tv Bloomberg Daybreak Americas Bloomberg September 19, 2019 7:00am-9:00am EDT
judgment, and as you can see, disparate perspectives. alix: a divided fed delivers a hawkish cut. bank of england now on deck. the oecd downgrades global growth forecasts as u.s. cfos get more worried about a recession. fisher of dartmouth tuck school of business will join us for more. "elcome to "bloomberg daybreak on this thursday, september 19. but if is on hold, brexit uncertainty persists, inflation idly weaker. we did see inflation moving a touch lower. uncertaintyhat if persists, inflation will likely be weaker. also, it was unanimous, unchanged for a bank rate cut. there were no dissenters.
pound nowing the euro the highs of the session. the cable rate coming in a little bit weaker. joining me now, stephanie flanders here on set with me, and from london, guy johnson. usst blush for you, walk through some of the results. guy: this is pretty much exactly as expected. the pound is barely budging on the news. the market is pricing and very little action from the boe going forward. it is very hard to call exactly what the outcome of brexit is going to be. i think we've got 10 basis points priced in on the downside by next march. just 17 by the end of 2020. the market doesn't know which way to call this one. the bank of england is indicating that the risk of a no deal brexit has declined. when a new deal brexit happens, the risk to the economy will be
lester medic than having been be lessd for, but -- dramatic than having been perceived before. the market finds it hard to find credibility. alix: particularly if they go the way of norway. you have to wonder how that works. talking about positioning for a quick second for the cable rate -- talk to me about positioning for a quick second for the cable rate. guy: positioning is reasonably neutral. the market has been quite short. some of that has come back. we are trading at a two month high at this point. we are trading, as i say, at a two month high. we've seen any volatility contract come in, which is going to capture the eu summit coming up. volatility has picked up a little bit around that. what i hear is that a lot of people are saying you get to 1.30 and i will believe the move has legs, but until then, it is hard to trade the pound and get
direction with it. most people trade with volatility, and that is the trend that continues. alix: good point. stephanie, it is as expected. inflation will likely be weaker if inflation persists. -- inflation will likely be weaker if this persists. any surprises for you? stephanie: no, this is an economy that is very close to this potential, if not past that point. we are not seeing productivity growth. pressures are rising, and we are expecting to see that come through, at least, the bank of england is expected to see that come through. before that, we are all focused on this brexit date. they've reiterated that if you did have a no deal scenario, rates could go either way in that case. of course, no one in the markets thinks that. theyone thinks in the end, would still cut rates to support the economy. alix: before we get to that part
of it, i want to focus on jobs and wages. wages and bonuses at the highest since 2008. is that still a good thing? at what point does it become a bad thing, as in a rate hike might not be beneficial? stephanie: we have a small version of the u.k. of some of the pressures we are seeing around the world. you have economies that had quite a long recovery, quite close to potential, but facing uncertainties around trade. the u.k. has kind of ed clere to trade war on itself, which is slightly different from everyone else. -- kind of declared a trade war on itself, which is slightly different from everyone else. wouldpe would be that it be going down that path of investment and things to improve efficiency and get product to growth. i'm not worried about the wage growth, but it does make the bank a billing -- the bank of england's job a little harder. alix: more interesting for me, the oecd talking down the global
>> -- the global economy. talking about if they hard brexit happens, talking about a decline in eu exports to the u.k. is there real fear on the ground there of this? guy: absolutely. nobody knows executive what is going to happen. the longer this has carried on, the u.k. economy is suffering. the u.k. at the moment has a high degree of uncertainty, which means the companies are not investing. consumers are beginning to cut back a little bit as well. you can see that today in the retail sales numbers. you can also see that in the numbers that have been delivered by one of the u.k.'s big retailers. it talked about a slow start to the autumn period. we don't know what is going to happen with brexit. if there is a hard brexit, again, that is very difficult to call. that is iniff shock
some ways easy to model, but hard to predict. but at the moment, you can just see this thing dragging on and on. if we get a decision, at least that would provide some clarity. even if we don't, it could still have a negative economic impact. stephanie: i find it interesting in that oecd comment, it reminds us that as far as economists are concerned, the long-term outcome of brexit, a relatively orderly brexit, is quite clear. we know the economy is going to become less open, and historically that has always meant a little less investment and lower productivity growth. that in a sense is what the oecd is talking about. what economists have often got wrong and what we are all uncertain about is the short-term. what happens to the economy trying to reach that state where it has got slightly less trade, but probably more stability? guy: how long do you think that would last for? would that be a year, two years? stephanie: the interesting thing
is i think the erosion in openness and the slowdown in productivity growth that comes from that, that is kind of permanent. we know that is one of the big advantages of trade and openness , and whatever happens after brexit, the economy will be less open with regards to the eu, its major trading partner. that's one of the things that has not been a dispute. it is everything else that is up in the air. alix: all right, thanks a lot. stephanie flanders will be sticking with me. we also want to highlight earnings. on theike it is down stocks, which will weigh on us and be futures, down by 0.2%. i did want to highlight dollar-yen. apparently the boj is going to be rethink monetary policy at the next meeting. their result of that is a higher currency. a little bit in the bond market, but hardly anything to write home about. crude getting a jump.
some geopolitical risks there. potentially waiting for some sanctions on iran. that is your post fed look. let's take a look at darden, posting sales for the first fiscal quarter that missed sale -- that missed estimates. it did announce a $5 billion share buyback, but nonetheless, that stock is down by over 1.5%. coming up, more on your trade analysis in the markets. this is bloomberg. ♪
bloomberg first take. joining me from "bloomberg economics"'s stephanie flanders, and vince's nejra -- and vincent cignarella, and lauren goodwin, new york life insurance economist and portfolio strategist. here's what the fed was talking about yesterday. chair powell: if the economy does turn down, a more extensive sequence of rate cuts could be appropriate. we don't see that. it is not what we expect. but we would certainly follow that path if it became appropriate. alix: vincent, what is the big take away for traders? vincent: the big take away from traders is the confusion as he tried to explain the organic growth of the balance sheet, which the market took -- alix: going right to repo? vincent: well, that's what it really was. the algos took it as potentially qe-lite.
we are seeing a little pullback this morning. we realize this is, as was explained to me smarter people than i -- explained to me by smarter people than i, they need to add reserves to keep that balance. it has absolutely nothing to do with quantitative easing. as we heard the chairman say, we don't see that as a likely outcome. that was just a knee-jerk reaction that pulled the dow from down 200 to positive as we closed. going forward, as markets see this is not qe at all, this is simply balance sheet management and reserve management, we will see that the fed -- he didn't see yet -- he didn't say it, but he wanted to, this is a midcycle adjustment. alix: it is interesting the markets took it negatively when they upgraded growth. you would think the market would be happy about a fed that wasn't panicked about the economy. it gave a little insurance cut. to me that is weird. stephanie: we are back to the
world where bad news is good news. i think it is because the situation is so unclear, because we are lacking global momentum, particularly in manufacturing, there is a great focus on what potential stimulus you can get coming directly from the fed and nothing else. you don't see a big upturn. you don't see china coming to rescue the global economy. you don't see the u.s. in itself running to rescue the global economy. but somehow it is supposed to deliver the extra growth. what he's trying to say is there is not necessarily any extra growth to be had. we are 10 years into a recovery, and it is looking ok. the markets are thinking we don't want ok. we want the kind of growth donald trump has been talking about. buten: i completely agree, there's also this uncertainty now about what the fed is going to do next. , all of couple of weeks our monetary policy decisions look as expected, maybe even a little better.
the path forward is a little bit more uncertain, especially because chair powell doesn't necessarily have consensus for the next move. to your point, unless we have global growth, and u.s. growth in particular, continue to slow, it is not absolutely certain we get that extra cut. that leaves room for market this appointment. vincent: i think the one certainty we have with the fred is the fractured nature, as you is the with the fed fractured nature, as you said. whether we are up or down in the next segment, if it is not clear that the data is really good or bad, we probably have the fed doing nothing, which actually isn't a bad thing, for a change. i think they've been tweaking things much too many times. the point we have bill dudley famously raised in the column he wrote for bloomberg, the former new york fed governor, the risks to the putis seeming to always support for, underwriting trade
war. it does not want to be in that position. so i bit of ambiguity about how much it can do, how divided it is. not such a bad thing. alix: another thing happened overnight. to me, it was a huge red flag that people are not talking about. the boj added a statement, a paragraph to their statement, saying, "it is becoming necessary to pay closer attention to the possibility that momentum towards achieving a priced ability target will be lost, taking into account the bank will reevaluate at the next meeting." when i read this, what i felt was capitulation but the boj copy and like, we can't do anything about inflation. now we are going to try to think of other stuff to do. did you make anything of this? vincent: it sounds like the boj is acting like a corporation. when we have no idea what to do next, let's form a committee and talk about it. alix: let's buyback stocks. [laughter] vincent: inflation in japan has
fallen from 0.9% to 0.5% over the past year. clearly, everyone knows that negative rates and what the boj has done is not working. i think they are lost as to what to do next because it isn't a bank of japan statement. what you have coming up on fiscal policy is something closer to tightening than loosening with the sales tax hike. if you look at that over time, the immediate quarter that follows is a downturn in japan. so things coming up are going to look real ugly. if i was still on the boards, i wouldn't be buying in at the moment. lauren: think about what that means for other global central banks. as we look to japan for guidance on where we go from here, the idea that negative rates have these consequences, something the bank of japan is really concerned about. they don't want to do more unless they absolutely have to. other central banks are paying attention. i think the european central bank in the fed are looking at what their tool mix might look like.
if japan isn't the number one example, more uncertainty for the market. alix: to that point, mr. kuroda seems to think they might have more tools. here's what he had to say at the press conference. >> risks have been rising from slowing overseas growth. it is right to say we are more inclined to additional easing then at the last meeting. we will continue to carefully modern the economic and price movements. really? [indiscernible] stephanie: to your point, they have been out there. withhad to be the leader, everybody following whether they like it or not. they look to making this guaranties in the long end. alix: they seem to be losing so much control. stephanie: that's why you may get into them buying more etf's. they have opened their toolkit
about as far as any central bank could, much further than either the euro zone or the fed. i would give them a bit of credit. they can't meet that inflation target. that's been true for a long time. it shows that you can't just create inflation by having a target, which is what they tried to do. he tried to change expectations. i think they have got an economy is not looking too bad. it is the global situation that is worse. actually, if we had not had the reduction in global momentum, we would have said the japanese economy going into this october 1 tax increase was looking quite good, and that the boj wouldn't necessarily have to act. alix: the whole trade war with south korea, where exports are down, is not helpful. stephanie: that is another case of a country declaring a trade war on itself. alix: let's talk about the global economy for a second. the oecd had their outlook out this morning. here's the head of the oecd talking about this problem. are heading slowly towards
lower growth, and the biggest risk we see to this projection is largely due to the uncertainty that's been creating by the trade conflicts of the world that is affecting not only investment, but also consumer. alix: which leads us to that chart, the lowest growth we've seen since the crisis. i have to wonder, self-inflicted? is this all new news? vincent: to an extent, when you talk about trade and slower global growth, they go hand-in-hand. central banks have absolutely no choice. no one wants to revisit the 1930's, when you see tightening monetary policy and the trade war at the same time. there's really nothing else left to do. i wonder why they don't lower the inflation target because if you can't hit 2%, why not just say it is 1%? then they can just keep easing and keep the ball rolling. lauren: well, they don't do that because it is all about expectations. monetary policy, if you say the
expectation is now 1%, you might undershooting that, and then what do you do? vincent: but mario draghi basically said that in his last statement, that the target is here to stay. alix: fiscal is the new monetary. stephanie flanders and vincent cignarella, think you very much. lauren goodwin of new york life investment is staying with me. you can find all of the charts we are going to use by going to gtv at your terminal. coming up, sinking optimism. recession concerns arise among cfos in. the u.s. more on that next -- in the u.s.. more on that next. this is bloomberg. chair powell: the thing i worry about next is that everyone gets obsessed about when the next recession is going to occur, and we talk ourselves into it. ♪
"bloomberg daybreak." chinese consumers aren't spending oversees the way they use to. tiffany plans on opening more stores in mainland china. the upscale jewelry chain also wants to make a chain deshmukh -- to make its shanghai flagship store the most important location after his new york store. microsoft unveiling a multibillion-dollar share buyback, boosting its dividend by more than 10%. the company stock is up more than 10%. microsoft market value remains at more than $1 trillion. the ceo of delta airlines says for now, a recession is all a matter of attitude. "bloomberg businessweek." >> the thing i worry most about is that everyone gets obsessed on burying when the next recession is going to occur, and we talk ourselves into one. it is all about consumer confidence.
the consumers are doing well. unemployment is at record low levels. i think people are seeing a lot of opportunity in the marketplace. if we get a new economy, you've got winners and losers being created at a faster pace than ever before. told an he also industry forum delta is getting closer to offering free wi-fi on its flights. that is your bloomer business flash. alix: thanks so much. the oecd cut its global growth forecast. it sees world growth at a mere 2.9% this year. lauren goodwin of new york life investment is still with me. do you think we are talking ourselves into a recession? lauren: we are not worried about recession in the next 12 months, but the quote we just heard from correct.n is you are not going to have recession until you see that consumer start to weaken. when we have these doubts put into consumers' minds, it can
contribute. we are not seeing that yet. retail sales are still robust, and savings rates are pretty high, so consumers have a little bit of a buffer. alix: true. -- is do think is it with interesting is duke had their survey out of cfos, and one of their big concerns was uncertain economy. that beat labor issues and hiring issues. that us the consumer psychology from a top-down perspective. how do you think about that? lauren: that is interesting because that is the first time we've seen that in quite some time. we are figured out the dynamic between businesses and the consumer. with think about it a little bit like dominoes. we seen the manufacturing businesses topple over a little bit. does that really infect the nonmanufacturing sector and impact consumers' view of the economy? profit margins are starting to deteriorate. we talked about this a little before, but when profit margins are healthy, companies can
withstand risks. so they don't have to cut workers' hours, for example. they can keep things going on pace. what we see now is a little bit of movement there to the downside. i think that starts to impact consumer behavior because they are the ones getting their hours reduced. again, not yet seeing it in new unemployment claims or consumer indicators, but that domino looks like it could topple. alix: lauren goodwin of new york life investment will be sticking with me. coming up, it is the fed's hawkish cut. division on a future policy path does disappoint. we will have more on that next as the market tries to digest what it means for the next few meetings. this is bloomberg. ♪ devices are like doorways
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not a lot of movement post fed. the market is interpreting it as a hawkish cut. in europe, a bit of a rally in european stocks, particularly with the ftse as the cable rate moves lower. the boe does nothing, but says they will have to hike if brexit happens, but if brexit does not -- if brexit does not happen. if it does happen, it will see inflation come off. in other asset classes, the boj does nothing overnight, but warns might not at all reach momentum for their inflation target. began is rallying. you have the norwegian krone having a bit of a rally as well. they hiked four times. now what? brent crude getting a nice rally. you have geopolitical risk coming in. fares like very whippy trading action for oil over the last few days. the fed delivering a hawkish rate cut.
policymakers show division on the future path of easing. chairman jay powell left the door open for more. chair powell: if the economy does turn down, a more extensive sequence of rate cuts could be appropriate. that.'t see it is not what we expect, but we would certainly follow that path if it became appropriate. alix: joining me now is carl bloomberg, and lauren goodwin of new york life investment is still with me. i've been calling it a hawkish cut. is that appropriate? cut, it is not a dovish but i think we should same a be it was a hawkish cut and a less hawkish press conference. we did see markets rebound as jay powell began speaking and made it clear that one more and done is not necessarily what is going to transpire at the fed. they are very focused on trade negotiations, slowing global growth, all of these new developments that could easily push them to more easing. in fact, that as our baseline
case for the end of this year. we look for a 25 basis point cut in october and december as well. alix: let's dig a little deeper into the dissent. in terms of the dots, you had five like the current rates, seven want one more cut. how strong is that seven? is that a clarida? is that powell? carl: i think powell, evans, and florida are in that camp -- and clarida are in that camp. it is really a split committee as to whether they should continue easing or not, but as the conditions evolve, we've been on a little bit of a path of strong data of late. some strong retail sales, rebounded industrial production. that gives them a little bit of confidence in the hawkish camp that could easily start to move later in the quarter. friday we see consumer spending, which has been so strong, really just driven by a drawdown and savings. that would be a concerning
develop and. it is really the health of consumers that is going to determine how things look in the back half of the year. when we look at the input into that, wage and salary generation, things have been to several rating for about a year and a ash have been decelerating for about a year and a half. that is like -- have been decelerating for about a year and a half. that is like wiley coyote falling off a cliff. you buy into you buy into that, or is this still a defensive growth momentum market? lauren: we are very much in the defensive camp. cyclicals have outperformed and bond yields have been inching higher, but the thing i want to draw attention to is that only about 25% of that story is based on economic expectations. the other 75% is based on the risk trajectory looking a little better. trade wars fell off of people's radars for a couple of weeks. the fed, we knew was going to
cut. now that things look a lot less certain, and as those risks come thinknto the fore, we it is dr. defensive. alix: which raises the question, how loose is the fed right now? where is that? this chart shows that we just turned easy, but some have a neutral rate that is now negative, which is not the case. carl: if we look at inflation-adjusted fed funds, we can see that the level of rates relative to growth is very accommodative. that being said, inflation is trending sideways and growth is decelerating. further accommodation may in fact be warranted. so the fed is taking an imprint -- taking an insurance policy out, but watch german industrial conference coming out next week. the manufacturing picture on ism is below 50. as we highlight this notion that things are getting much better in september, i am not so sure that is actually the case. the trade war could easily take another turn for the worse,
either in october or december. that is a significant headwind for an economy that is already showing signs of losing momentum. -- the describes drugs fed described growth is strong yesterday, but we have week e-sports, consumer strong, but exports,e weak consumer strong, but others. it is hard to make the case that further accommodation is not needed when you have an economy printing one handles on gdp. lauren: another point to support what you are saying is that since the fed said it would be , we got knowsuary easing conditions even without cuts. been 105 points of easing in the real financial markets. we've got our 50 now. we need 25 or 50 more? i think the slowing data through the rest of the year is how we get that for sure. alix: just to tap into the end
of this on how the market relates to the fed, scott meyers of guggenheim was on yesterday after the fed rate cut. here's what he had to say about how he feels. scott: the fed has changed the way it is operating at a fun a mental level, and they've moved towards this expectations based way of looking at the economy rather than sticking to the same macro variables they used to look at. i think it is very confusing. alix: is it confusing, or is the market just confused? carl: i think there is confusion in the marketplace, absolutely. this is relatively normal, so to speak. the fed is looking at gdp growth. if gdp growth is below trend, you are looking at a lack of inflation pressures as well. the inversion and the yield curve, the fed has to cut or you will see more problems like what we are seeing in the last few days. alix: carl riccadonna of
bloomberg economics, think you so much. lauren, you are still with me. i know you said you are still very much defensive. what are some of your top calls in the search for the yield world? carl: bond yields have moved higher lately, and we think that that is not something that is sustainable. i just spoke about that, so i won't bore you. where we are looking for yield is actually across assets. we are multi-asset investors. in equities, that means companies that are printing reliable revenues, reliable cash flows, and pay reliable dividends. those are expensive strategies, but if you have retrenchment into a risk off environment, the ones that are going to do well rely less on price evaluation to that value. in fixed income, it is all about credit quality. as we move later into the cycle, as volatility increases, we start to see some froth across sectors, so it is all about making sure you avoid those default risks. alix: so where do you find the
credit quality within the credit market? lauren: we are moving out of some of the higher risk sectors like high-yield, thinking about municipal bonds and in structure that tend to have reliable cash flows, providing that reliable cash flow is how you avoid the downside risk. alix: lauren goodwin of new york like, thank you very much. it was a great pleasure to spend the hour with you. now we will get an update on what is mucking headlines outside the business world. viviana hurtado is here with the first word news. viviana: a whistleblower complaint and washington reportedly involves president trump's communications with a foreign leader. it has led to a showdown between the u.s. congress the intelligence community. the acting national intelligence director refuses to share details with house democrats, and an inspector general determined the whistleblower complaint was credible. by tomorrow, president trump will have details of new sections of iran. the president said they will be
"very significant." did administration is responding to the attack on saudi arabia's biggest oil facility. secretary of state mike pompeo blaming the attack on iran. he is in saudi arabia to meet with the kingdom's leaders. in canada, a month before justin trudeau forced to apologize for wearing brown face makeup. , opponents say, reveals someone who is not fit to run the nation. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so much. he was 29 when that picture was taken. anyway, we are going to discuss the steps the sneaker company is taking to protect the environment. we will talk to joey zwillinger, all birds -- joey zwillinger,
viviana: this is "bloomberg daybreak." coming up in the next hour, peter fisher, dartmouth took school-- dartmouth tuck clinical professor. now to your bloomberg business flash. shares of target are rising. the discount retailer announcing a new $5 billion share buyback program. it will start when the current $5 billion program is complete. that will happen in fiscal 2020.
the buyback authorization represent about a 9% of target's market cap. software company data dog raising $468 million in its u.s. ipo. shares pressed above and already increased target range. bloomberg has learned the company turned down a takeover offer from cisco. data dog rebuffing the offer because it felt over time, it would be worth more as a public company. it is a formula that could add up to a bleak retirement for millions of americans. the cost of climate change, low interest rates, and longer lifespans are the risks for retirees cited by investment managers. severe weather that forces retirees to relocate can be disruptive to someone on a fixed income. i'm viviana hurtado. that is your bloomberg business flash. alix: thank you so much. we continue our covering climate now series. an initiative -- now series, and
--, has more. -- emma chandra has more. u.n. says that fashion is responsible for some 10% of greenhouse gas emissions. that is because of its long supply chains and energy intensive nest. in fact, it uses more energy than aviation and shipping combined. it is also responsible for 20% of global wastewater and 85% of textiles either end up in landfills or are burned. fashion companies are starting to act ahead of the g7 this year. companies representing about 30% of the industry by volume signed a pact to try and curb their environmental impacts. parent,ed by gucci's but also includes h&m and gap, its, ralph lauren -- adidas, ralph lauren, and nike.
head to zero net emissions by 2050. this may all be good for the environment, but it is also good business, too. millennials are the biggest generational group in the workforce now, and set to be the biggest buyers of fashion goods, especially when it comes to luxury goods. a report by nielsen last year found that 75% of the lineal's would change their shopping habits to take account of environmental -- of millennials would change their shopping habits to take account of environmental concerns. alix: allbirds is an environmentally friendly footwear company. the eco-friendly sneakers are made from renewable, sustainable materials. joining me from san francisco is joey zwillinger, allbirds cofounder and co-ceo. thank you very much for joining us. can you talk a little bit to us
about how you make a product people want that works, that is profitable, and also be very sustainable? joey: it is a related thing. we started the company because we saw this opportunity in this enormous industry of footwear, which emits, as you are noting, a huge amount of the world's global carbon emissions, and we saw that as a result of this, everyone was moving faster, cheaper materials as quick as they can and slapping a big logo on the side. we saw the alignment of using premium natural materials that were actually good for the planet, and making good business for customers, was actually a big opportunity being overlooked by some of the big athletic companies and some of the other fashion companies. so we take these premium materials and let them do the work. we design wonderful shoes and other products, and use premium materials to make it super comfortable and a great product.
alix: as other retailers catch on to this and say we want to do are you noticing more competition and/or more growth? joey: there's a lot of noise out there. a lot of companies are saying that they want to do things. i think it is not often we see a lot of action. natural materials. we use really low carbon intensity type of components in our products. we have also realized that we are still not perfect. while we think we make a great product and it is some of the lowest carbon impact for this industry, we still offset the rest of our carbon. we are actually 100% carbon neutral as a company, and we've created this carbon fund to offset this. i think this is the right step. we are looking at an industry where businesses are not paying for the pollution they are creating. they are making all of this waste that was noted in the segment leading up to this. it is just not being paid for by the companies who are polluting. so we've taken a step to say we
are going to pay for that. i think that is the right step in making real action. we hope a lot of people follow us. alix: what are your margins like? joey: our margins are fine. we can sustain a healthy business, and as a result, we set this up to be something that is both durable and sustainable from a financial perspective, as well as its impact on the environment. we've attracted a bunch of notable investors looking for financial return, and i think to a good degree, looking to align with our values on making an impact on the environment. alix: there's been an initiative pay in manytie ceo industries to climate initiatives and to actually delivering on climate initiatives. do you feel like that is the right incentive? you guys start from the ground up. you build climate company -- you built a climate sensitive company at the same time you were building a company. joey: i think anyone making a
product is making an impact on the planet, and they have a responsibility to pay for the pollution they are creating. if a ceo is not using his or her best effort to make an impact to clean up their pollution, they should not get rewarded just for financial performance. we've taken a very stakeholder view of our business. we set up as a public benefit corporation, which is an opportunity to say we are not just a fiduciary responsibility. we also have a responsible it the environment. that is the way i think every company, no matter how big and how old, should be thinking. absolutely, ceo pay was tied to environmental and financial performance. ceo pay wasy, if tied to environmental and finaco performance, i think the world would be a better place -- and financial performance, i think the world would be a better place. alix: you are in six different countries, you source from all over the world, and your shoes
are many factored in china. have you felt anything from the trade war issues and the global trade environment? joey: it has been pretty brutal. as you know, we are a pretty small company, and we are operating in every place that had a lot of news, from our storm and our team in london working through brexit, and china and this trade war is tough for us. this small company, we are using materials like superfine wool used in $5,000 suits, packing this into a product that is less than $100, but an amazing pair of shoes. the cost that we put into our product is so high that when these trade wars have happened, it has been a real big challenge for us. we have been whiplash around. even though we are a small company and we only make a small portion of our production in china, it is going to cost us many millions of dollars. the uncertainty it has created for us is really difficult. we have a company where we are backing shoes with such high cressman ship and quality, we
can't just pick up and move our factory at our leisure. it has been a really difficult time for us. alix: are you going to eat on margins, or do you have to raise your price? what do you do? joey: we are not raising prices. we think we can absorb this. wholesale andp only sell direct to consumers online and in our stores, we are going to continue to make sure we give amazing value for our customers. alix: it was such a great pleasure to chat with you today. thank you very much. i am getting some emails in my bloomberg about how much they love their allbirds. joey zwillinger, allbirds ceo, think a lot. bloomberg is part of a collaboration of more than 220 news outlets to highlight climate change. will continue our conversation tomorrow. please join me later for "commodities edge."
i will speak to the head of oil and gas collective initiative client investments, trying to look for ways to do carbon capture, at 1:00 p.m. eastern. coming up, markets digesting the fed decision. if you are jumping into the car, listen to bloomberg radio on sirius xm channel 119 and the bloomberg business that. this is bloomberg. ♪
rate. yesterday, you called it before the fed. how do you set up now? vincent: traders are telling me to camp the canadian dollar. of 133 now.shy there seems to be a lot of interest from what we call real money, which are not people who come in and out of the market on a daily basis, looking to buy a short-term perspective. if you are an importer, exporter , that is a good line in the sand for you. the other thing that is really interesting but longer-term is where the end is going to set up for the next month -- where the yen is going to set up for the next month. tax hike, its tends to be a negative for the economy. the boj is holding to see what the effects of that will be for next month. the potential for heil oil
prices -- for higher oil prices if the situation builds in the middle east. to a goodt adds up come along dollar-yen story. alix: and that is all a strong dollar story. vincent: it is all a strong dollar story. as we look at the fomc yesterday, it is a midcycle adjustment. the fed is fractured, and we are not getting qe. alix: president trump is going to love that. vincent cignarella, thank you very much. program, morehis reaction to the fed decision with lale topcuoglu of johcm, and peter fisher will be joining us of dartmouth. this is bloomberg. ♪
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daybreak" on this thursday, september 19. a whistleblower complaint in washington reportedly involves president trump's communications with a foreign leader. that's according to "the washington post." its lead to a showdown between congress and the intelligence community. bank of england policy makers voted unanimously to keep rates unchanged. that came a day after the federal reserve cut its benchmark rate. meanwhile, norway further broke away from the pack. it raised interest rates for the fourth time in a year and warned against unconventional policies like negative rates. >> i think all central banks, even those central banks which have gone into this unconventional policy, if it goes on and on, there are some negative effects of rates being negative.
economic forecast today from the oecd. it sees global growth momentum tumbling to levels not seen since the financial crisis. we are heading slowly towards slower growth, and the biggest risk we see to this projection is likely due to the uncertainty created by the trade conflicts all over the world, and that starts infecting not only investment, but also consumer. alix: president trump will have details of new sanctions on iran by tomorrow, saying they will be "very significant." secretary of state mike pompeo has blamed iran. in the markets, here is where we sit. s&p futures off by about 0.1%, right around the 3000 level. what will it take for us to sustain above it? not that hawkish cut from the fed. dollar-yen lower.
the yen the safe haven of choice. not what mr. kuroda once to hear. he's worried that any momentum towards inflation is not going to happen. a little bit of despair coming out of the boj. yields lower in the u.s. by about three basis points, picking up a little as the curve continues to flatten. joining me for the hour is lale topcuoglu, johcm formerly manager. -- johcm portfolio manager. the last time she was on, we talked about palming and behold time. you are very right. we have the repo rate. lale: it is interesting. to go to just needs their email and search repo. alix: but it is fixed now. i say sarcastically. lale: we will talk more about it. i think the fed and the market
views it as temporary. i think it is structural. i think the market structure has and i think as a result, the plumbing seems tuesday in for the house -- the house wen for built on top. i think the fed thought they could exit out of qe very quickly. it doesn't seem that way. alix: i'm not going to make fun of you anymore for your plumbing analogies last time. we are going to get more on the repo in a second, got first the fed delivering that -- but first the fed delivering that hawkish rate cut. not on aell: we are preset course. we are going to be making decisions meeting by beating as we see this, and we will try to be as transparent as we can. , athe economy does turn down more extensive sequence of rate
cuts could be appropriate. we don't see that. it is not what we expect, but we would certainly follow that. we are watching carefully, and there will to my time, but there may also come a time when the economy worsens, and we would then have to cut. we don't know. we are watching things carefully. alix: joining me now from new hampshire is peter fisher, dartmouth tuck school tuggle clinical and -- school professor and former blackrock head of fixed income. what was the biggest take away from the conference yesterday? peter: two things that go together. the first is this is a difficult policy choice the fed faces. the tariffs are a problem. global slowdown is a big problem, but the u.s. economy itself looks pretty good. that is a really hard choice, and you can see that in how the committee voted in the dissent and how difficult the forecast is.
see how difficult it is. given how difficult and uncertainty forecast is, we now see how foolish it is that the fed is continuing to practice forward guidance. powell reduced yesterday to saying i know i published a dot plot, but pay no attention to it. he also said we might have to use forward guidance in the future. what are we going to you when we want to use it, tell us to please take the dot plot seriously? they've put themselves in a ridiculous dilemma by mount -- by not stepping back a year ago from forward guidance, and those played out across the press conference. lale: i totally agree. you know what it feels like? i hope this has never happened to you, but when someone breaks up with you it, and they are like, it's not you, it's me. [laughter] but it is just this whole -- alix: who hasn't had that happen to them? lale: but it really is this
notion, i think everybody is looking at the economic data and just going, there is no need for a rate cut. there is a rate cut coming, and i think part of it is there are .ther pressures building up you can't just come out and say it. it's got to be one of the worst jobs you can have. do you fix that? lale agrees with you that you can't have forward guidance. it makes no sense at a really tough spot. so then what? peter: they should stop publishing the dot plot. they should certainly not say they know where rates are going to be a year from now. they should say we are uncertain. look at what he's saying. he is saying that dependence. i only know right now. i might do more later this year, i might not. and then he publishes the dot plot and continues to practice forward guidance. forward guidance of the kind they are practicing was invented to try to suppress long-term interest rates.
term premiumt the and the uncertainty premium. he doesn't know the answer. he should let the uncertainty premium show through. alix: if you do that, don't you set up the markets for even more confusion? t ofexample, scott miner guggenheim was on yesterday. here's what he had to say about the fed. scott: the fed has changed the way it is operating at a fundamental level and has moved toward this expectations based economyooking at the rather than sticking to the same macro variables they use to look at. i think it is very confusing. , volatility is good for the markets. it cleans out the excess. i think that is just how it should be. frankly, do we not have volatility. look at all of these random flash crashes over the last three years. look at the repo market. granted, it is like 30% to 40%
of what used to be, but we are already having it. just because we are not having it continuously does not mean we are not having it. it is just happening quicker, happening sharper, and everybody starts scrambling. it's been happening for years now. i go back to the same thing. the plumbing is too thin. alix: peter, you were nodding emphatically. vol isthe thing is low not the best vol. that's just how markets work. there is a distinction, you talked yesterday on the show after the press conference, yes, the fed should look at its forecast and has to anticipate the economy as best they can come about when they are this uncertain, pretending they know , theyhe path of rates is
chair powell: if we experience another episode of pressure in money markets, we have the tools to address those pressures. we will not hesitate to use them. alix: fed chair jay powell addressing concerns over the repo market. the fed will be injecting cash into money markets again today. lale top to wallow of johcm --
lale topcuoglu of johcm and peter fisher of dartmouth are still with me. aren't they fixing it? peter: yeah. soey markets are noisy, let me be the first to say it is hard to forecast perfectly where all the money ends up every day and the banking system. i ran the desk a long time ago, and it is tough. the treasury might have gotten higher tax receipts than anyone was expecting, or might have come in earlier than the treasury was expecting. it happens, and that may be all we are looking at. i certainly miss the fed friends -- missed the fed funds target, and they never even bothered asking me about it. they just know it is a hard job. we also have to stay open to we might be looking at something more, or that future episodes are worth thinking about. it spilled over into the currency swap market, that is not a good sign. foreign banks were having trouble financing themselves.
fundamentally, it is important to understand that the abundant aserve regime is not abundant as advertised. the institutions that have all of these high levels of reserves are called banks. the institutions that can everybody.ies are the institutions with high reserves didn't seem to want to lend them to the people who bought a lot of treasury securities. those two universes don't overlap entirely. the important point is the reserve regime is not going to mean there are never stresses in the money markets. it means that they just won't happen two things called commercial banks. they will happen to somebody else. to theot to stay open possibility that this is a warning sign of things to come in the way this regime works. lale: i fully agree. i reread your commentary you the interest-rate
observer conference in 2017. it is titled, "undoing monetary policy." it is an extra neri piece. one question i have been do you feelith, how about having the fed permanently be a player and perhaps lowering the repo rate? is that a problem? peter: first we got to secure an unsecured rate, and that is a problem. the permanent repo facility are a way of saying we are always there for you. when you go back to the y2k episode and when the bank of inland episode reflect it on the early years of this crisis, one of the ways to get the market few more coming up will coming to the central bank is make a standing facility, and you just pay something for it. it may be a way to get the money market to come to the fed when it needs reserves, but it is odd
that the distribution of reserves in the market doesn't seem to work out. i think that is what is going on here. the market now doesn't have a habit of recycling the reserves among itself. they are not investing in the human capital. they don't seem to want to invest in the balance sheet. markets, and the the market clearing mechanism doesn't work anymore. that has happened in the past, years and years ago. i confronted that with japanese banks. didn't think they should ever come to the discount window. they would get the fed funds rate through the roof. i had to plead with them, please come to the discount window to use the standing facility. the repo facility the fed is imagining would be a way of doing that. alix: your concern is that if they keep doing that, we won't see when the stress is coming to the market? lale: i think i am just generally worried that the more the fed intervenes in the functioning of the markets, it is hard to tell. we are just numbing the symptoms. like you have a cold, but you
are not taking the actual medication. you're just taking your nyquil and numbing the symptoms, and eventually the symptoms are so large that it will just pop. i think that is just what i worry. alix: peter? peter: i agree with you completely. it looks like the past that the fed is on. i think they are throwing sort of a wet plank it over the market, and thinking that they will never be -- that there will be financials -- that there will never be financial stresses because we can't see them, and that will not work out. alix: both of you are sticking with me. coming up, a recession obsession. our interview with delta air's ceo is next in today's bottom line. this is bloomberg. the thing i worry most about is that everybody gets obsessed with wondering when the next recession is going to occur, and we talk ourselves into one. ♪ elves into one. ♪
"bloomberg daybreak." shares of target are rising today. the discount retailer announcing a new $5 billion share buyback program. it all started when the current $5 billion program is complete in fiscal 2020. the authorization represent about 9% of targets market cap. chinese consumers aren't spending oversees the way they used to, so tiffany plans on opening more stores in mainland china. the upscale jewelry chain also wants to make its shanghai flagship store it's most important outlet worldwide after its new york fifth avenue location. shares of microsoft are higher. the world's largest software maker unveiling a $40 billion stock buyback. microsoft also boosting its quarterly dividend by more than 10%. so far this year, company stock is up 36%. microsoft's market value remains at $1 trillion -- at more than $1 trillion. that is your bloomberg business
flash. alix: time now for bottom line. in london, we have bloomberg's, chandra-- bloomberg's, -- bloomberg's emma chandra. emma: richemont getting a little bit of a rise today as we had export data from swiss watches in august. plus 2.4%.in at analysts liking that because august is usually a quiet month for swiss watch export. richemont has been down 7% prior to today's news since friday of last week. it had been battered a little bit longer than that because it had seen some concerns about the slowing global economy, about the trade war, about demand in hong kong, particularly as protests have ramped up and have lasted for a number of months. richemont owns the brand cartier, iwc, and they make up
about 70% of its revenue. that is its fine jewelry and luxury watch segment. they are particularly important for the likes of richemont. just this week, ubs rated them a sell on those concerns of the slowing global economy and chinese demand. alix: great information. thank you so much. next, we are looking at darden. sarah, give us the latest. sarah: darden reporting earnings this morning. you may know them at her for some of the restaurants, longhorn steakhouse, olive garden. to the tune of 2.5%. earnings came in about in line with estimates. however, comparable sales did look a bit like. we only saw growths of 0.9%. analysts were looking for growth
of 1.3%. at the same time, i will point out that olive garden did see stronger growth. olive garden saw growth above 2% at 2.2%, and at the same time, darden did announce a 500 billion dollar buyback program. still, shares lower this morning. alix: thanks so much, sarah ponczek. the third company would what to look at his delta. bloomberg spoke to ceo ed bastian in the latest busines sweek talks. ed: i am worried about everyone getting obsessed with when the next recession occurs, and we talk ourselves into one. it is all about consumer confidence. the consumers are doing well. unemployment is at record low levels. i think people are seeing a lot of opportunity in the marketplace. if we got a new economy, you've got winners and losers being created at a faster pace than ever before. that disruptive element, i think we all have to understand what is happening within that, but
the consumers are getting great value. airfares at delta, one of the reasons we are growing as an industry, airfares are down over the last 20 years. so you about that, it is were markable. every year they declined buy another one to two points. that is another reason why the travel industry is booming the way it is. jason: what has really worked and hasn't worked about what consumers have said? ed: the biggest thing that's worked is the core reliability of the product. have a much higher set of consumer expectations at delta than ever before. our on-time reliability, our ancellation rates, we've got goal to cancel cancellations because we know that is the biggest stress point for consumers. 250 days of the year, we did not have a cancellation worldwide. we are raising the bar. when you have that platform of
strength up there, it gives you the opportunity to get more adventurous. whether it is where we fly, how we flat, our technology, our digital innovation, great things about the fly delta app, it is a great thing because more customers than ever are booking on delta. just five years ago, we had less than half of that. we've got a lot of trust. we've got a lot of preference. we got a personalized service that people want to see. alix: that was delta airlines ceo ed bastian. lale topcuoglu is still with me. do you feel like we are talking ourselves into a recession, or do you actually think there is one? lale: no, the data is not showing a recession today. i think it is feasible that if the market, if the liquidity is not sloshing around as much as , consumer is a lagging indicator, so eventually
it will trickle down. i think there is a psychological element as well. the more people talk about it, it may happen. we are getting into q4. it is budget season for next year. all of the trade, the yo-yo back-and-forth, and all of the confusion around the world is just not going to help you in investing. alix: i'm really glad you brought that up. duke university had a cfo survey for september. peter fisher of dartmouth is still with us. they specifically talked about the economy is the number one concern over labor. are the cfos talking them self into a recession? peter: i take the concept very seriously. it doesn't mean we will have a recession at any particular point, but we think about what i call board room animal spirits. the business leader who is investing, is he the head of the pack or an outlier? or is it the other way around? i think we can to it really seriously. does this leaders can lose
confidence. that is what is so dangerous -- business leaders can lose confidence. that is what is so dangerous about the tariffs. i think what is more lightly to be in the offing is the 2001 recession, which was a business investment recession. the housing sector did not rollover. is this investment just came way down. -- businessvered investment just came down. kevin how levered the sector is -- given how levered the sector is now, we could talk ourselves into recession. alix: both of you are sticking with me. coming up, the oecd cut its global growth forecast to the lowest since the financial crisis as uncertainty around the world grows. we will discuss that. this is bloomberg. ♪ here, it all starts with a simple...
how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. alix: this is "bloomberg daybreak." i am alix steel. we are just a few minutes away from the latest read initial jobless claims. a little bit of movement upwards
in europe. in other asset classes, still digesting the central bank moves. the hawkish cut yesterday. norway raising rates. the boj saying they will discuss different policy cuts at their next meeting. money coming into the bond market in the u.s., selling in europe. the per steepened just attached to three basis points. initial jobless claims coming in at 208,000, right in line with estimates we have seen. the philly fed business index coming in stronger than estimated, yet sequentially we are down. coming in at 12, we expected 10. softness, but holding up. current account balance widens attached versus expectations, down negative 128 billion dollars -- trillion dollars. still with me is lale topcuoglu
and peter fisher. when i talk about the jobless claims, every time i break them i say it still seems like a stronger job market. is that narrative still true? peter: i think when we ignore the noise, which we should not from overseas, the u.s. economy is doing pretty well. there are lots of reasons to look at the u.s. economy and say it looks pretty good, as jay powell did yesterday. alix: i guess the question is how long can it sustain that? we had the head of the oecd on since they cut their clothes forecast -- there growth forecast to the lowest it has been since the financial crisis. >> we are heading towards lower growth in the biggest risk we see to the projections is due to the uncertainty created by the trade conflicts all over the world that start affecting not only investment it also consumer. alix: i get it.
the question is how long can everything else bad not affect the u.s. consumer? -- the external factors are so much more important. lale: i think that is true. the reality is that the trait and everything else is global. if additional tariffs go on you may have an impact on the consumers. if you point out the lower global outlook, there are pockets of different outlooks outside of the u.s. europe looks like they are coming off of a slump, but they have been challenged. emerging markets is a mixed bag. my skies,ay out of but i think it has a lot to do with central bank policy. it is reasonable there is a u.s. dollar shortage. we are making it worse by the fed balance sheet issues and the reserve declining.
if there is u.s. dollar strength, i think it is exhibiting the deficiencies in e.m. countries. there are certain countries that have been running down the reserves. i think it is all linked. ther: i am going to see same picture but from the other side. i think it is important we call out how destructive negative rates are. i do not sound like a fear monger, but let's remember the great depression the 1930's happened because of the mix of tariffs and currency devaluations. that is why the post-world war ii regime was about a general agreement on tariffs and fixed exchange rates. it is the toxic mix of the two. negative interest rates are a screen central banks are hiding behind to run bigger policies. it does not work. it is a nice theory, and it might stimulate domestic demand, but it is not happening. it does not stimulate credit.
the japanese banking system and the european banking system is shriveling in our eyes. that should be called out. i hope christine lagarde will call it out. it is terrible. alix: may be behind closed doors -- she is pretty political. what do we do about that? if we are in this kind of trade war scenario, it is not just the u.s. and china, it is the u.s. and europe, the u.k. and europe, japan and south korea. if we are in this world, what we do to get out of it? war's andt tariff currency policies are drive to the lowest common denominator. that is the problem. they are not growth oriented. they are destructive, stealing demand from someone else and thinking we will make it up on volume. you have to call them out. i think it is time we did that.
it is not working to have negative rates and thinking people will consume more. saving rates are going up in sweden. the economist say despite the negative interest rates. no, because of negative interest rates. negative interest rates might be attacks on future consumption. actually it is an income tax. therefore, it slows the economy down. we have to call this out. central bankers have a to boo against capital controls they want to pretend they are not running baker thy neighbor policies, and negative rates look like something virtuous when really you're just hiding behind that. alix: on that look, it got me a little concerned when the boj talked about the fact they have a lot more room to go, that they can deliver something more. then i looked at this chart and this is the boj, fed, and ecb total assets as a percentage of gdp.
the boj is so far ahead of everybody else. what can they actually do? have any more will they buy? lale: the whole central bank policy is a confidence game. they are playing the confidence game. do not fall our bluff, we have more to do. the challenges markets tend to call their bluff. alix: we still face this constant fx war peter is talking about. lale: i feel like it is early, but maybe we should all go to the pub and have a drink. it is fascinating, and i know we are talking about the plumbing. in the old days, broker-dealers used have two functions. , they weregents intermediaries, and then they were also were warehouses of risk. that was the stability mechanism. today, given what is happening in the markets, given the extreme central bank
intervention, we have dealers being agents, but the warehousing of risks has moved to central banks. central banks will be the largest asset managers in the world. i do not know how you take yourself out of that hole. i think they are here to stay and i do not think they will be able to suppress volatility. that will, at some time. simple things. i look at the growth and passive. we are an active management so perhaps i have an ax to grind, there are 8 trillion in passive a um. how do you think that will change of people change their view, they want less equities work less credit? alix: i talk to bank ceos who say the same thing. topcuoglu,r and lale stick with me for a second. let's get update on what is
happening outside the business world. viviana hurtado is here with first word news. viviana: a whistleblower complaint and washington involves donald trump's communications with a foreign leader according to the washington post. it has led to a show down between the u.s. congress and the intelligence community that is because the president acting national intelligence director refuses to share details with house democrats and inspector general determining -- and inspector general returning -- determining the whistleblower complaint was credible. prime minister justin trudeau forced to apologize for wearing brown face makeup at a party in 2001. a picture of the incident appearing in time magazine. photo scheer says the reveal someone not fit to run the nation it is a formula that could add up to a bleak retirement for millions of americans. the cost of climate change, low interest rates, and longer life spans are the risks for retirees.
severe weather that forces retirees to relocate can be disruptive to someone on a fixed income. 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. i am viviana hurtado. this is bloomberg. alix: thanks so much. still with me, lale topcuoglu and peter fisher. peter, i want to get your take on this global warming issue when it comes to the global growth, when it comes to paying more for health care cost, when it comes to governments having to pay more for natural disasters. how do you think of that in your structural view of the economy? peter: there are lots of uncertainties. uncertainty is not inherently a bad thing. uncertainty is a problem when it is combined with stress and anxiety. that creates risk. there are lots of uncertainties in the business community we all take for granted. the kind of uncertainty that comes from worrying about climate change or my retirement, you roll all that together, that
could be helping take savings rates higher. the u.s. savings rate is 8% now. it was 2% before the financial crisis 11 years ago. the low interest rate environment is not working persuading people to save less. we are saving more. also as the baby boomers age, we have a savings objective and not a consumption objective. tell me i am learning less on my retirement income and i will drive up my rate of savings. all of these things do way on household sentiment. lale: i agree. it is not also u.s. phenomenon. globally we have an aging population. that ties into each country's migration, immigration policies and how they re-energize their labor force. population that will start tapping their savings also means a shift in asset allocation. as you move out of equities, you
should theoretically move to fixed income. fixed income rates are low. you stay on the riskier part of the spectrum. if you come to the fixed income, i think the central banks, as that shift happens, because it is a global shift happening everywhere, they are here to stay because they will try to make sure they can dampen the volatility. as a retiree, you will not feel good. they also vote. there is a political angle at the end of the day. alix: 100%. you need to make them happy. peter, the last 40 minutes of our conversation together, it feels like fiscal policy and the interaction between fiscal and monetary policy and ordination is inevitable. what do you think? peter: that is the most hopeful thing we have brought up this morning. we should be seeing them work together. we have to put more on fiscal policy. i think the next generation of
in the united states and other countries, we have to figure out how to stop using our fiscal policy to support consumption and how to invest in our future to make things better. changing that mix is hard. that will be the challenge. alix: peter, such a pleasure. fun to chat with you today. peter fisher of dartmouth. lale topcuoglu is dipping with me for the hour. stick with me for commodities edge at 1:00 eastern. we will speak to the head of the oe gci, the oil and gas climate initiative. they are looking at carbon capture. it is the industry actually doing what they say they want to be doing? and coming up, alibaba has a winning bet. and he thinks he is right about wework. bloomberg users, check out gtv
viviana: this is "bloomberg daybreak." i'm viviana hurtado in the hewlett-packard enterprise greenroom. coming up later today on bloomberg markets, janice henderson cohead of global bonds. now you're bloomberg business flash. mark zuckerberg appears to be on a charm offensive in washington. a spokesman saying zuckerberg will meet with policymakers and talk about future internet regulations. facebook is under growing rooney over its privacy -- growing scrutiny over privacy practices. apple is one of the casualties
of the trade dispute. the company falling from 11th year ago to 24th in a survey of the country's top brands. in 2017, apple ranked fifth in china. the mobile phone rivaled huawei. they have moved up to second. i am viviana hurtado. that is your bloomberg business flash. alix: we turn to wall street beat. we cover three stories wall street is buzzing about. softbank vulnerable to wework rose. the softbank ceo feel some pain ipo's.road to wework's and data dogs ipo is priced above targets. analytics company data dogs raises $406 million in its ipo. joining me is bloombergs sonali basak.
work?s going on with we sonali: he is stepping behind we work. he has 30% of his shares pledged as collateral. to put that into perspective, we have m.i.t. per presser -- professor quoted that 5% of your shares pledged is normal. in is triple what he had 2013. the shares are up 27%, but when we work scrapped its ipo plants, the stock plunged as much as 5%. you have stopped -- caps off bank exposed we work. -- you have softbank exposed to we work. alix: corporate governance, what you think about corporate governance? lale: it is a key ingredient in the way you look at investing. alix: is it now? we are getting pushback now but that not -- that might not have
been the case a year ago. lale: you have to. if i am lending you money, i want to know what alix is like. i will be prudent with my capital. whether you are a debt or equity investor, that is critical. there are numerous examples in the history that when governance is poor it has led to consequences. look at the cable companies. sonali: why is it if they do not raise the equity it is hard for them to raise debt? what you think about these massive credit lines for these lossmaking companies? it is entangled. there is hope. hope floats. there is hope the unicorns will survive and the businesses will flourish. just do not of them need to flourish. some of them have too much debt. i think the credit investors always look at the equity markets and say they will ipo.
i will get my money back. little do they know the covenants are so messed up, you may not get your money back. alix: or you may not ipo, as we have learned. to our second story, which is deutsche bank still trying to offload equity unit. are there buyers? sonali: there are buyers. -- barclays,man goldman, all buying pieces. make are people looking to talent and clients at the margin. bank -- the pace of their restructuring. they announced it in july. this is the first part of an equity book they are offloading. it will take time. we will see in a month or so how far they have come along. the fifth of the bank balance sheet is quite a lot. beingi started my career
in -- it is a tough business. it is a people business. one of my friends used to say the value of the bank will go up and down as people go up and down the elevators. as you announced restructuring, the challenge is how do you retain talent? your abilitybout to invest and take risks. if you cannot do that, you can restructure all day long. sonali: fixed income is where they're trying to say. some have been in and out the door already. alix: our third story is data dogs. as we were all talking about peloton, it was data dogs that had crazy profit margins. it is a cloud company and said no thanks, cisco, we want to stay public. sonali: i love this story. you have companies that do not want to be public, you have data dogs thank we believe in ourselves.
i want to look at the bank angle, it is a great win for morgan stanley. we will see where they trade today. a couple years ago, cisco did swoop in and buy a company that was going to go public with morgan stanley as the underwriter. they bought app dynamics for more than $3 billion. this is one that stay on course. alix: this is a company that actually has revenue and profit. it has revenues. lale: profit is a question. [laughter] alix: very good point. you have to pay. you will not get that unicorn pop. let's talk about the name. data dogs. that image. sonali: the little puppy. alix: a puppy in a cloud business? made to ipo. thanks a lot. bloombergs sonali basak.
lale topcuoglu stepping with me. if you cannot get enough of downton abbey, let us us remind you the movie based on the series opens tomorrow and you can get a chance to experience the upstairs and downstairs life. the main set for the movie is opening its doors for two guest for a one night stay in november. you can find that listing on airbnb. the people who own it that nailed it with this. if you lose out, there is always the official downton abbey cookbook. "in the worlde -- -- askbook, it is not as breaking bad or game of scones." i have to admit i have the harry potter cookbook. coming up, the epa and the administration battling over regulations. tune into radio across the u.s. on sirius xm channel 119 and the bloomberg's news app.
>> today we are delivering on a critical element of the president's commitment. epa and dot are issuing a final action that will establish one set of national fuel economy standards. alix: that is what i am watching. that was the epa administrator owning a news conference earlier and discussing plans to curb california emissions. that has big implications for carmakers and sales in california. what are you watching? the --or us it is market. it is on fire. everyone is back in school and there's huge demand for fixed income. alix: where the biggest issuance? lale: investment grade markets because they can issue longer tenure. high-yield markets picking up. like?is it still covenant
covenant?ight or no lale: no covenant. from adjusted -- lale does not like even up -- thanks for joining me. lale topcuoglu. that does it for us. coming up on "the open" mike wilson will be joining us on this trading day after the fate day. the boj looking at further options. norway hikes rates. this is bloomberg. ♪ devices are like doorways
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up, chaircoming powell overseeing a fractured fed. the path toward more rate cuts gets murkier. the bank of japan said to consider more stimulus at its next meeting as trade tensions way on the outlook. the oecd forecasting the weakest global growth than a decade. 30 minutes until the opening bell. here is your thursday morning price action. futures positive five points on the s&p 500, up .2%. up euro stronger to 1.1067, .33% on the currency pair. the bid is back into treasuries. yields lower, treasuries advance. down to 1.75 on the u.s. 10 year. a federal reserve divided. >> it was interesting, the division, 7-3. >> there is a split. >> there is an honest difference of