the u.k. may need to take part electionsiamentary which are going to be coming up very soon. one of the u.k. ministers was saying they were pretty sure there was a way around it and could have that extension while also not needing to take part. may will have a difficult time tomorrow, that's for sure, when she meets the other 27 eu leaders, she will have a lot of work to do to convince them to have the extension she has asked for. euer: give us a sense on the side of things on which
countries are most likely to play hardball, and on what issues? >> we already heard earlier emmanuel macron was , if youfor guarantees are going to have this extension, what is it for? we don't want to see a continuation of her bringing her vote back, trying to get it passed again with nothing changed. they want to see something. that could even be something like a second referendum, which may has repeated the world out. german chancellor angela merkel issued a neutral statement today saying she welcomed the clarity letter requesting the delay. perhaps a slight dig, that we have not had clarity for many months on brexit. amber: thank you for bringing us up to date. we are going to take a quick
snc-lavalin chief executive neil bruce is breaking weeks of silence on the interference scandal tied to his firm that has engulfed the canadian government. with bruce about his company is grappling with the continued legal uncertainty. >> first of all, i had never talked to the prime minister dpa for about jobs.
to the prime minister's office. to the prime minister's office, we have lobbied, as you would expect a ceo or the company to do. basically, we are in a place where it is not just about 9000 jobs. to 2012, we had 20,000 canadian employees. today we have nine. if we cannot put some of this behind us, it's highly likely, we will have less. --hink what people need to hopefully would understand -- more and more of the canadian population would understand is, everything that is being fed, things that have been seven to 20 years ago. it didn't happen last month or last year. we are trying our best to put all of this behind us in an open
and transparent way. amber: you've said that before, that this took place 20 years ago, that none of these people are at the company anymore, but at issue is what happens with the company. what did you say about the potential for job losses? if you do notis get to go the way a deferred prosecution agreement, 9000 jobs disappear. >> that is incorrect and we had never said that. if there is no dpa or remediation agreement, if we eventually get to court -- we are seven years past and we are still not actually in court, but we are saddled with the burden of something wrong but actually have never been to court -- that if we are there, and then in two or three years time, we are found guilty, and that is the point at which we will, under the current regime, the no
longer willing and able to bid on federal contracts. amber: how important are bits to federal contracts right now? you only have one in canada that ends in june. it doesn't seem like a material part of your business. >> that is not the point here. amber: isn't it, why not? >> the point is, we firmly believe, first of all, we have apologized on behalf of the company for things that happened seven to 20 years ago. of theeve to the intent remediation agreement, like other dpa's is to be clear, which is to pursue the people responsible, and don't damage the innocent. this is not just about jobs or getting let off something. the company and the way the company has acted in an open and transparent manner, cooperated with everyone, all the authorities, we believe we
have met the criteria. amber: it is about jobs, though, that is what justin trudeau said that is what led him to people having multiple conversations with the attorney general. it is not 9000 jobs that is a slow it attrition over time, are we looking at a future where snc only has 1000, 2000 jobs? did you ever spelled out clearly what the economic loss to canada could be? >> no, because we put forward in our submissions what the public interest case is. the dpa and the legislation for the remediation agreement is really clear. you cannot justify it on economic alone benefits. it has to be in the public interest. the other thing that a remediation agreement is really clear about, and replicates what you have in the u.s., the u.k., and other jurisdictions is, you
need to pursue the people responsible and protect the innocent. the innocence our employees, customers, supply chain, pensioners, and at the moment, the exact opposite is happening. amber: did you threaten to move your headquarters from montreal? so where did this issue come up from, that it was a possibility? >> i don't know what people make up for what they have in their mind. canadian global champion, one of the few, actually. not many. e&rre in the top three design companies in the world. we are proud of being a canadian company. we have 130 offices across canada. we employ 9000 people, used to employ 20,000 people. we have a very, very strong
investor base. 82% of our investors are canadian. who havereat backers been incredibly supportive in terms of what we have done. we would not have been able to go and buy probably the best engineering company in the u k, support in terms of financing. be ins where we want to terms of our base. my interviewas with neil bruce, ceo of snc-lavalin. shery: coming up, we are awaiting the event decision on interest rates. we will have a special report at 2:00 p.m. this is bloomberg. ♪
riccadonna, chief u.s. economist for bloomberg economics. we expect the fed to hold steady, potentially lower projections with the number of interest rate hikes. -- challenging will it did will it be to stay dovish without implying a cut? impliedcut is already in the market, so this is the hurdle they are confronting heading into the next couple meetings. we have had a slew of weak economic data over the last couple of months with retail sales collapsing, week industrial production, the last jobs report showed a payroll stall. they have to make a nod to that. if we look at fed funds futures for the first quarter of next year, about 40% probability of a rate cut by that time. fed usnd of ties the hands going into the meeting, so therefore, they cannot be quite as dovish as they would want to be, or acknowledge that economic
weakness to the full extent they would want to because they don't want to be painted into a corner by reinforcing that expectation in the markets. amber: sounds like what you are saying is the pain trade for stocks could be lower because they are unlikely to get anything more dovish than what the fed has already signaled, what the market is pricing in. carl: equities are in a foul mood already as we get the negative headlines in trade talks with china being delayed or breaking down. is for aectation dovish fed, and they don't meet those expectations -- the key point where they will not meet those expectations is in the dot plots. the bed is signaling and ambivalence as to whether the next move is a rate increase or rate cut, with respect to the timing of the move, the dot plot will still have a mild positive slope, implying the next move or
the bias of the committee is for a rate increase. stocks may not react favorable to that. what could offset that is the timing of the end of the balance sheet wind down, which a lot of folks are anticipating today as well. if they are stopping sooner, or a bigger balance sheet could offset the hawkishness of their outlook in the dot plots. amber: carl riccadonna, thank you. shery: moments away from the fomc decision, we are seeing pressure for the s&p 500, the dow, and nasdaq. down half of 1%, being weighed down by financials and health care. 10-year yields below that 2.60 level. this is bloomberg. ♪
>> this is the fed decides on bloomberg television. we are awaiting the second fed rate decision of 2019 followed by a news conference with chair jerome powell. officials expected to hold rates ready but everyone looking at that dot plot. how much they downgrade their expectations by. caroline: such a difficult tightrope. they don't want to worry the markets too much, like the ecb did a couple weeks ago, but they want to guide the markets, they have their backs, still looking pricingthat the market in a rate cut. scarlet: it is a matter of saying you'll be dovish but not so much that people start thinking, what does the fed know that we don't know, that they had not told us? clearly all of that people have to work through. markets are a little nervous before hand. concerns about china, trade talks pushing down on the market. trump said maybe we will not walk back those tariffs.
euro is key, after any dot plot move. euro-dollar tends to move more than the stock market. .eanwhile, the dollar flat keeping an eye on high-yield overall as well. it has been a key up performer this year. scarlet: joining us is got guggenheim co-founder. what are you looking for from mr. powell when he speaks? >> he has a lot of ground to cover in this meeting. we will get the rate decision, not to expect anything. we will get the dot plot. how many rate hikes are going to be built into expectations? then we are going to talk about the balance sheet. that was interesting. i was on the show just three months ago, and the balance sheet was on autopilot. now all of a sudden we are making an emergency landing.
they are going to have to to move are they going on the balance sheet, when they afford to move on the balance sheet, and possibly say what the levels of reserves will be at the end. the unanswered questions which are probably beyond the scope today is to start talking about the reinvestment policy, which is also a major decision. i think the fed is behind the curve in analyzing the balance sheet. i think they thought they were on autopilot in december and now they are being faced with all of these questions. i'll be interested in finding out how much the chairman takes off the chew here. caroline: you think the market has baked into much? -- in too much? >> economic data is being distorted by a number of factors and is likely we will see a resurgence later in the year. seconds to go 15
before that rate decision comes out but all of the drama will be in the dot plot. the s&p 500 lower after being little changed earlier. caroline mentioned the hawkish comments from the president come trade situation. let's go now to michael mckee at the federal reserve. mike: no change in the fed target rate, and they are done for the year. the dot plot now calls for no rate increase in 2019. nine members move the. to zero. there is no change in the long run neutral forecast of 2.8%. big dow provisions to the economic outlook, the growth median is now 2.1% for this year, down from 2.3% in the december forecast. growth next year will be just 1.9%. th