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tv   Bloomberg Surveillance  Bloomberg  May 1, 2019 4:00am-7:00am EDT

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francine: president trump pushes drastic action from the fed to boost the economy. shiny apple, the tech giants forecasts -- giant's forecasts push shares. the white house warns it is prepared to walk away from the negotiating table with china, ramping up pressure to get an agreement. ♪ welcome to "bloomberg: surveillance." i'me are your markets, looking at the ftse 100 gaining 0.3%.
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we put this alongside s&p futures because we are seeing various volume across the board. is made a first in much of europe and asia, so this is what we are looking at. we have a fed decision a little later on. mr. mnuchin, the treasury secretary saying the trump administration will continue -- inin washington d c washington dc with china. coming up, we speak to the ate-chairman of rothschild 9:30 a.m. london time. but first, let's get straight to bloomberg first word news in new york city. >> ready to walk, the signal from the white house if no deal is reached suit. -- soon. mick mulvaney saying quote the negotiations won't go on forever. this is a shift from the
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optimistic perspective. the team is in beijing and the u.s. secretary says talks will continue in washington. raising taxes on the wealthy is not the solution to inequality, n, the from ken griffi billionaire founder of citadel. saying that socialism has a track record of failure and that a generation of students are completely disillusioned. governmentg subsidies for student loans that create profound economic distortion. >> i really think that education is broken in america. fixing it has got to be a key area of focus and reform. we have got to equalize the opportunities for all americans. today, juan guaido is calling for more protests after his gamble to take control has stalled.
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the military command state loyal to the president. the u.s. reiterating support but it seems to have little effect here the day begins with maduro still firmly in control. emperor ascended to the chrysanthemum throne. it was a low-key ceremony after his father ended a three decade of rain. he inherited the royal rigali of including a sacred sward -- sword and jewels. elaborate ceremony will take place later involving heads of state from around the world. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: thanks so much. meet withlicymakers donald trump, he is pressuring the fed to meet -- to make drastic moves. he is calling upon them to make
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cuts and resume a bond purchases. he prays china for great stimulus while the fed has raised rates. cutas called for a steep 1% , saying it would help the economy take off like a rocket. here is a reminder of how trump speaks about the fed policies. >> the federal reserve is getting a little bit too cute. it's ridiculous. >> the fed is far too stringent and making a mistake. >> i am paying interest at a high rate because of our fed. up like our fed not to be so aggressive -- i would like our fed not to be so aggressive. are doing well, but it is not necessary and i think i know more than they do. >> inflation is very low. hopefully some of the fed will be raising interest rates. if you compare us to president obama, he had zero interest rate. >> we have a gentleman who likes raising interest rates in the
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fed. we have a gentleman that loves quantitative tightening in the fed. we have a gentleman who likes a very strong dollar in the fed. >> the fetish of drop rates -- the fed should drop rates. and terms of tightening, it should be quantitative easing. francine: there you go. the president who possibly wants to be a fed chair as well. ,oining us is carolyn simmonds deputy head of u.k. investment at ubs global wealth management. nice to have you. when you look at the president, how much does this hurt the fed we worry about independence, i first heard mario draghi address independence concerns. carolyn: this is not a new
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issue, is it? he has made comments several times. i seem to member there were concerns in the past. hopefully, they are still independent. we do noteing that think they will be raising rates anytime soon or cutting it. inflation is slightly below target, but not like zero inflation. we are still not that far off. economists see a trend of inflation picking up, and it hasn't. do we have any inflation? -- any explanation? caroline: this is the interesting conundrum, isn't it? growth has been ok, but inflation is a weaker element. some of that is intermingled with productivity and the wage market and competent areas nobody has gotten to --
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complicated areas nobody has gotten to the bottom of. and if you are using excess down,ty, oil is not going you got a bit of wage pressure. it should eventually go up. this is the question we are asking online, is the fed at odds with a strong job market? is there a discrepancy between what we are expecting? caroline: that is the interesting conundrum. if unemployment continues to fall, then why are we even considering rate cuts? from, thee we come fed is going to air -- to err on the side of caution. towards last year, it didn't slow some factors. factors -- itome did slow some factors.
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the dollar has implications for other asset classes. our view is that the dollar should gradually weaken over the if we get aularly continued stabilization or pickup in growth, our base case. in the last few weeks, the dollar has been stronger than anticipated but the think -- we think it will weaken over the year and allow emerging asset classes to pick up. francine: what are your favorites? caroline: we are broadly neutral, but we like global in japanese equities. francine: thank you very much. up next, iphone sales bounceback, reporting better than expected sales of its flagship device after a bruising holiday period. we talk tech and apple, this is bloomberg. ♪
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francine: economics, finance, politics, this is "bloomberg: surveillance." but get straight to your business flash. warren buffett and outing the latest twist in a takeover battle. they have disclosed plans to inject $12 billion to help fund this bombshell. the board is deciding whether to accept the unsolicited offer. the company already agreed to a lower offer from chevron. sainsbury taking a 46 million pound hit on its failed warren e latest twist in a takeover deal. the chief executive is clinging on as the grocery works through b.n the -- plan
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he earlier described it as essential for the future, but has vowed to improve the store. we spoke to the cfo. >> it was a very good deal and we were disappointed with the outcome. but the main premise was that we could invest more in price, and as you know, we have committed to invest one billion pounds across those businesses. we will continue to need to invest in the core business. ubs is reportedly telling executives in his large wealth management business to be more selective when hiring. they are thinking to cut costs following a challenging fourth-quarter. bloomberg is learning they have introduced an informal rule to only hire one back office employee when five are leaving. however, the rule is less strict for client facing staff -- cli ent-facing staff. francine: apple shares ride in
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extended trade. ipo -- i thought maybe waning, but the company is making gains, not just due to its new focus as a services company. sales are up on this time from last year for wearables like the apple watch. however, tim cook did concede there were some global headwinds. >> we did experience revenue decline in emerging markets. but we feel positive about our trajectory. performancer-year over china improved relative to the december quarter and we have seen very positive customer response to the pricing actions we have taken in that market. francine: joining us now to talk apple and the wider sector is our european technology editor simmons from ubs is still with us.
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apple is not doing that -- doing bad. >> not bad at all. what we are seeing is a strategy to increase iphone sales starting to work in showing promise for how they will be structured in the future. is notable you mentioned the services side, that's up 16% year-over-year. because if apple's avery to offer discounts on iphones by increasing the amount of existing customers will pay, that means they will have a bigger store of hardware to sell service products to. francine: discounts on iphones, what does that do to margins? >> it hurts them. [laughter] famously, the hardware margins and apple with some of the best in the business. neverctly, and they have shared away from cannibalizing its own products.
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the ipod was a huge hit and the iphone took away. it does not mind doing that if there's something to fill in the gap. and so it looks like it's , music, video games, it looks like it will fill the gap that may be left by the slightly battered margins. francine: i have two apple charts. this is the price, it is pretty in line with what the target has been. what happens to investors from here? long as they manage to keep the emerging markets in control, we heard that from tim cook just now. and as long as people actually want to be subscribing to apple services, that it should be reasonably healthy. they've got a strong product pipeline, from what we know. but it will really come down to our people going to be fatigued with a number of products
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they're now being asked to subscribe to. when you look at netflix, amazon prime of the variety of services. apple isars a month, adding more and consumers will have ask themselves which ones do i need to cut? that will be key for apple. francine: caroline, what is your take on the tech sector? earnings were not bad. caroline: we are overweight on technology. within that, we have a preference for software and services. that said, the hardware should stabilize a little bit through the year. when we have had the earnings season, there are always some high-profile messages that get some attention, but the sector is beating expectations. growth will not be as strong as it was, but it is a good sector. not as cheap as it was, but far from expensive. francine: this market cap we have been looking at, it is amazing.
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it has plateaued kind of at the back. we took the start at the end of january 2015. are we in bubble danger territory, and are there any indicators we would be? caroline: i think you need to look at the valuations, which are not particularly extended. the way we think of tech is on a diversified basis. stop by stock, you can find some extremes. but if you invest in a diversified strategy you will get a better mix. francine: what was your take on china? >> well, there was a change in the tax structure for consumers in china benefiting apple. the slight easing of certain might have had an impact on consumer confidence, allowing them to buy slightly more iphones.
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there is still a lot to be revealed. thanks so much, our european technology editor nate and caroline simmons stays with us. up next, we take a look at stocks on the move, including sainsbury, getting a boost ahead of expectations despite the collapse of their deal. at sainsbury, retailers, and u.s.-china trade. this is bloomberg. ♪
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♪ francine: this is "bloomberg:
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surveillance." let's get a check on what is moving the markets here in london. a reminder, most markets are set for this may 1 holiday. annmarie: a lot of u.k. movers and individual names, i qe, -- doubt they are higher today, part of the apple supply chain. sainsbury is also to the upside, one of the biggest gainers. they are really shrugging off that failed to take over, locking in a 46 million pounds hit for hit. markets are focusing on the fact that they have boosted profit. -- profits. eat" to the downside, jpmorgan citing some weakness in the market. in the same note, they upgraded their arrival, so a bit of --
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their rival, so a bit of weakness. the white house is warned they are ready to walk if negotiations not proceed soon, mick mulvaney warning they will not go on forever. this dampens optimism about the prospect of a deal, meanwhile, steve has described talks this week as productive. the chinese vice premier is set to travel to washington for more negotiations. caroline simmons is still with us. what exactly is priced in? we are having -- we have been expecting a deal for so long, that what happens if we don't have it? caroline: i think you are right, people are pricing in a deal. you can see the effect it had on the market last year when it looks like the trade stuff was asked collating -- escalating. if there is a deal or an escalation, i think the markets would take that badly. francine: are you expecting a
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deal? caroline: yeah, we think things will get smoother from here. we have had a lot of pushing out over the course of the year. i think there probably will be a deal, at least of isn't, we don't think there will be an escalation. francine: let me bring you to my chart, looking at volatility. this is something we have seen in the past, some net shorts coming from fewer long positions. but what does the market feel? is there enough liquidity? well, in currencies, volatility has fallen away again. if may return if some of the political event risk returns. volatility will probably stay with us on this side. this strong rally in equities. is that a precursor to the fact global growth is about to recover?
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or has it overdone at an global growth will not recover? that is probably driving some of the volatility. francine: if you are an investor, do you have to take advantage? is it a binary event, or do you hedge? caroline: we are taking the hedge approach. we have overweight positions on global equities but positions also on the s&p 500. and in does positions, you can take relatively defensive trades, for example. francine: such as? caroline: you could do a covered call strategy, so getting the premium as well as owning the stock, limiting the downside. francine: in europe, the worry about ecb policy and what happens to the euro? is that an underlying concern? caroline: i guess the dollar is more of an issue within the euro. than the euro.
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we think the euro will strengthen a little bit. in terms of the equity market, we are underweight on that at the moment, particularly against japanese equities. if the euro does strengthen, that is not particularly helpful for the equity market, but earnings dynamics aren't that great. francine: caroline, thanks so much, caroline simmons, deputy head of the investment office at ubs. up next, we will be speaking to the vice-chairman of nm rothschild. we talk oil, we talk made, this is bloomberg -- may-day this is bloomberg. ♪ alright boys, time for bed.
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listen to your mom, knuckleheads. hand em over. hand what over? video games, whatever you got. let's go. you can watch videos of people playing video games in the morning. is that everything? i can see who's online. i'm gonna sweep the sofa fort. well, look what i found. take control of your wifi with xfinity xfi. let's roll!
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now that's simple, easy, awesome. xfinity xfi gives you the speed, coverage and control you need. manage your wifi network from anywhere when you download the xfi app today. happy may day,
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everyone. a european stock markets are actually closed. this is according to a new scientific study. it was a summary. some would say it is also a little bit depressing to read that. that it was actually a good read and something a little bit different. labor says a customs union is the only option. crossing bloomberg terminal for the month of april, manufacturing pmi fell in line. let's get you a pound check if we can. there is not much of a difference when it comes to the pound because it was pretty much expected but moving a touch at 130.58. and let'som the u.k. get straight to the bloomberg first word news in new york city . soar like a rocket is
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how president trump describes the economy if the federal reserve cuts rates by a full point. that is double the reduction larry kudlow was coming -- calling for. stephen moore's chances for confirmation are now looking increasingly uncertain. robert mueller is expressing frustration over how the u.s. attorney general characterized his findings. four-pagelliam barr's note did not capture the context, nature, and substance of his work. up tensions as the attorney general prepares to testify later today about the investigation. eric schmidt is stepping down from alphabets board. he is one of the largest shareholders in the parent company. it leaves the tech giant without one of its most recognizable advocates.
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during that time, he oversaw skyrocketing revenue growth. i phoned has stabilized. big project quarterly sales that beat analyst estimates. revenue grew 16%. apple shares have surged more a 20 month low in january after iphone sales prompted the company to cut its forecast. elon musk got off easy. the new deal fails to sufficiently punish musk for not at to social media restrictions. the tesla chief avoided additional fines. global news 24 hours a day on on twitter,ictoc powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. after six months of
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protest, french president emmanuel macron has promised an answer to popular discontent. a new wave of tax cuts, the question jermaine honest this is enough to win back voters. traditional mayday demonstrations are planned across the country. for a response to the violent action. are there any real risks that these protests turned violent. -- turn violent? the yellow vests are set together this morning. we only see a few thousand here, but even though the process is not supposed to start for another three hours. we expect a few tens of thousands of people in the french capital.
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the question is how violent this will turn. these people wearing black cuts , they have been damaging, for example. 1500rench police expected anarchists at least in paris that could turn this protest and to violence later today. they are gathering quite peacefully. have to see if this will turn violent at the moment. it seems quite peaceful.
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>> what can president macron actually do? try to placate the yellow vests but was that not sufficient? i have been speaking as much as -- as much as i could to these in the yellow vests movement. we have seen some income tax cuts. vests, they want more. they want to lower the retirement age to 60. there are a few requests that they had. the mayor also mentioned that a lot of the french people outside , sixellow vests movement
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out of 10 french would like the yellow vests movement to end. thank you so much. coming up on bloomberg surveillance, the chief soaking theys that rich is not the answer to income inequality. that is coming up next. this is bloomberg. ♪
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francine: this is bloomberg surveillance. i'm francine lacqua in london. the chief executive of bp tells bloomberg that world market will be tight in 2019. bob dudley also shared his thoughts on where prices are heading. >> you can't always do it right.
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we try to do it on the fundamentals rather than the short-term reaction. the markets are tight this year, fundamentally. ise a look at what unfolding. venezuela defying economic gravity and reports of more violence in libya. these things approach fundamentals. if you look at the production growth, it is still bottlenecked . it feels kind of tight right now. your biggest worry about oil prices for the rest of 2019? >> we plan the company on $55 a barrel. i think if i worry about it short-term, not longer-term we end up with either a spike or a drop and that is not good for the world or good for planning. but i think we will be in the sphere way of 60 to 75 for 2019. talk to me about integration of bhp assets. what are you learning in terms of the u.s. shale market?
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has great assets and great people. we took over the first of march after closing so we are early into it. we have synergies that are happening very fast. we are part of the checker boarding. the old historical reason that leases are shaped like a checkerboard. it might have some consolidation or swapping, but we have a great team that has been working on natural gas in the u.s.. >> this that consolidation come sooner rather than later? is that something we see in the near term? is no need to rush you look at that big piece of geography out there.
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>> and he will try to figure out who will get the upper hand? >> you can do rationalizing and you can do swaps. companies see a lot of value in that. assetsre some other right next to where we were producing gas. and you will see us divesting to make sure that we return shareholder value. >> you anticipated my next question. how is that going? is at the pace you want? what happens next? >> no rush. the data has been open. i am surprised with the number of countries having that interest. i think it bodes well. that was bp chief
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executive bob dudley. joining us is the vice-chairman of the rothschild. thank you for giving us a little bit of your time. where do you see the oil price going? actually, the main trend. in april, we had less volatility than we'd had. the prices are slowly going up. and certainly next year as well. because the underlying phenomenon like iraq, venezuela, in the next 24 months, i believe. prices will tend to go up more than they will go down. we talked about schram
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cohen not being able to do their ipo. and then we had that subscription, oversubscribed. will we see peak oil? >> it is not the stocks. certainty and uncertainty surrounding saudi --mco, we see prices everyone thinks that in the long term, prices may start to go when peak oil will be at that moment. new energy will take place. for the next couple of years, the prices will be above $70. francine: will there be other investments? >> investments will continue. not only a u.s., but also in argentina and other countries.
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it is very competitive. francine: how incredible is it that we have this alliance between russia and saudi arabia? what about opec? will that continue? >> this alliance between saudi arabia and russia continues. struck ancountries alliance to a half years ago. remember the oil price was $30 only two years ago. is $70 is a price that satisfactory for everybody. you had reminded be that you are in venezuela for a couple of years. we were following developments very closely yesterday. pushback against mr. ido's hold onr. gua
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the country? it showed that who is in power in venezuela is actually the army. maduro is a puppet of the army. but the army is there. so the only way in which quite t win is if thegh soldiers disobey the generals. this is a difficult -- francine: this is a difficult question. how do you change the minds of the military? is it living standards were they are fed up with the regime? a difficult is it to understand the intricacies that would topple the regime as far as the military? francine: as long as the
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military has a decent life in venezuela, they will not abandon maduro. if they are under sanctions, then maybe it would be such a difficult time even for the militaries that something will happen. but i'm not expecting anything to happen in venezuela. francine: what does that mean for the oil market? >> oil production will go down and it will contribute to the hiking prices. will they ever go back to the glory days? does it take decades? decades to goe back to glory days? even if the regime unchanged tomorrow, it will take a couple of years to get back to that level of production. from nm rothschild,
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paolo stays with us. the chief executive of said a tell -- fidel says soaking the rich is not the answer to inequality. this is bloomberg. ♪
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finance, economics, and politics. this is bloomberg surveillance. billionaire founder of sydow says raising taxes against the rich is not the solution to inequality. he spoke exclusively with the bloomberg in beverly hills, california. >> if we look at the alternative to capitalism, it is socialism. we know the track record of that. failed history across cuba, across ussr, in real-time in venezuela. where you literally have chaos in the street as people who have been economically subjugated for years are struggling with starvation. starvation.
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they are not talking about career opportunities, they are talking about the basic need of putting food on the table. -- education is broken in america -- has to be a in area of focus and reform our country. we have to equalize the opportunity for americans to have a fulfilling life and a fulfilling career. choose our to careers, the freedom to buy the goods and services we want to buy. the freedom to live where we want to live. i would never want to walk away from those basic freedoms that define who we are as a country. thatme people might say education in this country is a byproduct of capitalism in as much as in a free market, the highest quality goods and services tend to go to those who can pay the most and they would point to the recent college
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admissions scandal as evidence of that. that the kids getting into the best colleges have apparent that can pay people to fraudulently in the mid-omission. >> those are exact right choice of words. fraudulently. it is fraud. all in this country believe that when somebody gets ahead by cheating someone else, they have committed a wrongdoing. the very choice of words that we we allls you how much believe in the appropriateness and necessity that people should be allowed to advance on their merit. the bigger problem is actually visit code you're born indicates too much of your opportunities. >> lack of social mobility. >> going to a broken school.
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that point.gree on >> absolutely. it has to do with the commitment of our body politics to ensure that our school leadership and are teaching community is aligned with the interests of our student. that is what we need to do. and in this day and age -- i live in chicago. i am in a city that has all the of an inner-city that faces economic and financial hardship. how do you make sure that the young men and women in that area have a longer school year? a longer school day? the sort of supplementary education that takes place to help level the playing field for these incredibly talented young people to get ahead. ken griffin there, the
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chief executive of citadel. this contrast ray dalio the said last month that we should have higher taxes on the wealthy. who is right? paolo, does the debate going on in the states resonate in europe? taxes for the rich have been higher in general. we had a discussion 10 or 15 years ago. europencrease taxes in would be significant because they are already very high. this does not really fix it. what is interesting is how we up inthe people moving and in france, the debate is around this.
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this is the so-called lower class. the system is working in such a way. education is a place where we should create an equal platform for everybody. francine: but europe is not getting that complete we write. that is why we are seeing populism. what would you change? it has been around a mobilization process that has been hitting factory workers. digitalization .hich is keeping employees if you live in a european country, you make no progress in your income. how we solve this issue is, in
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my view, around slowing globalization, for example. think you so much as always. vice chairman of nm rothschild. tom keene joins me in the next hour out of new york. we will bring you more about apple's earnings. ivesonversation with dan of wedbush securities. that is a little bit later in the hour. expect no protests across europe because the stock markets are closed. very thin trading volume today. this is bloomberg. ♪
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francine: calling for a cut. president trump pushes for
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drastic action from the fed to boost the economy ahead of today's decision. the tech giant forecast higher than extended trade and iphone demand stabilizes after a tough holiday period. in the art of the deal, the white house warns it will walk away from the negotiation table with china, ramping up pressure to get an agreement. this is bloomberg surveillance. of brexitittle bit updates. politicians are talking a little bit about it. the inside story from the labour party and they said theresa may is not going to get a brexit deal unless we go to a customs union. that will really upset half the faction in the conservative policy. francine,re right, the news flow is absolutely extraordinary. many other stories we're following, but we will spend
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time on brexit. francine: we have been us will a and boe. boe. have venezuela and viviana: juan guaido is calling on supporters to continue to rally in the streets. he says the country has a chance of a peaceful rebellion. he urged the people to join him in an uprising against president nicolas maduro. terry leaders were still standing by maduro and the street has been cleared of protesters. the u.s. is wrapping up trade talks with china. calling the discussions with the vice premier productive. inks resume next week washington but the white house warned it is willing to walk away from negotiations still by the middle of may. president donald trump is calling on the fed to take drastic moves to boost a healthy
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economy. he said the economy would soar like a rocket. fed officials are expected to leave rates unchanged. the iphone is back on track. that is the message from apple. the company's projection for revenue and the current quarter also topping estimates. they created a larger base of iphone users to buy digital services. global news 24 hours a day on-air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. let's go to the data. equity bonds, currencies, commodities. appleing to call this enthusiasm.
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the s&p up nicely. we are not on 3000 watch but we are getting there. the curve steepening. the two days of training, not bad. and the two-year yield, i will show you this in a moment. a positive u.s. yield, negative german two-year yield. francine: i am looking at in volumes in trading. u.k. stocks are open. the rest of the european stocks are not. we are seeing some technology stocks going up. but it is a holiday in much of asia and europe so it is difficult to say how the market is reacting with treasuries on the dollar kind of in a holding pattern ahead of the fed. tom: i think francine will agree with me that this is the single best chart of global central banking. the u.s. two-year yield with
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great deflation, disinflation. , and this great and germany can't get out of its way. francine: nice chart, tom. overshooting the ecb target. this is probably the chart that mario draghi looks at. moving in tandem with a spike in german inflation. this is something that we need to keep an eye on. it is all about central banks today. we will continue to talk with
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everyone on china. trade talks have been productive. mulvaney saysmick talks won't go on forever. the u.s. might decide to walk away from negotiations. tona's vice premier is set have the next round of talks. commerzbank and global bank economist. think you for joining us on this mayday. -- thank you for joining us on this mayday. what is your take on this u.s.-china relationship? will it completely unravel? hope not. if they walk away, we are in terrible trouble. it is part of a broader difficulty that china and the u.s. have. trade is a kind of symbol of
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difficulty rather than the central problem. the second-biggest economy is going -- growing rather quickly and a fundamentally different political system than that in the u.s. to 15 years ago, the u.s. you would be engaging with china that the political system will gradually morph into a liberal democracy. today, the u.s. recognizes that china was a threat to u.s. livelihood. just trump trying to up the anti-with china, it is the entirety of congress. so i think it has been great to have a trade deal but the trade deal in itself is not the only thing that guarantees we have a wonderful flourishing relationship with the two superpowers. francine: do you agree? >> absolutely. this is a much bigger problem. if we bring it back to economics for a minute, i think it is
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incumbent on signing a deal. going back to a broader problem. if it breaks down, this is on trade. and you keep this from spilling out into the open. tom: i think we have to use a and it is losing control. through talks don't go as planned, will be the effect ?n the market >> markets have been remarkably complacent. if recent things don't turn out as planned, i think we can expect a significant rebound.
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equities, currencies, and repricing the bond market. the control is very simple. if we don't reach a deal, as long as we can keep talking and continue to give the impression that we will get somewhere with this, markets can remain fairly contained. we fooling ourselves? are we losing control on the arch discussion with china? >> it will increase tensions with the u.s. and china. the world divides into separate blocks. orwell's 1984rge where they describe that east asia. we see the developing in the currently. there are rivals and political systems. seen the u.s.-china
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spat. their economies have done ok. it is rather than by the americans or the chinese themselves. does that underlying mistrust actually lead to worse economic outcomes? yes. if you have a situation where nations work with each other and companies can work with each other, money can flow across borders -- you tend to have a bigger economic pie. i see them shift away from globalist politics. people have forgotten the lessons of the 1920's and 30's where we know isolation leads to very economic outcomes.
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francine: commerzbank will be staying with us. we understand the heathrow third runway plan has been backed by u.k. judges. this is led to a lot of media coverage in the last three to four years when it comes to the third runway with boris johnson. when he was mayor of london back then, that it would never happen under him. making sure he was on a trip abroad because it became embarrassing that he had to go through it. the high court has ruled on the legal challenge. there are a lot of activists. tom: this goes to the $2 trillion discussion. i know at jfk, they are only working one runway half the time.
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it sound like a good idea. we have much more coming up. the news flow is extraordinary. tom keene in the economic team will be there to cover every nuance of chairman powell's afternoon. 2:00 p.m., looking forward to that. stay with us. this is bloomberg. ♪
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viviana: this is bloomberg surveillance. let's get to the bloomberg business flash. it begin with an exclusive. the ipo for uber is oversubscribed. demand is reportedly focused on
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the lower end of uber's targeted price range. that would be close to $7.9 .illion china is taking steps to open the financial industry to the world. limits onll remove ownership and local banks and is also scrapping size requirements. overseas insurance companies are given greater access as the u.s. and china resume trade talks. and getting some breathing space. posting better-than-expected profit after the collapse of the -- lanllion deal to buy be is to invest in improving stores. company executives are still disappointed that antitrust regulators did not approve the deal. a we were told it would be good deal and we are disappointed with the process.
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price andest more in we invested more than one billion pounds across all of those businesses. we will need to continue to invest in price and the core business. and as the bloomberg business flash. tom: apple caused a fair amount tonight and they trotted out a wide set of eagerly awaited numbers. at oneeditorialize 5% up point. our bloomberg technology editor reporter in london as well knows how to use the setting mode on an iphone. product, product, product. i noticed that they came out with some capital moves. they raised the dividend. the dividend doubled in six years. screening bad news on the product side.
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>> i will be honest with you. the stock has improved with people happy about what happened. and i think that dividend raise came from the fact that the services side of apples is this is doing so well. get to before we even video games subscription. >> it is oprah, jennifer, and francine lacqua is how a phrase that on bloomberg when we look at tv plus. when i look at apple and i look at the finances, it is 50% revenue iphone. maybe someday, services would be bigger. visit amazon like.
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>> apple still wants people to visit on its own products. services.l i know apple tv is coming to some other products. it opens up the pockets. this will be the apple's for these services. there is lots to go. francine: will they have to continue lowering prices? >> at on big that they will have to continue lowering prices too far. there is still many of apple's key markets where it doesn't need to compete on price apple has ever wanted to compete on price.
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we look at the ipod this is relegated to a memory because apple has taken over. it will be a long road. the services can cannibalize some of the margin. think it can be confident for the for siebel future. seeable future. francine: how are they moving in china? >> there is still a lot of room to go there and china's local companies, huawei in particular doing well. it is going a little bit more consumer confidence that has benefited apple. it is still a very tough market
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and china is one of those emerging markets. i think those of the areas that they want to watch. on: they give are bracing us apple in london. i am thrilled to bring you a conversation later. a grizzled veteran of the hoax, promises, the realities within technology. and i've's on apple and will give away the highlights. he is a bit enthused. he will be with us at 6:00 a.m.. this is bloomberg. ♪
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tom: losing control of bloomberg surveillance. talk about the fed and not the wall of other news. peter dixon from commerzbank and stephen king, hsbc senior economic adviser. michael mckee showed me this chart yesterday. this is the odds of the october meeting being a rate cut. no. it yes. boom. march. down. yes again. where is the modeling coming from. >> some people are thinking if it is demanding it.
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of the first quarter data, the real numbers, the gdp numbers were stronger than expected. you can just about justify the idea that the fed should be thinking about cutting later this year. if you have low rates and simply focus on inflation alone, you will end up in the realms of financial instability. in fact, central banks have increasingly thought about this. what can be worrying is the chances the e-cig nala rate cut and the equity market roars away the chances that there would be a rate cut and the equity market roars away. francine: let me bring you to another market. we are seeing the fed possibly seeing the interest rate.
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>> you would think so, but the labor markets are a lagging indicator indy way -- anyway. the economy will turn down and the fed will presume to be in that spot. it does look for the moment. that is what president trump once. is pressure on the fed clearly rising. francine: do you agree? >> a think it is a decoupling. the fed will engineer a soft landing and it will be a steady growth of 2.5%. unemployment is hovering about 3.8%. it is cyclical for the economy. point is reached, the
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argument about having rate cuts strikes me as being a little bit odd unless something goes wrong with the economy between now and then. francine: stephen king and peter dixon, stay with us. it is made a in paris -- mayday in paris. we will have plenty more from paris and throughout europe. we have thin volumes because a lot of the stock markets are closed for the day. that is why apple is getting so much attention. hear from steven mnuchin, the treasury secretary secretary calling the latest round of chinese trade talks productive. this is bloomberg. ♪
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♪ "surveillance," on fed day from london and new york. terrific news flow this morning. viviana: president is preparing
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to designate the muslim foreignood as a terrorist organization, leading to economic and travel sanctions -- asked him to make the designation. special counsel robert mueller is unhappy with the way attorney general william barr described his findings on president trump and obstruction of justice. after heontacted barr issued a letter summarizing his report on russian interference, saying his report lacked contacts -- context. the new emperor in japan ascended the throne a day after his father abdicated. there will be a more extravagant
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celebration in october. his role is purely symbolic and he has no political power. -- british prime minister theresa may facing questions about her brexit strategy in public and private sessions before members of parliament. they will meet with selected members of her cabinet to discuss where things go next. may wants talks with the opposition party about a compromise to be wrapped up next week. anritish court rejecting attempt to block construction on a third runway at london's heathrow airport. they say they need the extra runway to compete with rival hubs trying to steal its traffic . environmental groups are filing a series of lawsuits. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more
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than 120 countries. hurtado.ana this is bloomberg. francine: after almost six months of protest, the french president has promised an answer to popular discontent, announcing a new wave of tax cuts as part as a 5 billion euro package. may day demonstrations are planned across the country and macron is calling for "an extremely firm response" to any violence. paris, great to have you. what we have seen from the protests and the yellow vests, are the protests today likely to turn violent? we are notoment, seeing any violence, but this is just the beginning. these protests are supposed to start in about two hours and a half. they have a few thousand yellow
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vests joining the protests. long as iotests as can remember, but this is different. the yellow vests have been calling for a convergence of the fight with the union and the danger of course is whether anarchy radicals join the movement. the police are expecting at least 1500 black bloods to come ,o paris, wearing black masks later in the day. tom: would you assume off of mayday there is momentum and inertia for further protests into the weekend? caroline: clearly, last saturday, we have seen about 25,000 yellow vests across the country, all trying to wait to
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come today for mayday. they wanted to save their energy. people outside paris decided to converge in paris to make this mayday historical. askingin paris have been shops and restaurants to barricade themselves. all of the shops and restaurants along the protest march are closed. we are already seeing a few police trying to protect the sites. hopefully, we will avoid violence later today. francine: thank you so much. she joins us from paris. still with us are stephen and peter dixon. with the to the unrest yellow vests movement and the discontent which means they are losing out to populist views. how is europe coping?
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stephen: there is a division between globalist and isolationists across europe. communities are communities that have a tendency to support populist, relatively easy answers. macron as an arch globalist who believes strongly in connections with countries around the world, but if you are a french nationalist and think you are protecting yourself, you have a clash. this is not just in france. if you think of the rise of left wing, right wing populist parties across the whole of europe. vox party in spain. something has changed. it is a sense that somehow the centrist political view that i
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would adhere to and others would, is not something that has worked for other people, who are looking for alternative views. in the u.k., the conservative ofty has a majority brexiteers that are suspicious of anything europe. the labour party does not want a second referendum because perhaps you could build a socialist utopia behind closed doors. from the left and the right, you have a new conviction that isolationism and nationalism and blaming somebody else for your troubles. francine: re: underestimating the impact this could -- are we underestimating the impact this could have in five years? peter: the protests started because mr. macron wanted to rise -- raise taxes.
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he has been forced to back down, as we have seen. the policy is to impose tax giveaways. i suspect that many of these issues facing europe require more cooperation, and something that macron has proposed could run into the sand if the nationalist agenda gets in the way. we are potentially looking at a fragmentation of policy. king, to spin on the word "fragmentation," are central bankers at fault if they are summarizing and using the aggregate in data and theory, or theyciety so fractured have to look at cohorts and subsets in every analysis? stephen: central banks are at fault because they try to do what they can do with their limited tools at their disposal.
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that has a countrywide or regionwide effect. you have seen regional disparities and many come trees in europe over the left -- countries in europe. in london, there have been tremendous gains in income in the last 20 years. elsewhere, you have a different experience. the pattern of brexit voting versus remain voting, a lot of the brexiteers came from parts of the u.k. that were left behind and the remain came from urban centers that have flourished. there is a sense that nations themselves are becoming underpinned, unstuck. are seeinguence, you a rival of these populist, isolationist movements. they are thinking about some of the issues that people who have
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left -- who have been left behind are worrying about. tom: peter dixon and stephen king, great conversation on the fed. many things to talk about. we have the brexit discussion. it is happening. fed, scott miner will join from guggenheim and we are thrilled to bring the former president of the minneapolis fed with a blistering bloomberg piece on the history of the fed. stay with us, this is bloomberg. ♪
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♪ this as surveillance,"
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taman francine from london and new york. -- tom and francine from london and new york. theresa may in public and private meetings today as she runs out of possible moves. talks with the labour party have been going for a month without a breakthrough. still with us are peter dixon and stephen king. studio -- according to ray new scientific find -- according to a new scientific find, theresa may is the most evasive leader in the u.k. we see the three books you put on your twitter page. if you had to write a book on brexit, what would you call it? despair" would be
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one and "i wish i was not british" would be another one. it is a collective act of self-harm for britain, a remarkable thing. the question was far too simplistic when asked. no one discussed the terms of departure and that was the weird situation, trying to get something through parliament, we will end up with a compromise much for the brexiteers and much different than we want -- they want. what is the way forward? we are trying to figure it out with one of our main reporters yesterday if there was a leadership challenge. there was one, and theresa may is still in power, and if we would see a pro brexit prime minister,. i am not sure it changes
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the domestic dynamics. whoever is the next prime minister will have to feel confident in their position if they push for an election. be how itroblem would changes negotiations with the rest of the e.u., because on the assumption that if a new prime minister was in place, the fact that brexit has not been delivered, you will find a situation where european leaders are faced with the possibility of a boris johnson who do they -- who they do not trust, or another pro brexit prime minister who is difficult to work with. king, tell me about this new party. there seems to be a middle ground. we were talking on the brake about the middle ground. in the united states, we
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have people exiting on both sides, i cannot remember what it is called. stephen: change u.k. tom: does it really have legs? can it move forward? stephen: it is difficult to tell. one of the awkward issues that has cropped up as we have european parliamentary elections that britain has to take part in. age has formed a new brexit party which according to opinion polls, is doing incredibly well, whereas change u.k. has done less well. one reason is change u.k. is not the only party in favor of remaining, and change u.k. is not working closely to have joint candidates. the remain vote is split whereas the brexit vote is defined.
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coappears that farage and have taken votes away from the opposition. he will say, i am still a winner. francine: do they need to change their name? thinge rafael saying one that unites them as brexit -- is brexit and they have the brexit party. peter: a name like the anti-brexit party will put people off as well. the point about change u.k. is to try to change the dynamic of the political debate. problems, theye are generally appealing to a wider audience. francine: theresa may will face questions about her brexit strategy in her weekly prime minister's questions session. this is bloomberg.
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this is bloomberg "surveillance." wants more money to manage. they hope to raise another billion dollars. the firm attracted $5 billion last year and he returned to the business after a ban after his future firm pleaded guilty. main fund capital's .eturned 6.6% last month according to an investor, and is now up almost 19% for the year. greenlight has long positions in general motors and bright line financial. the billionaire find -- founder of citadel said it is not
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capitalism that has broken the united states. >> i think fixing education, education is broken and america, has got to be a key area focused and reformed. we have to equalize the opportunity for all americans to have a fulfilling life and fulfilling career. viviana: that is the bloomberg business flash. tom: there is a bit of danger to it, and a hectic day yesterday on venezuela. , and within that is a single sentence that we go to. story of our wonderful wonderful events, we call it bazaar. why was it bazaar in caracas? rosalind: it appeared at first that juan guaido came out and said the military was behind him
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, this was the moment of uprising. as the day wore on, it became apparent he had not swung the military behind him and was not able to gain entry to a second tier airbase in caracas, and ended up in a park nearby rallying people onto the street. the claims he made initially fizzled out. did he believe he had the military behind him? was he assured he had the military behind him? did the u.s. shore him they were behind him? what happened during the day? or did he astray overestimate support? the question is whether people will come out and support him today. it all centers back to cuba. how theazing to me
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president tweets on cuba, the president of cuba calls it a coup movement. what is the relationship of cuba, the castro family, and mr. maduro? rosalind: there is a sympathetic relationship that goes back for a long period of time. maduro and before that, chavez regime to the types of administrations we have seen in cuba, and the allegation is that cuba has up to 25,000 troops in venezuela supporting maduro. ,hat is something cuba denies saying they have humanitarian workers there and that is it. donald trump is training his attention on cuba, threatening a trade embargo unless they pull those troops out.
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the relationship between cuba and venezuela runs deep and goes back many years prior to the trump administration. francine: what do you make of the claims from mr. pompeo that nicolas maduro tried to escape to cuba but that was denied from venezuela? do we know anything about russia involvement? rosalind: the russians have come saying itnied that, is ludicrous that they convinced nicolas maduro to not get on a plane. that is not true at all. russia has long-standing commitments to the ventura regime financially and other -- maduro regime financially and otherwise, and have supported him for many years. signals are coming at is not just about money for russia. there is a fundamental level of support. whether that extends to them telling him not to get on a
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plane, with so many rumors and wild claims spreading around, it is difficult to tell. it is clear the russians are doubling down on their support for nicolas maduro. francine: thank you so much. king with us is stephen and peter dixon. let me bring you to my hyperinflation chart in venezuela. we like this gauge but it is not as conventional as the consumer index. crazy, 200,000 percent increase in the past six months. how do the venezuelans do it? peter: what that chart is demonstrating is the limit of people's tolerance. people who have not gotten to that point will say enough is enough. thechart basically suggests
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government is incapable of looking after the interest of its people and when you get to that stage, it is only a matter of time before the state collapses. as we heard yesterday, a lot of things have to happen before we get to the end game. king and peter dixon, thank you. tremendous news flow, including the discussion on the fed at 2:00 p.m. today. she has been quoted worldwide in the last 24 hours on south america, latin america, venezuela, and cuba -- shannon o'neil. this is bloomberg. ♪
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like never before store. the xfinity store is here. and it's simple, easy, awesome. ♪ tom: this morning, it is fed day. the two year yield grinds ever
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lower. screen says there is a 50% chance of a rate cut in the september meeting. the president says to cut rates to 1%. mall veiny and milk in in l.a. in l.a.ney and milken lighthizer tenues talks with the chinese. threatenstrump "highest level sanctions" if venezuela in a non-coup. i am confused. me francinene, with lacqua. i have never seen a fed day when there is more other major stories than this one. francine: if you are a market participant, you want to make
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sure you get your fed call and dollar call right. brexit,that is venezuela, and the banks. it is made day across the world, but across -- may day across the world, but across europe markets are closed. tom: with your first word news, here is viviana hurtado. venezuela, juan guaido is calling on supporters to continue to rally in the streets, saying they have a chance of a peaceful rebellion. yesterday he urged the venezuelan people to join him in an uprising. hours later, military leaders were standing by maduro. the u.s. wrapping up the rate is -- latest round of trade talks with china. talks resume next week in washington.
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the white house warned it is willing to walk away from the negotiations. trump callingld on the fed to take drastic moves to boost a healthy economy. he says the economy would soar "like a rocket" if the central bank cut interest rates by a full percentage point. fed officials are expected to keep their rate unchanged. trade-ins and discounts have the iphone back on track. the tech giant reporting better than expected sales in the fiscal second quarter. projections for revenue are also topping estimates. they created a larger base of iphone users to buy digital services. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
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i am viviana hurtado. this is bloomberg. tom: marco -- mark gurman and shira ovide outstanding coverage yesterday. we will have much more on that. dan ives of wedbush will join us, long on apple. let's call it an apple left, update on the -- lift an update on the s&p. the dow steepening, euro steepening. am i allowed to say this? the dollar is steeper. the vix showing a bowl market. yields, i will show a chart on that and a second because we can do that. francine: we can do anything at bloomberg "surveillance," even on a day where we have thin trading in europe where a lot of
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the stock markets are closed, because the ftse is open ready much unchanged. i have a chart looking at vix throughout the last eight months, and it is not where it used to be at the same time last year. tom: here is the international debate around the fed meeting. the u.s., german to year yield. a great disinflation we saw over the years, reunification, pick then in 1990, 1991, and down we go. two two between the year yields limits the degrees of freedom for chairman powell. francine: apple executives had a clear message for investors -- the iphone is back and has begun to recover after a bruising holiday period. the share price compared to the
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target, the target is in blue and the share price is in white. wall street had grown increasingly skeptical of apple gains but that may change after earnings yesterday. tom: let's look at washington. , erik schatzker, and team are out at the milken institute. >> when someone asks, how long will the negotiation go on, i do not have a specific answer. it will not go on forever. at some points you realize you are close to somewhere and at other points you realize you are getting nowhere. tom: joining us in washington is kevin cirilli. veiny,s kudlow, mall mnuchin -- mulvaney, mnuchin, lighthizer.
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kevin: in terms of the timeline, they are all saying the same thing. tom: mole veiny is saying the same thing as mnuchin -- mulvaney is saying the same thing as mnuchin? trade they say negotiations are on their last lap, and in the next couple of weeks was the time period. to havedent trump wants a one-off meeting with president xi jinping they have to do it sometime in may or june. it would appear with mr. mnuchin and bob lighthizer in beijing this week, they are laying the groundwork. tom: what will they shake hands on if president trump gets his agreement? is it a treaty, an agreement? kevin: a framework. tom: what is a framework? is it done on a cocktail napkin?
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kevin: a little more elaborate, but precisely to your point, this will not be a treaty. at will not need congressional ratification so it will just be a framework of what they would agree to, particularly on the area of enforcement. that has been holding these conversations up, how will the u.s. guarantee china is making do on their process? , the architect nationalist of the trump administration who has since the saintlast week at regis in manhattan said he believes the u.s. business community is echoing what china wants by rallying against tariffs. francine: when you look at the clear in language, it is the trump administration after three to four months of positive, encouraging news is
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making note of its inpatients. does that work -- inpatients. patience. does that work with china? kevin: a lot of folks in the notionouse agree on the that the u.s. has the upper hand , given china's economic data. i would note that president trump in the last two days has attacked the central bank by alluding to china and saying the fed should change its policy because china is changing there's. -- theirs. tom: let me segue and get ahead of the sunday talk shows. why does mr. barr, the president, why do they fear mr. mueller appearing before congress? kevin: he is an unknown. the administration likes to
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control what they can control. in terms of what republicans are saying on capitol hill, many republicans want to hear from bob mueller. pulling suggests both republicans and democrats want to hear that testimony come forward. francine: what kind of testimony will we be hearing? kevin: in terms of barr's testimony, you will hear intense questionings as to why he released the four-page report, the timeline, whether he consulted the administration, whether he believes there was obstruction of justice. there was a lot of mincing of words. look for the obstruction of justice issue. look for democrats to continue down this line of an open debate of whether or not to begin impeachment proceedings. that is the debate republicans want to have.
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there was a remarkable display at the white house yesterday with special counsel counsel to the president kellyanne conway taking questions for 30 minutes with one person in line, vice president joe biden. francine: thank you, kevin cirilli, from washington. a clear message from apple -- demand for iphones has come back. >> there is an improved trade dialogue between the u.s. and china, and from our point of view, this has affected consumer confidence on the ground in a positive way. ♪
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♪ >> i think the fed has gone
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crazy. the federal reserve is getting a little too cute. it is ridiculous what they are doing. the fed is far too stringent they are making a mistake. i am paying interest at a high rate because of our fed and i would like our fed not to be so aggressive, because they are making a big mistake. despite that we are doing very well, it is not necessary, in my opinion, and i know better than they do. inflation is very low. hopefully the fed will not be raising interest rates. president obama had zero interest rates. anyone can have zero interest rates. we have a gentleman who likes raising interest rates in the fed. we have a gentleman that loves quantitative tightening in the fed. we have a gentleman that likes a strong dollar in the fed. the fed should drop rates.
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i think they really slowed us down. there is no inflation. in terms of quantitative tightening, as should be quantitative easing now. tom: absolutely superb video collection of the president, done by our team. i appreciate the many comments by the president. he got out and active last night . i was waiting for tweets on venezuela. we got that on cuba. "china is adding great stimulus to their economy. our fed has lifted interest rates even though inflation is very low, and instituted a very big dose of quantitative tightening." we thought we would get someone in what the most prestigious dorm in u.s. economics. in uva, she was a one resident.
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.ori calvasina for our global audience, explain the privilege, every parent in their amerco wants their daughter to be you. it is a collection of individuals from around the university who have been invested in the university, tried to make it a better place, excelled. tom: so you get to sit on the famed lawn. it is like magic, like being at disneyland. fabulous. lori: you will often see students running around and their bathrobes. tom: let us get to the fed. thomas jefferson, my guess is, what agree with the president that low interest rates are good. lori: i think they would probably be on slightly different pages.
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i imagine thomas jefferson would respect the independence of the fed, and the tactics we are hearing could potentially rattle investors. equity investors want an independent fed. tom: let's go to the october meeting. this is the october meeting 54% likelihoode of a fed rate cut, just above the 50% line. the market is nudging toward the president's view. how will equities do with a rate cut? lori: just to be clear, i am not in that camp, but i think you would see multiple expansion beyond what we have seen, and it would be a risk on environment. that has been ceding animal spirits in the last few months. francine: going back to fed independence, equity markets want fed independence. is there a concern they are not?
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i hear people coming on saying, president trump can say what they want -- what he wants and they will not be swayed, and others say the market is pricing it in. market,think the equity a fair contingent of people want to cut. about two thirds of investors thought the cut would be the next move, but they won it for the right reasons. -- want it for the right reasons. rbc.lori calvasina with 2:00 p.m. this afternoon, scarlet fu leading the coverage. i saw her walk out yesterday with a binder this thick. the fed decides at 2:00 p.m. this is bloomberg. ♪
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♪ viviana: this is bloomberg "surveillance." we have got a bloomberg exclusive, the uber ipo was said to be oversubscribed days after the ride-hailing service began marketing the sale. demand focused on the lower end of the targeted price range, putting the amount raised close to $7.9 billion.
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china is taking another step to open a 44 trillion dollar financial industry to the world, removing limits on ownerships of banks and size requirements of foreign businesses in china. all this happening as the u.s. and china resumed trade talks. in the u.k., sainsbury getting some breathing space, posting better than expected profit deal.a $9.5 billion they say they will invest in improving their stores. company executives are disappointed antitrust regulators did not approve the deal. >> we thought it would be a good deal and we were disappointed with the outcome of the cma process. the main premise of our deal is we can invest more in price across all of those businesses.
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we will need to continue to invest in price in the core business. viviana: that is the bloomberg business flash. tom: let's look at a chart. day. may 1, may let's look at last year. so away and go away. that worked until october. wasber, through december even uglier. do i govasina with us, to cash? lori: re-think the risks of a pullback or -- we think the risks of a pullback have increased. if you are a short-term trader, enjoy the ride. if you are long-term, lock in some gains. participantsody of watching the show have not enjoyed up 17%. lori: just because they have not
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enjoyed it yet does not mean that can take markets higher. we have been getting questions about cash sitting on the sidelines, and we found there is not that much. if you look at global and domestic equity funds, cash levels were low. thoseallocation funds, who do stocks, bonds, and cash, they raised money and the third quarter but worked a lot of it down in the first quarter. francine: what you are telling us is investors are keen to invest in the market. is anything holding them back? visibility is a little difficult in the next 10 to 12 months. be more intoems to focus, and if you look at gdp forecasts, you are still around 1.9% in terms of what consensus is looking for.
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that is a choppy environment for equities, so there is nervousness looking out longer-term on the economic trajectory. as we have gone through earnings , there is an element of earnings having been very manufactured. i feel that companies have been throwing everything but the kitchen sink at their numbers. we have been seeing commentary about layoffs, and tax coming down a little bit. there might be a low-quality aspect to this reporting season. we have had noise out of companies that look deep into the guts of the economy like transport and semiconductors. they say things are not so great so there are some doubts. francine: where do you see value? lori: we think the energy sector has a lot of value. you cannot invest in that space if you do not have a strong stomach, but things look very
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good. financials have started to work. we are starting to unlock value in the health care sector. you can noble at the providers and services. tom: we will dive into apple in just a bit. she is with rbc capital markets. protests, we talked to caroline protestsd paris, increased in a modest way. in tokyo, they greet a new emperor. this is bloomberg. ♪
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♪ francine: this is bloomberg "surveillance," tom and francine from london and new york. let's get straight to the bloomberg first word news.
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viviana: president trump is preparing to designate the muslim brotherhood as a foreign terrorist organization. that would lead to economic and travel sanctions. asked president trump to make the designation, the muslim brotherhood winning elections in egypt after the arab spring uprising but was ousted. robert mueller is reportedly unhappy with the way attorney general william barr described his report on president trump and the obstruction of justice. mueller contacted barr after his summarization. mueller writing saying his letter lacked context and created confusion. the reign of the new emperor emperor hasnese
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begun. there will be a more extravagant celebration in october. the role is purely symbolic with no political power. the first task will be to host president trump at a banquet. theresa may facing questions about her brexit strategy in public and private sessions for members of parliament. she will meet with selected members of her cabinet to discuss where things go next. thewants talks with opposition labor party about a compromise to be wrapped up next week. a british court blocking an block the construction of a runway at heathrow airport. environmental groups filed a series of lawsuits. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
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i am viviana hurtado. this is bloomberg. to do atthing we try bloomberg "surveillance" as go beneath headline data. we do that with fed day and with apple. let's talk about the stock as a financial investment. , andcalvasina is with us we are thrilled to bring in daniel ives of wedbush. 225.ent up to what is your five-year vision? daniel: new highs will be made in the coming months, and if they continue to execute and the services business gets more streak read, the stock could go to 240, 250. tom: they do 60 billion a year in free cash flow.
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this is the chart nobody knows about, the privatization of at 6.5 billion shares, it is a linear function like until. will they private size apple -- privatize apple? daniel: you have the massive buybacks and dividends, but i think m&a. historically, the biggest deal they have done is beats 2014. we think deals on the content side will be coming over the next six months. that is what investors will focus on. francine: how well the iphones perform in china? daniel: china has been a disaster if you look at it. this quarter was nothing to write home about, but you saw a rebound in the last few weeks. the price cuts have really started to happen and they got
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it stronger for the june quarter. that is the focus. while the stock is up today, a is york city cabdriver -- it a jaw dropper, about the iphone demand starting to peak bank -- peek out. 70 million to iphones coming up for an upgrade in china. francine: how is services doing? well it be a linchpin for apple going forward? nothe costs, they are worried about cannibalizing their businesses. daniel: it is all about putting a fence around the backyard. 900 million active iphones. business on a standalone basis is worth $400
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billion, $450 billion. you are starting to see the stock get re-rated. tom: i get that. beservices sunday at will 68% of this entire pie, but what is the run rate that you see out? institutional shareholders, the sovereign wealth fund to at the margin needs to buy more shares. what is your cell on services out five or 10 years? aws cloudon like, like, or is there a limit to the ecosystem? daniel: i will compare it to aws and amazon in terms of services, because that is only 15% penetrated. you are talking about a $50 billion revenue stream and over the course could be $75 billion. tom: what is you are some of apple, if they spun off
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services? people think bezos should spin off aws. daniel: $450 billion. tom: and terms of a share? daniel: on a share basis, we call it about $100. elsei am buying everything -- this is really important -- i am buying everything else at his price target for $125 per share, and company after company including anadarko we see this. lori: i have to say, if i could weigh in on the hardware space, what i like is this is not a crowded overvalued part of technology. tom: what is the multiple 12 months forward? daniel: it has basically trimmed about 30% discount to the group. tom: francine?
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francine: if you look at the tech space, what looks overvalued? you look at how extended hedge funds have been and how extended valuations have isn, i would say timt trading on our model at last year's highs, but it is very lumpy. sammy's look fairly valued. s look fairly valued. there is not a ton of value. francine: a chart looking at the faang valuation, i have it. this comes back to what you are saying. we had a leg lower with a correction a couple of months ago but it is flattening out. do we need to take pressure off the valuations? lori: i would be taking profit in the timt space.
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the valuations -- tom: do you agree? daniel: i think faang names are going higher. wrong?y is lori daniel: fundamentally, you need growth and any investor who is not choosing growth in the next six to nine months will be redoing their resume at the end of the year. tom: we are extrapolating out future revenue growth. if you take a given 20% number, do you automatically take it down to 10% or 7%? in software. lori: one of my big gripes with software is that the fundamental , longer-term secular growth story is well understood, and i do not believe there is anything as secular growth. tom: you will set a higher revenue stream.
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daniel: it is cloud computing with 50% moving to the cloud. the biggest secular theme i have seen now is in the cloud. nirvana. not in can you guys disagree on fed? lori: i think the fed should not do anything this year. daniel: i agree. tom: they agree to disagree on the run rate and extrapolate out. brilliant on apple and the view forward for technology. yesterdaydley writing , at the university of rochester, and he leads our great fed coverage into the 2:00 p.m. meeting. this is bloomberg. ♪
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♪ viviana: this is bloomberg "surveillance." billionaire hedge fund investors money toen wants more manage. they hope to raise another billion dollars. last year, the firm attracted $5 billion. he returned to the industry after a five-year ban. he was not charged. david einhorn's hedge fund rebounding. greenlight capital made a return of 6.6%. it is now up almost 19% for the year. green light has long positions in general motors and bright house financial.
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the billionaire founder of citadels says it is not capitalism that is broken in america, ken griffin speaking at the global conference. education,fixing because education is broken in america, has got to be a key area of focus for our country. we have got to equalize the opportunity for all americans to have a chance to have a fulfilling life and career. viviana: that is the bloomberg business flash. tom: with us, daniel ives of wedbush. lori calvasina with our single best chart. there is no other thing to say then it is may day. may all along the bits and chart. this is the dow. you have to be in the market to play. lori: you have to be in short-term, but year end we are setting up for volatility.
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if you care about the next six to 12 months, i would start using incremental strength. francine: how do you break it down by country or region, and does that go to dollar strength? everything you do is underpinned by the fed. lori: we focus mostly on the the, we are sensing overvaluation and over ownership problem in the u.s. as lingering. there is tremendous value in europe. what we actually saw, and i mentioned earlier how asset allocation funds were working down there cash and putting it in nine u.s. equities. equities.- non-us we think the appetite outside the u.s. is building. tom: we can speak with daniel others.ut lyft and
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what is the difference in this hope and fear of the rubber chicken circuit? daniel: the banner names. if you look in tech, who bert -- pinterest, the business models, more formidable subscription models and that is the difference from an investor perspective. tom: megan mcardle writing today a the washington post scathing about the profitability of some of these companies. you and i have seen this before, the extrapolation. by siliconipulated valley and their bankers? is it manipulated by small share amounts coming out and the hype about profitability x number of years out? daniel: i don't believe so. back, amazon
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changed tech investing forever. so many investors in terms of criticism, profitability, and they missed the amazon move. in terms of what profitability is focused over the coming years , investors from a tech perspective focus on growth. profitability needs to come and that has been an issue, but it comes down to the vision and growth fueling the engine. if you look at the last five to 10 years, what these tech companies have been able to do, that has changed a whole game for tech investors going forward. francine: are there too many ipos in the tech space? daniel: it is based on supply and demand. when you see names like pinterest and zoom, i think investors are speaking with their money. if you look at a fear years ago with some of the issues with --
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few years ago with some of the that is onesnap, that should never have come out, like blue apron. investors salivating because of the business models and because of the secular themes -- cloud, ridesharing. these are game changing themes that public investors want to own. tom: daniel ives, thank you so much, and lori calvasina. coming up, the defendant of expert on venezuela -- definitive expert on venezuela and the linkage to cuba, shannon o'neil. this is bloomberg. ♪
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♪ bloomberg "surveillance," tom and francine from london and new york. estee lauder raising for guidance on earnings-per-share, and beat estimates, $1.55 as opposed to the $1.30 we were
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expecting. we saw similar encouraging news from l'oreal. estee lauder raising its full-year guidance. let's talk venezuela. opposition leader juan guaido is calling for a revolution. yesterday, he urged the venezuelan people to join him against president nicolas maduro. hours later, military leaders were standing by maduro and the streets were cleared of protesters. joining us is shannon o'neil. how much of a setback is it for juan guaido? shannon: this is a big setback. yesterday was a gambit by the opposition, by the united states, and others who have backed juan guaido. they started in the morning in front of an air force base, calling for people to break away
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slepthe regime and maduro in the national palace. he seemed to be firmly in control as of this morning. francine: do we understand he thought he had the military behind him and they did not go behind him at the last minute? do we have an indication of why this happened? manyon: stories came out, by u.s. government officials, that there was a deal happening in the back room. john bolton said three of maduro's inner circle where turning and would join the opposition, that proved not to be the case. secretary pompeo said at one point yesterday maduro was on a plane but the russians convinced him to turn around. we know as we wake up this inning, maduro is still control, military brass is still
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--ind him," juan guaido behind him, and juan guaido is free but not saying where he is. tom: your book on mexico is just superb, and your work has always expanded out to the caribbean sphere, down to venezuela and over to cuba. hours we have seen the president of cuba make it clear this was a "coup president and the trump will put in draconian sanctions on cuba. will they step back? shannon: the administration has opt the anti--- upped the ante against cuba. harsher sanctions, i would not be surprised.
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other administrations are very anti-cuba already. tom: is that what this is really about? this is important for our global audience, it is about south florida. marco rubio was with us yesterday as the newsbreak, always looking to south florida. what is overy weighing this international event? shannon: it is guiding the policy. cubans have been there for decades and many venezuelan expatriates are looking for a change in their country, so that is guiding these politics and that is why we see a hard-line. cuba and venezuela have been linked for two decades. venezuela provides cheap or free oil to cuba and cuba has provided health care for venezuela. there are ties the trump administration is trying to
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break, but i do not see that happening. francine: if the military did not go to the extent that juan guaido was expecting, what would make them turn? we have the last round not seen in venezuela is the military force to fire on its own unarmed civilians. when we have seen protests put down and venezuela, it has been the national guard and collec tivos, neighborhood gangs, but has not been the government. that would be the breaking point. tom: let's talk about the military ahead of the defense and the debate yesterday. when we say "military" in the media, is it five guys at the top? is it the captains, majors, and colonels?
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"military" is this an listed? shannon: it is the leadership but they have expanded the top brass. venezuela has over 2000 generals. there is a lot of promotion happening. a lot of generals for a smaller country. there is a lot of promotion and people who have changed stature bite being affiliated with the regime. the military is not just in control of armed forces. they are in control of food and many are governors. tom: we will continue this conversation on bloomberg radio in a minute. ♪
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customize each line by paying for data by the gig or get unlimited. and now get $100 back when you buy a new lg. click, call, or visit a store today. ♪ alix: powell's patience while
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trump once a 1% rate cut. blue skies for apple. the market focus is the sales outlook, rising services revenue, and more buybacks. trade talks productive. trade secretary steven mnuchin -- treasury secretary steven mnuchin tries to drive the deal home. david: welcome to "bloomberg daybreak." i'm david westin, here with alix steel, finally. good to have you back. alix: i felt like i was gone for a year. [laughter] beat onvs has a nice earnings-per-share and revenue, and maybe even more important, forward guidance up more than before. data point says it is going pretty well, up almost 5% in


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