Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  April 22, 2019 1:00pm-2:01pm EDT

1:00 pm
that by iranian oil without facing sanctions. the goal is to not your run of its principal source of revenue. it countries currently have waivers including china and india. secretary of state mike pompeo called afghanistan's president over the weekend to express washington disappointment over the indefinite post potion of their talks with the taliban. the talks were scheduled to begin friday in qatar but were called off after disagreements over who should attend. the gathering was considered a significant first step toward finding an end to the war in afghanistan and the eventual withdrawal of u.s. troops in the country. president trump says he will not nominate former pizza company executive herman cain for a seat on the federal reserve board. in a tweet, the president called him a truly wonderful man and cain asked that the president not nominate him. the confirmation did appear to be blocked by his own party.
1:01 pm
the supreme court will decide whether the main civil rights law that inhibits employment discrimination applies to lgbt people. the justice said they will hear cases involving people who claim they were fired because of their sexual orientation. another case involves a person who was fired after disclosing she was transgender. the cases will be argued in the fall with decisions likely by june 2020. 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 am ritika gupta. this is bloomberg. in new york, 1:00 6:00 in london, 1:00 a.m. in hong kong. i'm vonnie quinn. welcome to bloomberg markets.
1:02 pm
from bloomberg world headquarters in new york, here are our top stories. you for herman cain. president trump dropping his plan to nominate cain for the federal reserve board. naming mcgill patrizio as ceo. ?ill the shakeup pay off blood sport on wall street. we explore how hedge funds may be pressuring companies to default. all that in the next 30 minutes. taylor riggs is with us halfway into a quiet trading day. taylor: it's been quiet, light volume, a little bit of a reversal. we were looking at losses but now we are looking at gains. the tech sector was the upper former. nasdaq 100. some of the faang stocks. course, it is all about oil today, up almost 3%.
1:03 pm
now we are looking at sanctions on countries that want to buy oil from iran. we have a full v-shaped recovery here. rebounding about 3% for the year. lower prices at the pump, but want to be top on iran, so today we are getting higher prices. see what that is doing to the energy stocks we've been following from a oil companies do offshore drillers, refiners. we were looking at some of the offshore drilling companies like transocean, and they are getting a boost. spread, heavy crude, losing its premium as those prices are getting a little bit of a shock from the lack of supply, boosting up prices. we are in the middle of earnings season, so i wanted to look at some upgrades and downgrades. kimberly-clark, take a look, up 6%.
1:04 pm
this morning, finally seeing their price increases having an effect. this was a store that we had heard from procter and gamble the last few quarters. really able to pass on those costs to the consumer, getting a lift. down here at the bottom is tesla. the start ofng their autonomy day, where we get a lot of information about their self driving cars. earnings on wednesday. analysts are a little nervous about the production and delivery. and of course, what that means for that ever looming free cash flow and profit targets that seem to be elusive. we will await all of that wednesday. vonnie: thanks, taylor. adding some news from samsung. they say they will release -- delay the release of the galaxy full smartphone, the $2000 loan that was having some issues for some customers. now we are hearing the company will delay the release of the
1:05 pm
fold smartphone. president trump has said he will not nominate herman cain for a seat to the federal reserve board. in a tweet, the president said, my friend herman cain, a wonderful man, has asked not to be nominated for a seat on the federal reserve board. i will respect his wishes. hermann is a great american who loves our country. for context, let's bring in our economics policy correspondent michael mckee. herman cain said he did not want to go through the betting -- arduous vetting process. would he have made it through? would not have. republican senator said that they would have voted against him. he would not have been confirmed by the senate. that was a message the republican senators were deliberate resending to donald trump, who had not been at herman cain when he said he is the man i want to nominate. the vetting process is proving
1:06 pm
to difficult, particularly with the sexual harassment claims against him that came up during his president of campaign. it moredoes it make likely that stephen moore will pass? mike: there are some thoughts that republicans on the hill loyal to trump would want to mature than one of his nominees got through, but moore still has not gotten through the vetting process and i seem to be more negative stories every day. a story in the last hour that he has written a number of disparaging things about female athletes in women's sports that will not make people happy either. we will see what kind of groundswell of opinion develops against him. so far, republicans have held their fire, have not said one way or the other how they feel about stephen moore. vonnie: is there a reason to think that perhaps the fed , andd be more diverse herman cain, who has served on the kansas city federal reserve board, may have been a good
1:07 pm
choice in terms of thinking about diversity at least? mike: no question the fed could be more diverse racially and in terms of the kind of experience that members bring. you won't get any argument from people at the fed. they actually felt they got a little phd heavy at one point. economist,is not an a lawyer by training, the chairman of the fed. the question is whether herman cain was a qualified -- probably as a businessman, and his service on the kansas city fed gave him some insight on what went on, but it doesn't mean that he had any spirit on monetary policy. the question was about his political views and how he espoused them. he was seen as a political operator, someone on the fed put there to advance the president's views, rather than doing the best thing for the economy, what ever that may be. vonnie: ultimately, there is room for a few outliers on the board. unanimity,re to be
1:08 pm
economics would be easy. putting aside some of the allegations made against herman cain, leaving that for another time. but if someone like that were to be nominated, why should he get through? mike: leaving aside the allegations, there is no reason necessarily. the issue is there are outliers on the fed, and we see that in the debates that go on most of the time. there are people who want to raise interest rates, others who slow and weonomy is need to cut interest rates. the majority seems to be in the center. but the idea of cutting interest rates in order to juice a presidential campaign is what members of the senate were worried about, along with the allegations against him, and the idea that you do it for political reasons rather than the best thing for the economy. vonnie: now the president will have to find another candidate? mike: there is no question, he could find somebody synthetic to his views, that you don't want
1:09 pm
to raise rates more quickly, but with better credentials who would have an easier time getting through the senate. always inchael mckee, second peter, federal reserve. thank you. sticking with the fed and markets generally, let's bring in the chief investment strategist at state street global advisors. what do you make of the market continue to grind higher in the face of all sorts of bad news? largelyarket has been fueled by the idea that the fed is on hold, chinese economic data has improved, that recession fears are falling. there continues to be an incredible optimism regarding a u.s.-china trade agreement. all of this is being supported by their easy monetary policy. in terms of the rally, most of it is being driven by those few attributes. vonnie: we got the news on iran, oil, the waivers will not be extended. how does that impact your near-term use, if at all? thehat is interesting,
1:10 pm
market isn't expecting much from the federal reserve. in fact, they are pricing in a rate cuts later this year, more than 50% chance we will have a rate cut by the end of the year. i don't see that happening. as it relates to the price of oil continuing to climb, that will eventually show up in price inflation. you haven't already tight labor market. many of the metrics the fed uses to look at inflation are already sitting at or near their inflation target. the economy is likely to grow more than 2% this quarter. and the markets are a whisker away from all-time highs. i don't know how the market interprets that this will result in a cut this year from the fed. vonnie: what are you looking at these days? there are a lot of sectors that have sold off substantially. anything interesting that maybe was not before? >> technology continues to be an area where it demonstrates high
1:11 pm
levels of growth. as was mentioned a few moments ago, we will see earnings from amazon, microsoft, twitter, google this week. can those companies continue to demonstrate very strong rates of growth, very strong return on invested capital? well their returns on capital remain noticeably above their investment on capital? in environment where growth is sectors likeical technology, communication will be interesting. the other thing i would add, industrials have become a lot more interesting, now that the chinese economic data is improving, and the fact that we will likely see a trade agreement between the u.s. and china. i think that will help multinational industrial companies earnings and global growth in particular. vonnie: are you less concerned about the author of warnings from the international agencies about global growth, given china
1:12 pm
is a major portion of that? >> i think global growth has slowed from where we were but i do think what has happened -- recession fears were overblown. and i think it's important to note the number of steps china took to help stabilize its economy and protect itself from a protracted trade war with the u.s. are now starting to show up positively in their data, in terms of industrial production, retail sales, better economic growth. i think this also had a negative impact on europe and germany in particular. i think that is now going to start to shift gears a little and we will start to see better global growth. one of the things i've been keeping an eye on that i'm pleasantly surprised to see is that bond yields are firming. that suggests to me that fears about economic growth and inflation that was going to be bad or poor are starting to turn. i think that's a positive for stocks. vonnie: you mentioned the area
1:13 pm
of technology. we are waiting for many tech earnings this week. anticipate any surprises, good or bad? in earnings season, there will be good and bad. i expect companies will have lowered the bar so much this quarter and expectations are so poor, they are likely to be on earnings expectations and revenue growth. any time you have a high-growth company, folks will be really looking at subscriber growth come a topline revenue growth for you and you could see some disappointments there, but overall the earnings will be solid, and supportive of technology shares. we are seeing that ahead of the earnings already as tech and communication services are some of the leaders today in what has been a lack luster section. vonnie: michael, thank you so much. i want to recap some breaking news. samsung says it will delay the launch of the galaxy fold smartphone.
1:14 pm
this is the almost $2000 phone that folds. , some of the review users said that it was not ready. they experienced problems with the new phone. samsung now says it will thoroughly investigate the issues. it had been planning to launch april 26, but is now delaying that launch. this is bloomberg. ♪
1:15 pm
1:16 pm
vonnie: this is bloomberg markets. i'm vonnie quinn. myft heinz has announced girl patrice year will be the
1:17 pm
company's new chief executive officer, replacing bernardo hees effective july 1. the company trying to recover after tortuous two years. let's get to some analysis now with bloomberg news, who i've also been speaking with the ceo. kraft heinz has cut r&d spending, all sorts of things from advertising to innovating to buy new labels, brands. what is the new ceo planning to do? >> that is the great question and the focus on him will be, does he depart from the classic strategy of focusing on cost cuts sometimes at the expense of innovation? he has been at anheuser in bed for a long time, doing marketing. so he's been selling beer, and now the question is how he can sell more food. short of a major acquisition, they need to sell more products. sounds simple, but they have not been able to buy anything to allow them to cut costs.
1:18 pm
a lot of people consider their portfolio a little out of step with modern tastes. vonnie: given he has a marketing background, should we anticipate lots of advertising spend and not much else going on? >> i am sure he will go to the marketing playbook, and something that he can do with these brands, but things like oscar meyer, maxwell house are facing pressure from all sides. there is better premium coffee that people want right now. maxwell house, other than being the lowest price, doesn't have a ton to offer. very difficult atmosphere right now for packaged food makers. it's been difficult for couple of years. kraft heinz maybe more so than their competitors have been slammed by broad generational shifts in how we eat and shop. vonnie: the brazilian group that goes into restaurants and that sort of hospitality area, really upending the company, cuts
1:19 pm
costs, r&d, all sorts of things, and does deals. with the playbook change your? -- here? >> that is the question. they took heinz profit, they set profit margins at the top of the industry in a few months, and then they acquired craft. that deal happened in 2015. two years later, those shares were north of $90 and everyone loved it. it was only after they failed to buy unilever that the problem started to come to life. buying and cutting costs is what these people do but failing to get unilever was a stumble for them. the spotlight has turned back to their brands and the lack of innovation that has gone on. vonnie: in many ways, he has a low bar to beat. toilet, $33,in the instead of 90 of few years ago after the deal. he can more or less do anything and get the price of.
1:20 pm
it is like taking over a team after a couple of losing seasons. warrens some pressure, buffett is in the stock, but he is taking over at a low point for the company, no question. any sign that he can get growth going will be well-received by wall street. vonnie: will activist join the party? >> i'm not sure there's an activist that want to take on the fight. i would be a little surprised because of the power of the shareholders there. vonnie: thank you. kraft heinz and a new ceo. some hedge funds investing in credit default swaps have turned the market into the equivalent of fight clubs. this is bloomberg. ♪
1:21 pm
1:22 pm
1:23 pm
vonnie: this is bloomberg markets. i'm vonnie quinn. newloomberg businessweek, a era for credit default swaps and how they are being weaponize by hedge funds. claire boston joins me now. we think about cds. what has changed since then? cbs's have come a long way since the financial crisis. a lot of people remember aig losing a ton of money. regulators swooped in and said we need to fix the market. they made it safer by clear and other reforms, but the market also shrunk as a result. 100 50point, over trillion, today about 10. vonnie: what are hedge funds fighting over? >> did companies actually default, are these swaps going to pay out russian mark these are forms of and for --
1:24 pm
insurance against default. if i'm having trouble paying my debt, anybody who bought cds on me can get a pay up. but cds are zero-sum contracts. so somebody will have to make the payment and somebody will receive it. hedge funds right now are fighting over technical battles over and did a default occur, how much will i have to pay out? vonnie: who decides, are there meetings happening all over the city? >> basically we have a body of market participants deciding whether a default occurred. if it did, there will be an auction. the auction determines the price of the pay up. there are lots of games that hedge funds have decided to play to determine the price of the auction, or whether a default occurred. vonnie: what is the formula here, taking on sovereign obligations? >> that was a trait from a couple of years ago. right now we are seeing and more in the corporate space. there is not much distress in
1:25 pm
the world, so hedge funds introduce their returns. a lot of them are taking risk in the cds market. vonnie: what is the industry try to do about these shady deals? >> it is a hard problem to fix, is what people are finding. one of the situations that drew a lot of attention was have navy in, a case that was considered to be a manufactured default. they were going to get some cheat financing if they defaulted on cheap debt. so the regulatory body is trying to say we need a default to be connected to underlying creditworthiness. an hadt case, hovnani enough money to pay their bills, but they defaulted in a while. vonnie: it was not really upfront in terms of them saying this to anybody, other than the person they were doing the contract with. >> that sparked big lawsuits and questions about whether these derivatives are tied to credit risks. vonnie: who loses in a situation like that? >> in that case, everybody
1:26 pm
scuttled off in the end, so there were no losers, but it could be bad for somebody on the other side of the trade. vonnie: it is in the current addiction of bloomberg businessweek. there are many of these deals out there, so we should be on our toes in terms of following that. can watch businessweek saturday and sunday on bloomberg television and bloomberg radio as well, as well as picking up a copy on your stands. halliburton becomes the first of many big oil companies reporting this week. we examine the critical days ahead for the oil industry. right now, indices are relatively unchanged. the dow down 42 points. the s&p 500 up fractionally. this is bloomberg. ♪
1:27 pm
1:28 pm
1:29 pm
ritika: let's get to the first word news this afternoon. in sri lanka, the government is blaming a local jihadist group for the series of deadly bombings.
1:30 pm
the attacks on churches and luxury hotels tilde at least 290 people and wounded hundreds more. christians and ford taurus work for targeted. authorities have arrested 24 suspects. they say there have been several mornings from intelligence agencies about impending attacks. iran is brushing off the trump administration decision to stop exempting countries from u.s. sanctions on its oil exports. the goal is to died i iran its printable source of revenue. it countries currently have waivers including china and india. the u.n. health agencies has at least 34 more people have died in fighting for control of libya's capital over the past two days. ring the total to 254 dead so far, including civilians. the world health organization says more than 1200 others have been wounded since the libyan national army launched an offensive earlier this month to take tripoli. in new york state
1:31 pm
continue to drive up the number of u.s. measles cases which are approaching-- levels not seen in 25 years. 71 more cases were reported last week with 68 of them from new york. 22 states have reported cases that the vast majority have been in new york, mainly in new york city, and the nearby rocklin county. 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 ritika gupta. this is bloomberg. shery: live from bloomberg world headquarters in new york, i'm shery ahn. amanda: live in toronto, i'm amanda lang. welcome to bloomberg markets. we are joined by our bloomberg
1:32 pm
and bnn bloomberg audiences. president trump hard lines with iran. the u.s. saying it will not read or waivers that lets countries by iranian oil without facing u.s. sanctions. oil spikes to a six-month high. -- old.he hold samsung delayed the launch of its foldable phone after screen failures. we have the latest. winter is coming. what is the next great big risk to munis? climate change. how investors are preparing themselves. on the major averages here. we see a somewhat quiet session although this is likely to be a week driven by earnings and economic data. we get that first rate of u.s. gdp at the end of the week. volume keeping it light. markets bouncing around the breakeven point. it really is energy driving markets, spiking. that is keeping both the broader of the and the couple
1:33 pm
components of the dow moving higher. big energy names on the move. real estate, is worth noting, moving in the opposite direction today. unitedhealth group a boost again today after some real weakness last week. at the bottom you can see what nymex is doing in relation to that move against iranian oil. shery: one index outperforming today, the nasdaq 100, trading at a record high. gaining ground for the past five weeks in out of 17 2019. which are the stocks propping up the nasdaq 100 blue chip stock index? we are talking about microsoft, cisco. you would think given how the nasdaq 100 has performed, tech earnings this week would be pretty solid, but analysts expect earnings out of amazon, facebook, twitter, microsoft not that great.
1:34 pm
estimates are for a drop in the first quarter. the growth outlook, of course, will be key, as we get 30% of the s&p reporting this week. the nasdaq hitting close to its high. people telling us we are seeing a rotation back into cyclicals. that is good for tech, buying them some time, as they report this week. oil rose to the highest level in almost six months as the u.s. said it will not reissue iranian oil waivers when they expire in may. mike pompeo addressed the decision earlier today and said the trump administration is working to minimize the effect it has on pricing. >> i want to emphasize that we have used the highest possible care in our decision to ensure market stability. united states has been in constant discussion with allies and partners to help them transfer away from iranian crude to other alternatives. we have been working with major oil-producing countries to make sure the market has sufficient
1:35 pm
volume to minimize the impact on pricing. kevin cirilli is with us now from the white house. of course, for the trump administration, there is a lower price of oil target that is attractive. for some of those opec members come it may be higher than that. they would become a to 80 than 60. where does it leave them following this decision? kevin: for the administration, this is a type of policy win for a faction of folks inside the administration who have been on this,or some time even predating the administration. e.on that, a one-your grace period about how this will be allocated. if you look at the impact trump administration has had pacific we on tehran, and how they have not been able to carry out their oil industry, it's been significant. there are some who were skeptical of the administration following through on this, but
1:36 pm
the administration and others made it clear today, that is not the case. they will continue down this path. the ultimate goal being to get tehran to denuclearize and let go of their nuclear ambitions. what will it mean for the relationship with its allies? waivers were granted to the biggest u.s. allies like japan, south korea, and india. kevin: precisely. even beyond that, prime minister shinzo abe is said to be here in washington later this week, in the second half of the week, as well as japan's trade minister. clearly, there are continuing conversations on the geopolitical front that will have to be worked out. but from the administration's vantage point, even from the u.s. vantage point, gone beyond the left and right, there is deep skepticism about any type of international business, let alone u.s. business, doing any
1:37 pm
type of financial dealing with iran coming especially when they continued to be so brazen on the nuclear front. obviously all in aid of that, reversing the decision to make progress. be aere a sense there will new conversation, a new deal offered, or is this a stalemate? kevin: the administration has said consistently for the past several months that they want to see your on behaving --iran behaving likean other countries. putting so much intense pressure on iran that they had no other choice but to come back to the drawing table. where this gets interesting is where you look at the other negotiations going on beyond u.s. and iran. look no further than north korea. by the way, on kim jong-un meeting with vladimir putin later this week. you have different pressures in a difficult political chess game going on around the world.
1:38 pm
through the lens of the united nations, that is where these one-off talks with iran could pose significant challenges. that this isne is something the administration has been signaling they would do for some time, had received criticism saying it would not be possible, but ultimately today said it is possible. and caring through with this announcement. that one-year grace period to provide some window to ease back some of the volatility with an adequate care to the international oil market. shery: kevin cirilli, thank you. for more on oil, let's welcome janice henderson research analyst noah there. we have now seen gasoline futures boosted to the highest levels since october. for how long will these iran sanctions support prices? >> i think they could support them for certainly several months if not quarters. see brett go to $75 a
1:39 pm
barrel, wti, $65 a barrel. the bias for those oil prices, a comfortable range is plus or -$5 a barrel. if we break out of that rate for a sustainable period, the risk is to the upside. amanda: the opportunity could be for american producers in the shale field. we heard from halliburton today beating the upper end of expectations, saying the worst is over for pricing for the oilfield service providers. would you echo that, that this is an opportunity for some players? >> i think so. if you look at what halliburton said, they echoed the comments from schlumberger last thursday. , the worst of them appear to be behind us. that doesn't mean a pricing will rebound sharply and get that much better. in north america, with the service companies are saying is, activity seems to be responding, the outlook is for a slow grind.
1:40 pm
international markets you are seeing better response on the top line. countries are spending more. again, international pricing appears to be a bit of a slow grind. i think things are getting better but it does not appear -- if you listen to the companies that are disciplined like halliburton, schlumberger, it doesn't sound like activity is getting back to levels where they are thinking about adding incremental fleet or activity back in the field. shery: when you break down iranian exports, most of them are going to china and other asian countries. bloomberg on the showing exports going to china the most, then india, japan, and turkey. how will these countries be affected, can they get relief from u.s. shale exports? >> they could. seehe near term, if we iranian barrels, the market, there is a plan that saudi, other opec members will backfill on those. i don't think we will see a supply crunch in the near-term.
1:41 pm
what it does highlight, though, is if saudi and other opec members are bringing production back into the market, that spare capacity which is already somewhat tight, will continue to get tighter. in terms of u.s. barrels coming in, we could see a little of that. south korea was importing a very light oil from iran. possibility that u.s. production , which tends to be lighter in nature, could go to south korea and be a substitute for those iranian barrels. in the near term, i don't see any issues with those iranian barrels coming off the market for importers of the crude. amanda: of course, a reminder that there is some geopolitical and u.s. political risk in this space. how do you rank that, when investors think about it? get tooe the oil price high, the risk that the trump administration would take action to do something about that does that make this a more risky space? >> i think the risk is always
1:42 pm
inherit. any given moment you'll have large countries or producers off-line. you are seeing it now with issues in venezuela, libya. pipeline issues in nigeria. i don't know if you are going to put a geopolitical risk premium on the barrel. maybe after today a little higher. getting comfortable with geopolitical risk is something that investors in the oil and gas space, something they constantly face. finally, we have seen a iranian oil production falling. we are showing you the bars in blue. also at the same time, they were able to find buyers of their oil. we had these sanction waivers, the bar in white. its will happen to iran, economy, oil industry, if these waivers are lifted? >> it will certainly have a negative impact. we do see some cheating with
1:43 pm
sanctions, some countries may choose to just ignore the sanctions completely. say --near-term, if we iranian imports of crude oil roughly a million barrels a day right now. we could see the fall by about 400,000 in the near-term. with that coming out of their exports, it will certainly be a negative impact to their economy. amanda: we will leave it there, thank you. theng up, not year of foldable smartphone for samsung was supposed to kick off friday. but not so fast. problems found in testing means users will have to wait longer. we will discuss next. this is bloomberg. ♪
1:44 pm
1:45 pm
1:46 pm
shery: this is bloomberg markets. i'm shery ahn in new york. amanda: i'm amanda lang in toronto. samsung will delay the release of their foldable smartphone until next month. reviewers found defects in the galaxy fold. it was originally scheduled for release this friday. the flaws include some displays ripping off the phone, which is cuddling the launch. joining us is mark gurman. we heard reports of this, including you personally having some issue with this. how unsurprising is it that samsung is delaying the full launch? >> the fact that this phone got to review -- [no audio]
1:47 pm
these issues came to light. it would be catastrophic for , notng if it was consumers a small subset of reviewers discovering these serious showstopping problems with the display on the phone. they werems like finally moving on with their exploding phones in 2016. how much damage will this do to their reputation once again? is a reputation and a pr, marketing nightmare for the company. quite frankly, they should have never been announced until it was ready. it is utterly shocking to me that it has come this far without employees raising enough of an issue about this thing for the law to be postponed, before even getting into reviewers hands. the most interesting thing about this is how simple the problem is. it is literally a plastic film on top of the phone, like any other tablet. you peel it off and the damage
1:48 pm
begins. in my case, less than 48 hours from removing the plastic known, the thing was a complete lemon. history of new tech innovation is littered with things that the market did not want or need. will this fall into that category, will it be a matter of going back to the lab to figure out some small items and bring it back to market? >> this is a proof of concept prototype, something that they marketed as an actual product. if this was a good phone, good tablet, didn't have these display issues, if it was a completely working version of this idea, i think samsung would have a potential hit on its hands. tothey could get the price about half of the $2000 if it is now. i don't think it will happen for a number of years. it just feel so early. shery: they spent years developing this phone. what will be the financial impact on samsung? >> the financial impact will not
1:49 pm
come specifically from the hardware. the financial impact will come along -- the next two years, when people stop buying new samsung devices because they are losing trust in the brand, their ability to test products before they come out. i have lost confidence in this device after just a few days using it. if it came to market, consumers would lose faith in samsung as a brand as well. shery: a good thing they delayed it. thank you for that, mark. today is earth day. coming up, how climate change could swamp muni bonds. we have that story next. this is bloomberg. ♪
1:50 pm
1:51 pm
amanda: this is bloomberg markets. i'm amanda lang in toronto. shery: i'm shery ahn in new york.
1:52 pm
time for a look at the biggest business stories in the news right now. sales of previously owned homes in the u.s. fell the most since march. it fell to an annual rate of 5.2 million, down 5% from february, the fourth decline in five months. national association of realtors forecast sales will pick up this year. in china, regulators have outlined an approval process for video games after a year of scrutiny to provide more clarity for tencent and other players struggling with a crackdown in the world's largest gaming market. the chinese government has been targeting gaming addiction and other perceived social ills. inevitable cost of climate change, rising seas and extreme weather are already threatening economic on state and local government bonds. in fact, blackrock says within a decade, more than 15% of debt in the s&p in the visible bond economic on state and local government bonds. index of come from region that could suffer losses from climate
1:53 pm
change. our investors heating the warning? joining us now is daniel moran. how are muni bond investors reacting to all of this? now, muni bond investors are about doing the risk in the market, looking at which areas are most susceptible to climate change, deciding on whether or not that is a musicality or local government that they are interested in investing in. beach soldple, miami bonds last week. they sold $162 billion and included two pages worth of climate risk factors in their bond documents. they wanted to tell investors we are aware of this, it's happening, and these are the steps we are taking to mitigate it. investors are weighing those words of the government and seeing whether or not they want to invest in a 30-year bond. who knows what miami beach could look like in 30 years? amanda: or even lower manhattan.
1:54 pm
we note issuers are paying attention, are investors? we have yet to see a big muni being affected in the way that we imagine they could in the next 30 years. so interestingis about this, muni bond investors are not currently pricing in climate risk into the bond pricing. so what they are doing is looking at it, but that is not showing in the pricing they are demanding for the risk levels for different issuers. that could very well change, if there were multiple rating downgrades because of climate change. that could change if more data becomes available, investors start to become comfortable with the cup that possibility. demandow with such high for muni bonds, they are not pricing in the climate risk. amanda: of course, the real, catastrophic risk is that the municipality has to go away. in the interim, there is climate mitigation cost that could tax that economy. have you to see a bond or jurisdiction say there is a risk miami is underwater in 20 years
1:55 pm
and there is no source of revenue to back these bonds? danielle: we have not seen that yet. municipalities have been working diligently to assure investors they are mitigating the risks. but investors are also taking precautions. i heard from an investor who was interested in buying american samoa bonds, the islands in the south pacific, and was willing to go out five years. not willing to go at 20 or 30 years because of the uncertainty that climate risk presents. shery: thank you so much, danielle moran. the latest on the risks of climate change on the muni market. given all of the risks, not only miami, but we have seen hurricane maria really destroy puerto rico, not to mention superstorm sandy. we have seen lawmakers starting to act, trying to think of new measures to protect these risky areas that could flood. we have seen some of them raising money in order to protect the coastlines and so
1:56 pm
forth in all of those flood prone regions. something similar is happening in canada as well. amanda: we are seeing increasingly municipality saying with a once in a 100 year storm happening every 10 years, if you're in a flood plane, you may have to rethink it. there are homes in quebec that are flooding which are only just recovering from the flood a year-and-a-half ago. the premier of quebec saying maybe we need to move the homes. a dramatic response but maybe the way things have to go in the future. a reminder that you can catch all of our interviews on the function tv . from toronto and new york, this is bloomberg. ♪
1:57 pm
.
1:58 pm
1:59 pm
>> let's get the first word. president trump said nobody my orders a reference o special counsel robert
2:00 pm
mueller's report in which they ignored his orders. he said it during easter egg record about the mueller report. also asked whether was worried about impeachment a point amongst some democrats. his reply, not even a little bit. sri lanka's u.n. ambassador use speeds m to esponsibly because of the bombings there after the government shut down those sites country.e officials fear the spread of nflammatory content could provoke more bloodshed. t least 290 died and 500 injured. officials blame a local jihadist group. he turkish president faces rebelli rebellion in party f

138 Views

info Stream Only

Uploaded by TV Archive on