tv Bloomberg Daybreak Americas Bloomberg September 27, 2019 7:00am-9:00am EDT
the whistleblower. republicans dodge questions. investors look toward the threat of an elizabeth warren presidency. initial public failures. platonic the worst rating debut in 10 years. endeavor polls it's offering at the last minute. more blackeyes for banks trying to score a win. welcome to "bloomberg daybreak" on this friday, september 27. i'm alix steel. in the markets, there are two things happening. one is the weaker confidence in europe, not really bothering euro-dollar, up by 0.1%. the big news in the last half-hour comes in the oil market. oil down by a full percentage point on the dow jones. saudi arabia will agree to a partial cease-fire in yemen. if it takes hold, they would consider broadening it to other parts of yemen as well. globalw for the
exchange, where we bring you today's market moving news from all around the world. joining us from brussels, bloomberg's maria tadeo, from london, ed evans, from the white house, kevin cirilli, and michael mckee joins me here in new york. first we want to start in brussels's maria tadeo. we are taking a look at euro area confidence falling to the weakest level since 2017. maria tadeo joins us for more. maria: that's right. the numbers were particularly bad when it comes to industry. trade uncertainty really weighing on prospects on the outlook. this is particularly bad for germany. this is a very export oriented economy. in europe, germany is coming under huge pressure to engage in fiscal stimulus to drop that black zero, no deficit policy. we are looking for any signs this is going to happen anytime
soon. we are just not there yet. has got to be, brexit. we are just four weeks away from what is supposed to be a hard deadline for a no deal brexit. officials in brussels tell you the situation is so volatile, they really don't know what to expect at this point. alix: thank you so much. we went to turn now to london. you have the pound set for further trouble following dovish comments from the bank having one policymaker michael saunders, used to be a hawk, and now comes out and says that if the u.k. avoids a no deal brexit come on monetary policy could go either way, and the next move in bank rates would be down rather than up. ed evans has more. a reversal for mr. saunders. ed: indeed. there are continuing negotiations with the eu, but frankly, nobody on either side is very confident a deal is going to emerge. it's clear the u.k. has not
addressed issues such as the irish border. even if boris johnson wanted a deal, it is not clear he could get it through paul are meant. his allies -- through parliament. his allies today warning of riots if they don't exit. both sides want to get to a deal, it must be stressed, or at least avoid the blame for one that isn't reached. alix: thank you very much. here in the u.s., a busy day for economic data. pce,e also going to have the forecast of the fed's preferred inflation measure at the strongest reading since january. michael mckee is here with more. what are you looking at? michael: we also get durable goods in consumer confidence today. the fed has a lot of data to watch. i am going to put income and spending as the first on equal today because fed officials have said it is all about the
consumer, and the consumer is driving growth. this also includes services, and we spend more on services these days. also, do we have the money to keep spending? pro tip, watch to see if that number is distorted by trump administration to farmers. also watch that core pce. michigan sentiment consumer confidence fell this past week. is that something the fed is going to have to worry about? alix: thank you very much. in d.c., revelations about president trump's interactions with ukraine's president shaping up to be the most serious threat to his presidency so far. in a closed-door gathering with u.s. diplomats, the president took aim at on-site it officials -- at unnamed officials cited in the was a blower complaint. pres. trump: who's the person who gave that was a blower the information? because that's close to a spy. you know what we used to do in
the old days with a spy? for spies and treason? we use to handle them a little differently than we do now. alix: kevin cirilli is at the white house. what is the response on capitol hill to the last 24 hours? kevin: republicans still sticking with president trump, including in the senate, where they have taken a more tepid and measured response to the president's rhetoric as he pushes back against democrats. sayces on capitol hill house speaker nancy pelosi would like to try to move impeachment along before the end of the calendar year. i'm also told that several senators in the republican party are growing increasingly skeptical of how the white house is handling this impeachment inquiry. that said, if there were to be impeachment and it were to get to a senate trial, there would need to be 2/3 in order to convict the president, and right now that would be 20 republican senators would have to get on board with democrats, and those
votes simply don't exist. alix: the other news of the morning comes from the dow jones, that the saudis are looking at a partial cease-fire in yemen. this comes hours after we learned that the u.s. will be sending more military equipment to saudi arabia. can you walk us through what we know? kevin: brent crude oil has dropped on the news the saudis have agreed to a partial cease-fire with yemen. theomes following the who s claimingthi responsibility for that drone attack. it comes as there has been increased pressure upon the put the rebels -- upon the houthi rebels and others to try to get the situation resolved. on capitol hill, there seems to be bipartisan agreement that something must be done as it relates to this situation, but they differ in terms of how to bring about an international coalition. alix: thank you great reporting.
some breaking news for you this morning concerning wells fargo. they have named a new ceo, charles w sharp. he has a history of being the ceo over at visa and bank of new york mellon. the company says he has demonstrated a strong track record in initiating change, driving results, and strengthening operational results in compliance. no doubt, wells fargo needs a win here. they had a phony account scandal that completely shook the company out of bed. they had to fire the ceo. the fed has also imposed sanctions on the bank, forbidding it from boosting its total assets beyond their year end 2070 level. all of this -- 2017 level. all of this he is going to have to come in and fix. it has been the ceo job that no one has really wanted. we are looking at charles dubya scharf ascharles w
back and take jamie dimon's job when he was looking for a successor. this is definitely a huge surprise. alix: when i broke the news, i did point out that this is the job that no one noted -- that no one wanted. do you have any read on how they got this? sonali: he's a very interesting choice. he was not somebody that was floated like so many others were. there were a lot of other jp morgan people floated. it is a hard job. but you seen charlie scharf in tough situations before. alix: remind us how wells fargo got here, and why they had to make this kind of shift. sonali: they had this big account scandal, and then we had an insider that rose up and took the ceo home, and he stepped down a little earlier this year. they didn't have a replacement when he did step down, so alan
parker, the general counsel, did step up. they wanted someone who could really clean up the bank. this is a cultural issue from every rank that infiltrated the bank, so they wanted someone from the outside. to do a cleanup warren buffett -- from the outside to do a cleanup. warren buffett at one point was saying it shouldn't even come from banking. alix: they also have to get the fed off its back so they can start growing assets. sonali: exactly. it is funny because charlie scharf was one of the people that was called to washington earlier this year. you can go back and look at the tate. he didn't have to answer as many questions. he was definitely somebody who had to deal with regulators very much this year. alix: berkshire hathaway owns
almost 10% of this bank's stock. do you think you will be happy with this? sonali: i would be surprised if he wasn't asked, but yes, it will be likely that they will like this candidate. of course, he's criticized the wrongdoing, but also remember, buffett also loves jp morgan. all of these people that were trained and groomed under jamie, there is a connection here where there is synergy. alix: there will be a conference call for more on this. we talk about who else was in the running. where are they? where are the names that were in the running? where did they go? sonali: that's a big question. how do you keep moving up? you see jp morgan keep bringing
them up. they have moved a lot of people around. they moved the cfo to consumer, the consumer to the cfo role. one thing that might be a bit of a sad story on washington, this could have been the first woman ceo at a large major u.s. bank. there were a lot of people in the running that were able to rise to the top at wells fargo. with that said, charlie scharf really is an interesting choice. we will see how he shapes his team around him. alix: exactly. great point. 1%t stockstill popping over in the pre--- that stock still popping over 1% in the premarket. coming up, we are going to have your first take, your trade and analysis for all of the market moving news. this is bloomberg. ♪
veterans. rachel evans and vincent , and amy wu silverman joins us from rbc capital markets, managing director and equity derivatives strategist. what happens when your anchor doesn't have a prompter, that's what happens. we were going to start off with impeachment, but i want to very quickly talk about oil. the news was that you had dow jones saying that saudi could do a partial cease-fire in yemen. oil drops like a stone. vincent, what are they talking about? vincent: we had the houthis earlier this week basically say they were going to cease-fire. everything is calling down in the region. the calm is probably being pushed by the united states. alix: but they just sent arms to saudi arabia. vincent: well, we sent a couple of missiles and some troops. i think that's part and parcel to the fact that i think the administration is putting pressure on saudi arabia to tone
things down. we can never have a conversation with iran with tensions where they are now, so this is the first step. we probably heard from rouhani with the u.n.. you are not recognizing this yemen situation. so if you do, we will move towards somewhere toward the middle. as we see tensions easing, crude oil now on its heels this morning. positive for global growth, positive for markets, and this should work well for stocks for the rest of the day, although i'm a little surprised they are not rallying a little more than they have been. alix: there is the whole impeachment thing. we will get to that. amy, oil volatility. amy: i will tell you, this is the one area where investors are just not touching it. i would like to say this trade is going on in this trade is going on. to be totally honest, they've just moved out of the area. oil volatility is not that expensive relative to what you would think is going on. part of it is i think the recovery from the initial
farming was much quicker than people had anticipated, so you actually saw that vol come out quicker than originally people had wanted to play for. right now i would tell you it is really the focus not even on impeachment. it is whether the trade war will resolve. i actually think impeachment is a bit of a red herring. rachel: that is an interesting point because the stock market this week was and it wasn't. we saw the s&p when we were getting all of those impeachment headlines out. we saw it fall as it came out that policy was going to make an important announcement. then we saw it rise as they release the transcript, and then fall again. there's also the news on those trade headlines. i think it is really difficult for traders at the moment. they see these headlines, they know it is a big deal, but they don't really know what they are supposed to do about it. to your point, it is kind of one of those longer-term things.
how do you actually trade that going forward? vincent: in this situation, you don't. algo al go driven -- it is driven. what you can trade is you watch the politics from the republican party. whatever one wants to know, is this a nixon impeachment or a clinton impeachment? the clinton impeachment was sort of a nonevent realistically. obviously the nixon impeachment wasn't, and that's because the republican party fell away from backing him. if that happens to trump, we will see actionable, tradable things we can do. it won't play well for equities. it won't play well for risk in general. tohel: to some degree --amy: some degree, the markets have already priced that next year, we may or may not get a new president. the fact that it is because he got impeached versus there was just an election and he didn't win, the market is actually pricing those buckets the same way. that's what i think is really interesting. probably, you will get
impeachment from the house, but you may or may not get conviction. to me, all this does is it overhangs the same way that trade war is an overhang. one thing in the options market that people are focusing on, they are buying upside in industrial volatility. they are buying upside in china volatility. i think they are pulling for the upside. they are more focused on the fact that this impeachment becomes almost a brexit like overhang on the market. we all know what's going on, but what are we going to do about it? what they are really thinking is , if somehow this pushes trump to resolve the trade war or the fed becomes more lenient, you actually get the upside tale as a more realistic possibility. alix: to me, one of the biggest takeaways from the whistleblower complaint yesterday was it did not look good for vice president joe biden, which raises the question, is this more of a boon for senator elizabeth warren?
is that a real possibility? that leads me to health care. this is a three-month skew for the health care etf. naturally, i am going to turn to amy. interestingthink is about this, if lauren were orders -- if warren sanders come out of the iowa caucus as frontrunners, health care is toast. i think it was july when they had that bernie sanders town hall, and the entire health care sector said, this is really bad for us. the same thing. people are actually playing it out of the iowa caucus, that six-month bucket. you're seeing that being a place where people are owning volatility and puts. the reason is that february 2020 date when the caucus happens and you get a sense of how far along versus biden
versus sanders. rachel: when we look at the defensive areas that have been taking inflows, we see money flowing into financials, a very unloved sectors. when it comes to health care, that is not really the case. we are seeing people look for low volatility places to hang out. they had their sixth busiest trading day of the year this week. health care is a really tricky one to read because it doesn't necessarily have the same qualifications as you might think. flows going see the into financials. if you see warren become the frontrunner, watch that. what do you think the stock market is going to do if
elizabeth warren becomes president? lower, and the skew was 10% to 50% is what they thought the market would fall back if she becomes president. is wewhat's amazing to me actually haven't talked about trade. i just want to point out what we saw from the state department. this is about redoing the huawei ban to allow u.s. companies to buy some of those products. with think it is likely to be extended. to me, that is a negative. that is a we are not backing away from this you know we are going to talk october 7. vincent: this is actually really big news because president xi has made a specific point of two things for a really proper trade deal to go through. one, drop all the tariffs. two, drop the ban on huawei. if the united states does not do that, the odds of a proper trade deal will not happen. little things, but a
real trade deal is not in the future. alix: where were the options before impeachment happened when it came to trade? is almost as, it if impeachment didn't really have any -- like they are two segregated things in terms of how the market was reacting. i would say it was much more about the trade headlines independently. the options market is taking impeachment as something that is a key plus 18 months thing. even if he is impeached, it goes to the senate, and that is a whole run out thing. it would really depend on -- a whole drawnout thing. onwould really depend republicans. alix: you point out more options in the cyclicals to play upside on a china trade deal. how do you look at this huawei
headline? it is interesting. the options market is always thinking about tales. so if it does go through, the leverage you are getting on the upside because it is very cheap is so massive. they own places where there is good bang for your buck. alix: bloomberg macros squawk voice vincent cignarella. bloomberg's rachel evans, thank you very much. amy wu silverman will be sticking with me. coming up, we speak with the ceo of one of the largest mortgage providers in the country. sanjiv dos of caliber home loans -- sanjiv das of caliber home loans will join us. this is bloomberg. ♪ devices are like doorways
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the technology sector in europe still up 0.7%, despite micron and it's not so great forecast when guidance fell, really hitting all the semis. in other asset classes, a mixed dollar story in the g10 space. did want to highlight the cable rate, down 0.2%. former hawk at the boe michael saunders saying you could see rate cuts even if the u.k. avoids a hard brexit. that's throwing a wrench into the currency market. .itcoin, bad week worstso looking at its week since july. it is going to get even worse, as dow jones broke the news that saudi arabia is looking at a partial cease-fire in yemen, draining some of that political risk. preferrede fed's inflation measure expected to come in at 1.8%, which would be
the stronger measure since january. with me still is amy wu silverman of rbc capital markets. the difficulty with higher -- amy: the difficulty with higher inflation is it is a much more gradual thing. when we look at different timelines of when this can happen, you have a fed meeting coming up in october, and you have that october 31 date where supposedly, there's going to be a brexit. if i was playing something, i would be owning the on timber -- the november volatility bucket in terms of looking at those data points. alix: what we continue to hear from the fed is a lot of split on do we want a rate cut or not. vice chair rich clarida talked about a potential inflation overshoot. when does that start factoring into traders? amy: i hear you on that -- alix: she's like, i hear you, but no. [laughter] amy: i think the reality is the
more these impeachment headlines go on, powell is going to have to make a decision incorporating that. alix: how? amy: it's just a question of turmoil in the markets, which we've seen. we seen, i think, the last three months or more that the fed is not really been independent and how they've been making these decisions. i think the last statement he made was sort of couching this could be it, but the minute we get the market diving because of some related impeachment headline or some other fiscal traders inhink general, the sentiment has been it is much more correlated to politics than they would have you tell. alix: so how do you hedge for that? what do you do? amy: tales right now in general are not that expensive. 10 minutes ago we were talking more about the upside, what you would do for those upside.
the downside as well are not so expensive. relativet s&p or iw m to the volatility of all other etf's. when you rank them versus eem, versus others, none of them are saying we are at all-time highs. they are below average, and their 25th to 40th quartile. if you want to own the tales, that's what you do. the only other caveat is it is much more about the event. you own it because you think this is going to happen october 31, or you think this is going to happen at the fed meeting, versus these are the data points clicking higher. i think that is the difference. alix: i see. so there is a fundamental investor. amy: the timeframe is not specific enough for the markets. alix: i know you are the equities person, but i want you to be a tourist in other asset classes. this is cross asset vol.
the blue line's treasury volatility, and the white line is equity volatility. what do you see when you look at that chart? amy: these days, it is important to be a tourist because the question really is, when you are an investor, you don't say i'm an equity investor. i own equity things. you are forced to say i own where the volatility is the cheapest. to give you an example, we've had equity investors through the beginning of last year, when the fed really changed its rate curve from being one of hiking to one of cutting, they went into euro-dollar options, which they were a complete tourist and. but that is where the highest payout is. for us, the framework is volatility is an entity like valuation. it is the pe of all these different factors. wherever your pe is the cheapest, that's where you own. i don't care if it isn't fx or credit or equity land. but in equity land, it is not
that bad. [laughter] alix: thank you so much. great to get your perspective, amy wu silverman of rbc capital markets. mortgage rates have been steadily climbing, boosting demand for home loans. , ceong me is sanjiv das for caliber home loans. it is one of the largest mortgage companies in the u.s., with $40 billion in overall volume in 2018. you are the perfect person to talk to when it comes to low rates right now. what have you noticed in the last six months? sanjiv: well, this has been great for the housing market. we have seen a huge increase in refinancing in the last three months. it's been off the charts. calabar, which does about $4 billion a month, is now doing $7 billion a month in refinancing. it has really been great for the consumer. an average of 10% savings for the consumer. the other thing we are seeing is a pickup and purchase. inn caliber specializes
purchase, that is what we do ask truly well. we see that the consumer, all the affordability issues are waning a little bit. even the house prices haven't come down that much. the fact that rates have come down, you have seen some of the stats in the last days and weeks on new homes, existing homes, pending homes, they are all starting to look really good. alix: let me talk quickly about the refi's. do you get a sense that that is over, or there is a lot more to come? sanjiv: there was a slight interruption in the past few weeks, but the 10 year back to 1.62%, refinancing applications are backup as well. alix: do you feel is ace -- do you feel it is the move in the markets that changes the need for -- that changes the
refinancing, or the overall level? sanjiv: it is the overall level. about a year ago, a lot of the refinancing was for cash out, whereas now, the refinancing is a rated refi. in other words, it is probably going into savings. alix: interesting. you mentioned affordability as well. this is the median existing home price to household income. that ratio is quite high. what level can we sustain if rates stay around 1.6%? sanjiv: what we are starting to see is, first, the u.s. home market is actually not very uniform. high in certain places, it's very low in certain places. i think that is well known. most of the center of the country has actually been doing quite well. texas, where caliber is located, is doing extremely well.
parts of idaho, colorado. the coastal cities aren't doing the coastal cities aren't doing that well in terms of affordability. i don't think new york, california, the levels of affordability really are in favor of buying right now. alix: stay with texas for a second. what is your visibility going out? we have the oil downturn. we hear yesterday about employment moving lower, wages moving lower in that industry. what is your visibility in the next six to 12 months? lotiv: texas has moved on a from its dependence on just oil. i find there's a whole lot of new industries that have been created. most importantly, the fact that housing is really affordable in these large cities that have lots of land and a lot of affordable housing is being built is really what is causing the growth in the cities, plus a
lot of technology and technology backup operations are being set up in these cities. where caliber has a very large salesforce has large and on's of homes available that are really affordable, and these are booming. alix: my last question on this end, do you have a read on the confidence right now? i understand rates are low, affordability is still high, but it depends on where you are. what if we hear consumer confidence start to roll over a little bit? how quickly do you feel that? sanjiv: we have about 1500 to 2000 loan officers talking to consumers. to be fair, i haven't actually done the research, but i will tell you that in talking to our loan officers, i find that consumers are concerned about the volatility in the market and all the noise around the trade war and the so-called impending recession.
there's a lot of these intangibles playing in the back of consumers' minds. at this point, given where rates and home prices are, i think confidence is playing a little bit into this. as i said, i don't have the data, but based on information from our loan officers, it does seem to be the case. alix: wells fargo getting a new ceo who you actually know. i wanted to get your take on charlie scharf, how'd you know him, if you think you would be good for wells fargo. sanjiv: the short answer of that would be charlie would be fantastic for wells fargo. charlie and i have been great friends, and we were colleagues when we were fixing the housing crisis together. he was the ceo of the mortgage business at jp morgan. i was the ceo of the mortgage business at citigroup. we helped in the so-called fixing of the housing crisis. there's a great deal of respect in what we learned of the things that should not have been done
before us. i think charlie is really well honed in that. ceoally respect him as a and a leader who understands banking. he was ceo of visa. he's grown at jp morgan, but he understands it really well. he's a very responsible banker. alix: thanks so much. it was a real pleasure to have you. great perspective. sanjiv das, caliber home loans ceo. now let's get a look at what is making headlines outside the business world. hurtado.viana viviana: president trump spoke at a closed-door meeting with u.s. tip lemat. bloomberg obtained that -- u.s. diplomats. bloomberg obtained that video. pres. trump: i want to know the person that gave the whistleblower the information. because that is close to a spy. you know what we used to do in the old days, when we were
smart, with spies and treason? we use to handle it a little differently than we do now. taylor: president trump --viviana: president trump's comments leading critics to warn against what they call witness into edition -- witness intimidation. an appeal court ruling that a no deal brexit is a matter for the newly returned parliament in london. a spokesman for boris johnson says the u.k. and european union have made progress in brexit talks, but a deal is a long way off. in hong kong, police are banning a national day of protest march. according to an organizer, police told her the locations for a rally were too close to high-risk buildings. organizers are bowing to go ahead and protest without police approval. all of this coming as carrie lam is taking blame for the entire unrest rocking that city. 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: they key so much. coming up, -- thank you so much. coming up, can big tech save big mac? adonald's is getting makeover, and investors are loving it. check out dv go on your terminal. -- check out tv on your terminal. . this is bloomberg. ♪
now to your bloomberg business flash. wells fargo has a new chief. charles w scharf becomes ceo and president on october 21. he will be tasked in leading the the accountfter scandal and the sacking of the ceo. previously, he led bank of new york mellon and visa. commerzbank giving up its goal for growth this year. cfo stephen engle saying the bank strategy is soberly realistic. shares of tesla climbing the most since june after ceo elon musk says things are looking up. in an email to employees, musk says the electric carmaker has a chance to top the vehicle delivery record it set in second q, on track to reach about 110,000. for the second quarter, tesla
reported more than 9000 deliveries. the lower margin model three sedan revving up demand. i'm viviana hurtado. that is your bloomberg business flash. alix: thank you so much. but did they get that approved by the person that is supposed to approve those tweets i elon musk? weekly we turn to our "business week" feature. ' ceo is making it update to keep up with rival tactics. and a wealthy businessman writhing a wave of discontent to the land's highest office. and aviation shame hurting airlines, increasingly under pressure as passengers become more climate contests -- more climate conscious. joining ms. joel weber. mcdonald's is investing -- joining me is joel weber. mcdonald's is investing in big tech. reporter: the ceo has really
driven the company revenues and share price up. it's been kind of an amazing story for investors. in the last six months, he's really doubled down on technology. we talk about kale salad bowls for lunch, fried chicken and witches from popeye's have become viral, fake meat with beyond and impossible. he is saying we are business as usual. we know how to do fast food really well. but how can we use technology to enhance our customer experience? alix: so what is that. reporter: it started with an acquisition that was artificial intelligence. earlier this month, it was voice recognition technology. what we will start seeing probably as mcdonald's rose it out globally as things like, you go through the drive-through and it knows your license plate number, and serves you or offers you a meal that you may be had adviceme, or gives you and customizes a menu for the weather. the voice recognition
technology, the latest one, could that be used as drive-through, within the kitchen? we are seeing also kiosks in the store, so instead of interacting with people at the counter, you are just tapping your finger on a screen to order. alix: all of this is minting fast food faster food. that's the goal, right? joel: exactly. because of that, investors have a great story. alix: let's go to our second story, which is a populist president and monk olea, sort of a president -- president in mongolia, sort of a president trump redux. joel: mongolia is one of the only democracies in that sphere of influence, and it really has one thing going for it, which is commodities. what his narrative has been is external forces are stealing our wealth. because of that, he has fanned the waves of populism and cracked down on the judiciary tradition in the country, which was being a democracy.
he's really consolidated power, and because of that, activists have said this might not be the best thing for democracy over here. alix: you mentioned trump. countries with stalwart leaders that have this base. joel: it is the strongmen democracy mentality. mongolia has a long history of being tight with russia. it's even gotten closer in recent months because of that. what we are really seeing there is a president who can grab power and do with it has he will. alix: our third story is flight shaming. what is flight shaming? joel: do you everything about your carbon footprint when you are flying? if you think about the airline industry and mass, that is one billion tons of co2 every year entering the atmosphere because of planes. what does that mean for the whole airline industry? the place that looks to be maybe
most of -- maybe most vulnerable as flight shaming becomes a trending topic among consumers is europe. europe has a lot of short flights rather than long-haul flights. we are so far away from any sort of hybrid or electric option in flying, so we are seeing consumers pushback on airlines and say, you know what? i'd rather take a train to offset carbon pollution than to fly. we are even seeing some airlines encourage people to take trains. alix: that is a little crazy. i guess the trains are a lot nicer than amtrak. joel: it is a changeable thing because consumers are not actually offsetting carbon, so the easiest way -- with carbon credits, so the easiest way to emblem it a change on a personal level is to take a train. trains are four times more efficient than airlines. maybe add a little bit to my travel time, but it's worth it. alix: awesome. so great to have you. joel weber out of "bloomberg
businessweek." you can read those stories and more in the latest issue, on digital and on newsstands now. and come on, admit it. no one wants to spend a long flight near a screaming baby. if you are one of those children getting a little loud, you don't want to face angry looks from fellow passengers, so japan airlines is giving passengers with babies the option to choose seats near other travelers with young children. they are calling it baby travel support service. the website will indicate a child icon in seats were a child under the age of two will be sitting. you can choose maybe not to sit there. i'm all for it. coming up, japan prepares for a sales tax increase. that's coming up next in today's trader take. if you are heading into your car, tune into bloomberg radio on sirius xm channel 119 and on the bloomberg business at. this is bloomberg.
alix: 20 me now is vincent cignarella, former trader -- joining me now is vincent cignarella, former trader and the voice of bloomberg macro squawk. vincent: on october 1, japan is scheduled to raise their sales tax from 8% to 10%. last time they did that, retail sales absolutely cratered. wasn't great for the currency. it weakened about five big figures or so. possibly doing the same thing again. japan is kind of out of tools to stimulate their economy. if they put fiscal pressure on their economy and retail sales dropped, not a lot bank of japan can do about it. for canada, the impeachment situation may actually help get usmca through. people are saying that democrat senators, especially the ones in red states, need a win. they don't want to be seen as just beating up on trump. the easiest thing for the democrats to do to get a fast win is to fast-track usmca in
the next couple of months. that will be brilliant for the canadian dollar, brilliant for the canadian economy. what i am looking at this point, if i'm looking at two different economies, you don't want to be in japanese equities, bonds, or the currency, and you do want to be in canada over the next couple of months. cash -- sell yen, by sell yen, buy cash. thank you so much. you can keep up with vincent on macro squawk. coming up, kathryn rooney vera, bulltick head of research and strategy, will be joining us. this is bloomberg. ♪
this friday -- welcome to "bloomberg daybreak" on this friday, september 27. president trump is lashing out at the person who gave information to a whistleblower. he made the comments at a closed-door meeting with diplomats. pres. trump: i want to know, who's the person that gave the whistleblower the information? because that is close to a spy. you know what we used to do in the old days, when we were smart, with spies and treason? we use to handle them a little differently than we do now. led: trump's comments several democrats to warn the president against witness intimidation. police in hong kong banning a national day of protest march planned in an area close to what they call high-risk buildings that could be subject to violence. protest organizers say they will
go ahead with their plans anyway. and someone will be new in charge over wells fargo. they have tapped former head of charlesnew york mellon w scharf. datanal spending and pce out in just about half an hour, expected common at 1.8% -- expected to come in at 1.8%. here's where the markets are set up on this friday. it feels like a heavy year news flow day. the story is a bit disjointed. on the one hand, dow jones broke the story that the saudis could be looking at a partial cease-fire in yemen. crude. weighing on a rough euro confidence measure coming in, particularly from industry, yet you are seeing the euro higher. it feels like a modest risk on kind of day, with a move into equities out of the bond market, and the dollar is mixed as traders really don't know what to do about these impeachment inquiries with president trump. ande revelations
interactions with ukraine's president chipping up to be -- president shaping up to be the most serious brett to trump presidency so far -- serious threat to trump's presidency so far. these animals in the press, their animals. [indiscernible] [applause] many of them are saying i'm the most presidential, except for possibly abe lincoln. these people are sick. they are sick. they are afraid to say that the press is crooked. they are a crooked press. they are the dishonest media. i want to know, who is the person who gave the whistleblower the information? you know what we used to do in the old days, when we were smart, with spies and treason? we use to handle them a little differently than we do now.
[laughter] [indiscernible] pres. trump: we've been hit harder than anybody in history. we just keep going. we are looking good. we are looking good for another four years. [applause] alix: joining me now is jeanne zaino, iona college political professor -- college political science professor. also joining me is kathryn rooney vera, bulltick head of research and strategy. what have you made of the last one he four hours of u.s. politics? henne: it has been an exhale -- it has been an insanely busy week. there is mounting support on the democrat side for impeachment. the numbers are growing rapidly. we have seen now some signs of among others on the
republican side saying this is serious, and get the video you just showed that bloomberg obtained, you have a president in what many people are reading is trying to intimidate a whistleblower. the president knows full well it wasn't one person who shared this information. it was multiple people who shared it with the whistleblower, who seems to be identified as a former cia intelligence officer or cia official. this is fast-moving. it is very, very serious. the impact on the markets can be tremendous. alix: in order to get that impact on the markets, the rhetoric is you're going to have to see senate republicans start to shift their rhetoric towards president trump. the party line for yesterday was, i haven't read it. haven't had the time. what do you think it is going to take for that to shift? jeanne: i thicket is going to take -- we have a two week recess coming up over the jewish holidays. those lawmakers are going home. if the people in their district give them the sense that this is a lot more serious than they may
believe, we start to see polls coming out, republican support for an impeachment inquiry, you will see some of those we publicans break off. the other thing is this is going to impact the markets because now the white house is going to have to fight a very serious impeachment inquiry. and takes a lot of time pressure off of things like trade and the war with tariffs. kathryn, you are the market purchase been. i can show you the trump impeachment bets jumping over the last couple days. how do you look at it from somebody who is putting money to work? kathryn: this makes tv fun because we will take to completely other side of everything your guess just said. [laughter] kathryn: i think trump will likely be impeached by the house. the democrats have been looking for impeachment since they won back the house. you need a simple majority in the house. closeis zero chance, very
to zero chance that the president gets convicted with the information we have now, which we are not going to get additional information in the senate. that is not going to happen. i would say that the market is not going to care very much. we saw what happened with bill clinton a couple decades ago, impeached by the house, which by definition, he goes down in history as impeached, but not convicted by the senate. the same thing is going to happen here. what i care much more about, and one other point i differ with, i think that trade war tensions will ease over the course of 2020. trump has big incentives to get a victory there. the chinese also know he's a little bit weaker now on that front, but i think he's going to get something done, at least in the framework there. what is a much bigger risk to me is that you see elizabeth warren jumping in the polls. let's face it, 40 9% of the s&p 500 is based on tech, health care, and financials. aboveis lady who is now
biden in national polls has talked about breaking up tech, breaking of the banks, and reverting corporate tax reform, on top of eliminating the private option in favor of a public option. this is going to cause a big collapse in the markets if and when we get confirmation that elizabeth warren is going to win the primary. alix: on that point, we spoke about this in the previous hour with amy wu silverman. what she said about lisbeth were in and health care. -- this is what she said about elizabeth warren and health care. warren and sanders come out of the iowa caucus as front runners, health care is toast. i think it was july when they had that bernie sanders town hall. he mentioned medicare for all, and the entire health cap sector woke up and said, this is really bad for us. jeanne: there's not elizabeth warren without a weakened joe
biden, and that is actually what i was saying. joe biden is being weakened tremendously by this allegation involving the ukraine president and corruption. elizabeth warren's entire election campaign is about corruption. democrats take that very seriously. she is winning this battle because joe biden is getting weakened. the more biden is weakened, and sanders has already been weakened, the more she comes to power. we seen her rise in the polls in iowa. she starts to win some of these early primaries and caucuses, and she could win this thing. i think it is having a terminus impact. kathryn: we are going to know by february. iowaizabeth warren takes and new hampshire, and she is very likely to take both, the market is going to fall in february. so put options for a march expiry. you get iowa and new hampshire
in the first week of february, then super tuesday in march. i think elizabeth warren is going to take it, and i think the market, which is zero pricing and elizabeth warren risk when confined with the weakening of biden, which i every -- which i agree is complete with the case, i think the market is going to price that in in a dramatic fashion earlier than one would expect, and i think clients need to protect themselves on that risk. jeanne: the one thing i would say, if elizabeth warren ones on this, so does the president if he can survive in the senate. obviously at this point, we haven't seen movement from the republicans, so he would win in the senate. the president wins because voters, moderate, independent voters will not go with elizabeth warren unless she moderates her positions. we have seen inklings of that. nothing that would impact the market yet, but if we see her moderate, we may see a change on that. but the president would do better under those circumstances
, hence what some people say is his fourth dimensional chess of weakening joe biden to bring warren up to help himself. it's hard to say that's really what he's calculated, but there is a way in which this does help the president. kathryn: i completely agree. i thicket is going to be elizabeth warren and trump in november. this could go against the impeachers, as we saw with bill clinton when newt gingrich ultimately lost his job as house speaker. if this does look like a political hit job and the voters don't subscribe to the high crimes and misdemeanors committed by the sitting president, then it could backfire and we could see a warren, who is a very strong leftist -- she is going to move to the center. we all know that is going to happen facing donald trump, and i agree that puts trump in a better position. what i am saying, and i think your audience needs to hear this, is that the s&p is not did's counting -- is not
discounting the chance of a lisbeth were a nomination. alix: great conversation. really appreciate it. jeanne zaino, think you for coming in. kathryn rooney vera of bulltick will be staying with me. coming up, it was the job that no one wanted, but someone had to take it. we will bring you more for wells fargo's new ceo, next. this is bloomberg. ♪
basak. how did you get here? sonali: we see wells fargo gaming this morning. people just wanted them to have -- see wells fargo raining this morning. people just wanted them to have someone. where people really know him from is jp morgan. he was looked at as a possible successor to jamie dimon. wells fargo is a much trickier story than jp morgan. there's a lot of cleanup to do, a lot of regulators to appease, customers and rating agencies. alix: we are seeing analyst comment triple out --, trickle out. what is on the laundry list? sonali: regulators is number one. the federal reserve asset cap, removing that is going to be a very big deal. on top of regulators, just operational issues. they had to revise net operating income expectations down
twice. also balancing what they are going to do with these regulatory issues. alix: when that the client issues and internal -- within the client issues and internal workings, is that done? or does he have to go in and clean house? sonali: that is going to be very interesting, for an outsider to come into a bank that has been run by insiders for so long. cultural issues have to be cleaned up. they got in trouble for different lending practices. they had gotten in trouble for their wealth management arm having some improper incentives and different advice they gave on retirement products. to go in ncf there are any more issues, he's going to want to find them very quickly. alix: i also wonder what this winds up meaning for their investment banking area. they were just a pure play housing guy, and now they get into invest banking. sonali: even before he showed up, they were trying to beef up aspects of the investment bank, particularly prime brokerage.
,gain, you have everybody else jp morgan, bank of america getting into these areas wells fargo had a chance to dominate in, middle market investment banking throughout america. so they have a lot of competition. to be able to do that head-on is going to be tough. house,hile cleaning while dealing with the fed cap. thank you for joining me. with me still, kathryn rooney vera of bulltick. what are your thoughts on the grubbing financial sector? financial sector? the potential for the dot plot shows the potential for one weight hike -- for one rate hike in 2020.
under policy continuity, if we were to get a complete rupture of policy continuity and, as i mentioned in the previous segment, someone who is far more left wing then you are going to get a reversion of those things. you will get more regulation, the necessity for interest rates to drop, if not move negative because i do believe there will be an economic deceleration, and you are going to get consumer confidence dropped quite a bit following a drop in the s&p 500, which, as i mentioned, 49% is tied to tech, financials, and health care. financials are about 13% of the s&p 500. alix: if you go back to the drop in the s&p next year, what kind of drop are you modeling? does that mean you're going to go by\uy the defensive's right now -- going to go buy the defensive right now? kathryn: you have to anticipate the initial pricing in of a risk that is currently not priced in
as soon as february. as i mentioned, the very first two primaries. both of them, one should expect an immediate drop in the markets, pricing and a risk that is not hereto for priced in. i am recommending my clients buy put options for a march expiry just before super tuesday. going into short-term treasuries. there can be a position in defensives. but i do think one has to hedge that risk. there is the potential for policy continuity, but when we are talking about banks, we really need to focus on the fundamentals here and the potential impossibility for a change in this fundamentals. alix: the backdrop of trade, you mentioned this earlier, that the impeachment issue could push forward a trade deal, which would be good for cyclicals, industrials, and materials, for example. are you hedging a play on that?
kathryn: sure. aligned on both front for a trade deal to come to for ration because china, the deceleration is not a newfound phenomenon. this is not something that has come exclusively from the trump trade war. this is something that has been in the pipeline for more than a decade. china has seen significant economic deceleration for some time. that isr for an economy ased on trade, it is more grave in that sense for the chinese economy. my contention from the chinese ite is certainly, they need to keep growth sound. they need it to keep political machinations more stable because we saw what is happening in hong kong. they don't want to see that flow
into the mainland. from the u.s. side, of course trump needs a victory, especially now with this impeachment on slot. -- with this impeachment onslaught. trying to accumulate those victories ahead of the november election. alix: kathryn rooney vera of bulltick will be staying with me. we will take a look at the ipo following pellet on's -- following peloton's weak debut. >> there are believers and nonbelievers. the people that believed in peloton for everyone of the rounds have been very, very happy, and we will continue to delight capital partners who invest in us. ♪
two top executives implicated in a surveillance probe, saying it would be damaging to the bank lose anyholders to memory senior management over the scandal. the credit suisse board is trying to figure out who was responsible for having the former wealth management had followed. rent the runway funding money and giving out extra cash to disgruntled customers, but it is warning service disruptions are likely to continue. complains about outfits that didn't show up on time or never arrived have plagued startup. over $1any is valued at billion. it blames software. as thecutting costs startup refocuses on its core business. this coming after the company postponed its ipo amid concerns over its valuation. we are told wework may also turn to job cuts that could number in the thousands.
that is your bloomberg business flash. alix: thanks so much. theirn shares plunging in trading debut yesterday, suffering one of the worst starts for a $1 billion plus ipo since 2008. kathryn rooney vera of bulltick joining me. what is your broader take away from that? you wind up having wework being pulled. how do you view the ipo market? kathryn: it's been full of disappointments, with my dalia -- with medalia, as well. a bunch have come out, made an initial splash or didn't, and have since filed off quite a bit -- since fallen off quite a bit. going forward, do we see that amount coming into 2020 with economic deceleration and with the risk for -- the multiple risks we see on the macroeconomic front? alix: i wonder also if we can
tie some things together with this. this chart shows the profitable versus unprofitable performance. the unprofitable ones obviously underperforming. it feels like the market is getting more discerning. at the same time, you have something in the junk bond market also. you have leveraged loans that weren't able to get off the books. you had some issuance that was pulled. do we learn something broader about risk, or are these idiosyncratic? kathryn: that is a great question. the biggest risk i've been before my clients, even the elizabeth warren narrative i've been talking about, with a risk i don't forget priced income of the risk icy is central bank intervention. it is fomenting this search for , really pushing people out the duration curve. corporations levering up.
you see nonfinancial corporations in the u.s. at the highest leverage ratios since precrisis. we even see some dislocations in the overnight we go market. it is precisely because of the undesired consequences of a very proactive central bank. sinced extend that out, you asked to draw the lines together, extend aligned to the the lineboj -- extend to the ecb, the boj. at some point this will have to adjust. alix: coming up, we are minutes away from key inflation and consumer spending numbers. we will break it down with kathryn, as well as simon, cuda, state street global senior economist. this is bloomberg. ♪
one is the mix dollar. downll all be about crude, 2% on the report from dow jones that the sallies could do a partial cease-fire in yemen. the geopolitical risk being priced out. very important for the prudent market. -- for the crude market. here's the big data drop. personal income bang in line with estimates. personal spending comes in light, just up .1% for august. july revised lower. the core pce we wind up looking at for the fed is in line with estimates, coming in at 1.4%. the core core at 1.8%. the highest in a year or so. you also had july revised higher. durable goods coming in stronger-than-expected. up .2%. backu back out defense and
out those orders, it was solid, .4%. inflation holding, a stones throw away from the 2% level from the fed. a warning sign that personal spending is coming in a bit light. durables holding up. i want to break down all of this. kathryn rooney vera is still with me as well. we ticked off some of these points, simon, walk me through your take. the data highlights one of the things we have been focusing on. this idea that as long as the consumer and services hauled, the u.s. economy holds. despite the fact that spending data came in light, what is encouraging to me is the strengthen income. that is critical for consumption going forward.
this disappointment comes after a string of strong releases. this is a positive combination, what we got this morning. up .6% inensation was august, so continuing to rise. pce,you make of the core 1.8%. how much longer can the fed say we are not the mandate, we have to overshoot? simona: we have been saying for a long time that inflation in the u.s. is manageable, but it is not dead. since the july rate cut, the argument for that inflation deficit has lost some of its persuasive power. i think the fed can let things bubble up a little bit. we want to get to the symmetric goals. it is encouraging. it is harder and harder to say there is no inflation. there may not be much inflation outside the u.s., but in the
u.s. we have some. alix: good point. kathryn: i completely agree. i think the impression and negative interest rates throughout the globe is inflation is dead and buried and it is a phenomenon that is not going to go back to haunt us and it is -- but it is a monetary phenomenon. i will say one point. i am looking forward to the 10:00 university of michigan consumer sentiment number because if we get consumer confidence remaining high, then we should expect the spending upber two take up -- to take , especially on the back of wage growth. we saw consumer confidence disappoint slightly. that is the number one indicator i am looking at right now to determine where we are in the economic cycle. if consumer confidence remains high, with real wage growth,
then you are far from a u.s. myession, which has been long-held contention. alix: if you look at personal income, the saving rate winds up going up. does it mean the consumer will be fine or is that an indication consumers are genuinely getting scared? simona: to me it is a good thing. i see consumer spending is a function of two things. as your other guests stated, confidence is important, but having the money to spend is even more important. when i see -- what i see the high saving rate doing for the economy is it creates a cushion. we know the manufacturing sector is hurting. capex has softened since last year, but the consumer seem strong and does not appear to be vulnerable to the downside.
even with some deceleration in employment growth, the consumer will not be forced to switch off consumption right away. debt service ratios are low and the savings rate is high. you have the ability to sustain consumption, even in the face of slower growth in slower employment growth. it also begs the question how this feeds into a possible recession. pimco saidlps at that while recession is our base case, it does not take much to tip over an economy moving at stall speed. we think it is important to focus on capital preservation and to be conscious on corporate credit and equities. how do you see that? it will not take a lot to tip us over into a recession? kathryn: i completely disagree. it will take quite a bit. the consumer is two thirds of the economy. -- yousumption growing
have consumption growing. it is hard to see, without a significant shop, the can -- a , the sectorshock toppling over. this combination of data says the fed does not need to cut the three times the market is pricing in. the fed should not anymore. the fed has a two-pronged not five.ot three, as we have heard the fed talk about global expansion, helping the lower classes get more access to credit, the domestic expansion, maintaining financial markets. it has a two-pronged mandate. this gives us the space to win back at some credibility and keep rates on hold. alix: what is the fed narrative now? narrative is the
base outlook is good. we are worried about downside risk, which is a wise thing to do. to what extent do you worry? i agree with what your guests said exactly. how many cuts can you rationalize simply on the basis of risk that has not yet materialized? i would also add in terms of the recession risk, housing has rebounded nicely. -- look at to make where interest rates have held the most, it is housing. there is a possibility of a new refinancing wave which gives us another stream of income to consumer. the chance of recession is quite low. whether you -- whether the fed cuts once more or stops here, we will see. beyond another cut at most i think would be unnecessary based on what we have seen. alix: thanks. appreciate it. simona mocuta and kathryn rooney vera. we want to get a headline of
what is making headlines outside the business world. is the biggest threat to his presidency. donald trump lashing out at the person who gave information to a whistleblower. the president speaking at a closed-door meeting with u.s. diplomats. bloomberg obtained that video exclusively. >> i want to know who is the person who gave the whistleblower the information? do inow what we used to the old days with spies? we used to handle it a little differently than we do now. viviana: mr. trump's comments leading several top democrats to warn the president against what they call witness intimidation. tofrance, several lining up pay their respects to former president jacques chirac. he died thursday at the age of 86.
a public ceremony is scheduled for sunday. tankersh flag oil entering international waters has been held by iran since july. the news coming shortly after the tanker began transmitting its location for the first time in weeks. 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. much.thank you so we want to highlight what is happening with crude. another leg down. intraday we had a leg lower on the dow jones headlines and perhaps the saudi's would consider a possible cease-fire in yemen. another light lower about 20 minutes ago. we'll be paying attention to that. that will leave oil stocks out of bed as well despite the s&p oil and gas etf down on us 3% in premarket. coming up, another company hurting from trade tensions. more on microns warnings on the
viviana: this is "bloomberg daybreak." i'm viviana hurtado in the hewlett-packard enterprise greenroom. coming up later today, brian hook, u.s. special representative for iran. alix: time for bottom line. we will take a look at what is happening with crude. gains made all price after the attack on saudi oil facilities. we have now erased any of that
geopolitical risk premium priced in. many analysts say there should have been even more risk premium priced in. it is now being completely priced out. the headline from dow jones that the saudi's could consider a cease-fire in yemen. also where we go from here. what happens with iranian sanctions and waivers on countries buying iranian oil. that front and center's any kind of shift we may or may not see from the u.s. now it is time for the bottom line. we take a look at companies worth watching. we are joined by sonali bostic and sarah -- and sarah ponczek. we had tesla shares down 30% and a nice pop yesterday when tesla's elon musk told his staff in a memo they may get another record 100,000 deliveries. according to bloomberg's dana hull, that would bring them to the low end of their projected range. alix: thank you so much.
i want to know if tweet was approved. the second company we are watching his micron. the company gave a disappointing profit forecast. sarah, break it down. sarah: micron reporting earnings after the bell. further fiscal fourth-quarter we did see the company beat on the top and bottom line. about $4.9d come in billion. the sticking point, the issue was gross margins and a quarterly profit outlook. micron saying in their fiscal first quarter, they are expected share.d eps of $.46 a that compares with an estimate of $.49. you are seeing shares ticking lower. they areny also warns still very much vulnerable to u.s.-china trade. the recent pickup you have seen a demand for new orders might
not be sustainable. analysts seem optimistic. you saw a raise their price target, and credit suisse saying this was a messy bottom but it is still a bottom. alix: thank you very much. to dig a little deeper, microns ceo mentioned the huawei issue is weighing on the company. he said restrictions against huawei continue, we could see a worsening decline in our sales to huawei. we heard today those waivers may not be continued to be issued. joining us is our reporter from bloomberg intelligence. what is your biggest take away right now? >> there is a near-term versus long-term issue. this excludes any impact on the trade bands pinch on demand. we have set continuously the trade demand has not pinched man. there -- not pinched demand. it has not structurally pinched demand.
we have heard the same thing from mike on. in the near-term, stuff is still weak. prices are up 50% from the beginning of the year to now. you're starting to see some green shoots from demand, particularly an area of importance for us, cloud spending. that is all true. we think that will be back have floated in the second half of 2020. 2020, and the of remainder of 2019, how to think shakeup? we think there is a propensity for the weakness to continue and pricing declines to continue. micron has that cannot match that with cost decline. away impact will amplify the weakness. willy huawei impact amplify the weakness. companies buying a on tariffs ,oing up or bands being enacted
that could front end demand as well. alix: can micron trough without a resolution to trade? >> this trough is outside the resolution. this could potentially be a memory trough if the current situation continues there is no trade demand impact. if the trade demand does impact, we will see the pitch in the first half of the year and the second half of the year to have stronger demand. this trough is excluding any demand impact. alix: thanks a much. great reporting. coming up, wells fargo names financial ventures ceo to lead a turnaround. and crude another like a lower. a yemen officials confirms the saudi's agreed to eight limited cease-fire, taking a lot of the geopolitical risk out of oil.
alix: wells fargo naming a new ceo. the company will be holding a conference call at 9:00. o'neill's is sandler partner in principal research. he has a buy rating on wells fargo. scott, good to talk to you. you like the announcement? scott: we like it for a few reasons. he is an outsider, that was a key goal for the board. checking that box was very important. he is already very well-known and very well respected. he has a wealth of experience as a large financial company ceo and this resolves in a norm is
open for wells fargo. -- an enormous open question for wells fargo. --x: scott: we will have to give him a little time to do that. having said that, wells fargo has spent the better part of the last years attempting to clean up its reputation, i doing major investments in compliance, risk management, et cetera, all with the goal of satisfying its regulators to move beyond the issues from a couple of years ago. one: what kind of team do -- do you want to see around him? scott: wells fargo already has a strong bench. any new ceo of a company this large and with these kind of specific issues, the ceos will always have leeway to get his own management team. i say stay tuned for this kind of announcement. there are not the things will get on day one but they will
manifest themselves over time. alix: the conference call starts at 9:00. what would be your biggest questions? scott: this will serve as an introductory call. i do not think we will get resolution to a number of the main strategic questions, for example, how does he go about improving regulatory relations with the overarching goal of getting the asset cap lifted? two, how can the company resolve its elevated expense base, which should be a real opportunity, and how does the company reversed the slide in its revenue momentum. $50.50, what is priced in right now? tott: you're getting paid wait with the 4% plus dividend yields. investors are hoping the worst of all the bad news is out. we have not heard anything new on the regulatory front in some
time. a lot of investors are hoping there is an opportunity on the cost side to rationalize the elevated expense base. i think for the most part, investors see in a norma's amount of fact tries -- an enormous amount of franchise value. alix: thanks very much. joining me now on the phone is coal speed, smyczek portfolio manager. capital portfolio management. >> i find his background interesting. wells fargo has gone into the wealth management meant business in a massive way with while cobia. -- with wachovia. financial stocks of today are visa and mastercard. he has direct experience in that. i think banks could entrench on that world in the next 10 years in a way people do not expect and his background would suggest
he has the experience and knowledge to go with that. alix: is one of your top 10 holdings. will you be adding? interesting to see what the insiders do first. let's say he walks into the job and him and if you lieutenants in place and adding more to his bench, they say this is quite the opportunity. we will trust that. there are very few insiders buying at all. like i said, and scott mentioned this, where they take their business will be the most interesting thing. he has to play with the politicians and the regulators. outside of that, it will be where wells grows from here. alix: it has been a tumultuous time for the stop. this does remove a big overhang. was there someone else you wanted to see in the role? cole: i would lean on what
charlie's comments were on that. he had said it was possible it would not be good to have somebody from inside the industry is what i remember him saying. he was very honest about -- tim sloan had a deal with the fallout. andher was just as bad, charlie has spoken very vitriolic of him. we have someone coming in from the outside of the bank. i think that is a good touch to say he has his background from jp morgan, he has a background from other institutions but he has not been part of anything in the last 10 years. alix: really appreciate your present -- your perspective. that doesn't for me on "bloomberg daybreak america's." open"?up on "the after the will be joining jonathan ferro. on "the-- coming up
open" jack caffrey will be joining jonathan ferro. the latest headline is yemen officials seem to be confirming the saudi officials are issuing a partial cease-fire agreement. the battle is between the saudi's and the rebels that operate in yemen. the rumor is they have some kind of connection to iran, and that is what started this issue where they attacked the oil facilities inside saudi arabia which caused a disruption in the market. if you remove all of that from the market, what is the downside potential of oil? crude off 2%. you have wti around 54%. this is bloomberg. ♪
jonathan: coming up on the program, ignoring the politics and focusing on the fundamentals. more signs the economy is stalling. wells fargo naming a new ceo. charles scharf will be taking over the embattled lender. is peloton the latest high profile name to fall flat on its face? with 30 minutes until the opening bell, good morning. here is your friday morning price action. equity futures up seven points on the s&p 500. we are positive .25%. the euro a little firmer and the dollar weaker following this morning's data. treasury yields higher by a single basis point. 1.70% is your yield on the u.s. 10 year. we begin with the big issue, market staying focused on policy and the data, ignoring d.c.'s political drama. joining me is quincy crosby, jack caffrey, and thierry wizman