Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  March 31, 2017 12:00pm-3:31pm EDT

12:00 pm
>> from new york city worldwide, i'm jonathan with 30 minutes dedicated to fixed income. his is "bloomberg real yield." coming up, the president is poised to right executive orders on trade with protection yeet to materialize why the consensus happened. and corporate issues toward a record quarter as they try to secure financing. and the fed says the stage. we look ahead to the big event next week. we start, then, with the big
12:01 pm
issue. y the consensus trade just became by e.m. >> e.m. looks quite exciting. >> e.m. is in a hot spot at this point. >> it's a wonderful time for investors to increase their international diversification, both developed and emerging markets. >> we do see an improvement in emerging markets and i think that the behavior of e.m. since the fed hike in march is a good example of new resilience of the asset class. >> this is the most interesting period in the emerging markets since 2010, probably. jonathan: let's see what the roundtable is talking about this trend. co-head of global fixed income strategy. here with me in new york city is cathy joens for financial research. and stephen caprio. if you take the map of emerging
12:02 pm
markets and take a look at how credit has performed in emerging markets, you will struggle to spot the red. it's just green across the screen. brian, pessimism around then, markets and bang, load up on e.m. why has this become the consensus trade, brian, so quickly in the last few months? brian: then, bang, load up on well, one, i t seen better growth prospects around the world. there's better opportunity there. i would stress in the fixed income markets, spreads there are getting relatively tight so i am not sure there's a lot more upside in terms of price but good coupon clipping opportunities, i think. kathy: yeah, i think i would be a little bit cautious to tell you the truth. it's had a big run since the end of last year as the spreads are very, very tight. now almost back to the lowest since 2014.
12:03 pm
and there's a lot of question marks around global growth. if we get to the trade barriers coming in, that's not going to be great for e.m. jonathan: jpmorgan, goldman sachs all buy, buy, buy e.m. is it becoming a little bit crowded now? stephen: it's becoming a little bit crowded. you think about 50 to 70 basis points. with that said the demand is sticky for emorging markets. [inaudible] and, again, i think it does come back to what kathy said, the fed is only hiking two to three times this year. e.m. will continue to see well in that environment. jonathan: brian, looking at the situation so far. u have the v.i.c.'s yielding higher. is that still the story? brian: that's the story, that's the trade. it's crowded as well as high
12:04 pm
yield. the spreads continue to grind tighter. where you're clipping that coupon as long as everything goes according to plan and if he starts to get some bumps in the road, maybe some fiscal bumps, trade policies doesn't look favorable to the markets. there's some risk there i think relative to these prices you're paying. jonathan: brian, can you divorce the e.m. code from the treasury market? treasuries have been incredibly stable. you have that favorable stop-down story for markets. the reality, how different is it? brian: i think you can divorce it a little bit. there's definitely some similarities there. we're still going to have, you know, markets moving somewhat in nandem. to see what we're seeing over in emerging markets in the developed world they have been a little bit behind the u.s.
12:05 pm
there's some pickup there. that's encouraging. again, the price is here. it looks like they are getting ahead of themselves, perhaps. jon in an: kathy, you have to see if this is trade. you can bring up wcrs. this is emerging markets against the dollar so far this year. it's pretty much everything except maybe two, three currencies that have underperformed the dollar. is that's how it's been in the last three, four months? kathy: you have had underperforming in the currencies. the peso leading up to the election. brazilian real, they have moved quickly. and the pickup in commodity prices, stabilization oil prices have helped many of these currencies but i think most of this has been driven by currency. stephen: these currencies may have more support than they did a year or two ago. real interest rates are higher. the balance of payment have cleaned autopsy bit. there's still risk.
12:06 pm
it might take a little bit more a sideswipe so to speak to hit e.m. than it has in the past. jonathan: you have the one in the last 24 hours and they want a new finance minister, what do you do then? stephen: it's part of the issue with e.m. where spreads are tight. you do need to be careful. i think it's ok to clip coupons in e.m. at this point. again, there's a lot of maturities coming in the next few months. $50 billion, $60 billion. that's strong in the end run. jonathan: if you look at the bloomberg e.m. index, mining, energy, do you need to be bullish on the miners, the energy place to be bullish on emerging markets? kathy: i think you need to believe they can hold the oil price in a fairly narrow range. and if that doesn't happen, if it slips back below in the low 40's or whatever, the market's not prepared for that outcome. jon in an: brian, as you look at the situation, they've --
12:07 pm
jonathan: brian, as you look at the situation, torres, how much money has moved from nontraditional investors into this asset class so far this year, and can it unwind just as fast? brian: you definitely have investors out there looking for the hot play, the income play, the yield. obviously commodities, finding a little bit of a bit has helped. i think it's sticky in the near term. but, yeah, any big disruptions, those more volatile markets like emerging markets are definitely more susceptible to it. jonathan: we are looking at the reality check of south africa. as soon as you get the political scare,s bang, the money comes out. stephen: you see in q-4 when trump was elected. you south a lot of outflows from e.m. they came back quickly in q-1. when oil prices fell, they slowed but you didn't see major outflows from e.m. unlike u.s. high yield.
12:08 pm
jonathan: you bring up the president. president trump set to sign executive orders today. will they have a big impact? you see e.m. just rip since the election after the initial dropoff. will they materialize? kathy: it looks like they will. executive orders give the president a lot of leeway to make some changes in trade without having to go through congress and not have the same problems with the a.c.a. it looks like we will get some sort of trade barriers. if they talk about trying to renegotiate with everybody, that could probably take four years or more. i am not really sure where we go. if they go at china first and then mexico, the big trading partners, we could have a scare in e.m. jon in an: is that enough to be bearish? stephen: a little bit more cautious and we will see what comes out later today. onathan: brian rehlin, stephen caprio and cathy joens, thank
12:09 pm
you so much. sucked up by the market but cracks starting to show in the margin. this is bloomberg. you are watching "real yield."
12:10 pm
12:11 pm
jonathan: i'm jonathan ferro from new york city. this is "bloomberg real yield." what it has been for issuance. the busiest first quarter for debt sales since 1999. u.s. investment firms push it to more than $415 billion. that surpasses the previous record at $381 back from 2009. over in europe, syndicated primary issuance was active every single business day of the quarter. issuance volume is poised to
12:12 pm
ach almost 446 billion euros and you have to wonder whether there is pushback. they are trying to lift the offer from 8% to 10%. i want to bring back a roundtable. brian, kathy and stephen. kathy, we had this big wall of debt come into the market and the market just suck it all right up. is that going to continue? kathy: we think it's going to continue early into the year because the in-flows, the mutual funds for corporate debt has been very strong. 15 consecutive weeks of weekly in-flows. and as long as that's the case, demand will be driven, they'll go out and buy up all the corporate bonds they can buy to satisfy that demand. jonathan: stephen. stephen: i think that's right. the demand for u.s. investment grade is very strong at the moment. you are starting to see a
12:13 pm
little bit of cracks abroad. it deals with japan that is hawkish but by and large the demand from mutual funds remains strong. jonathan: who is getting a better deal here, the issuer or the buyer? brian: long term the buyer. in the short term the issuer since we've seen spreads retract quite a bit over the last eight months. long term, there's some, you know, secular demographics and other things at play that i think will keep rates low for longer period of time. jonathan: stephen, you talked about a crack. you mentioned europe, you mentioned japan. kathy, do you look at energy for where the cracks are? we talked about the energy plan. they want to come to market. they want to market it around 8% and they have to lift it up to 10% to get the bid, are we going to see more of that? kathy: i think so. if you look at my bloomberg, you see that whole play in nergy when we had the drop prices an suspends spiked up
12:14 pm
and they came back down and tightened to where the rest of the market is. i think people might get a little bit nervous here because we don't know what will happen with energy prices so you are not get look of premiums for the risk in the marketplace. jonathan: brian, is that a concern for you as well what's been happening with energy over the last couple of months? a chart we showed on this program is where spreads where when crude went to $80, there where they are at now and crude is $50, does that make any sense to you? brian: it makes sense but i do think a lot of the bad players we kind of shook out last year through the energy collapse. so if oil's able to stay around the $50 a barrel level, i don't see big risk in that space from a default perspective. if we start pushing down towards $40 or even through $40 again, yeah, those concerns are going to be more heightened. jonathan: stephen, there is that high yield energy crude screen for you. how will it reconcile?
12:15 pm
stephen: we think it will go down. shale will start it. again, a lot of these names have lower break even cost to some extent. but, again, with the lack of premium high energy yield names, these names -- there's definitely some risk. jonathan: as we sit here and talk about record quarter for issuance, they will say what was the money actually used for and, stephen, you said it's about refinancing. i want to bring up the m&a hangover that needs to be talked about. you see the number of deals out there. these guys, a lot of them still need to come to market to get the financing in place for these deals. when the debt is issued to finance some of this stuff, the things start to -- do things start to change a little bit? stephen: it will be in the -- it will be a supply -- there will be supply to hit the market. there's plenty of demand to offset that. in general, where we are more broadly in the cycle, again, there's plenty of indicators we look at in terms of leverage,
12:16 pm
lending standards. even terms of, say, payables, length of time that account payables are outstanding. it's a very different environment than we were in 2013-2014. demand may be there but if you get supply and the economy is only ok, not great like the market's expecting, you will see spreads go. jonathan: credit quality, the amount of leverage these companies got. at&t is at the top. you see the big telecom companies, at&t, verizon, etc., it keeps doing this. it keeps rising. you've seen that reflected in the price of the debt? kathy: not yet. not yet. i think that's because there's so much demand out there for investment grade paper. so not until probably we see some, you know, real slowdown in revenue growth, a real slowdown in the top line outlook for some of these companies and then you probably see the spreads start to widen out. jonathan: let's talk about telecom, for instance. i see the consumer price
12:17 pm
tolerance. i recognize it's still low. i look at companies like at&t and verizon and the monthly bills and the only way they can get revenue up it seems is just by a pure volume play. at what point does the debt and the interest rate they get and pay to investors, what point does that have to reflect their actual ability to increase revenue, to increase profits? brian: well, you know, those big kind of blue chip firms, i mean, spreads are tight. we have some room here for spreads to widen under such a scenario. those debt payments are quite a bit more secure. you also have the large dividend payments out of the equities that can help support the debt payments. over the long term, those investment grade names, i'd like to move up a little bit up in quality even from those at these prices. but, you know, i think those payment streams are a little bit more secure than when you move down in credit quality. jonathan: stephen, is it time to move up in quality? stephen: i think it is. we are looking at single a rated names.
12:18 pm
and technology. technology names as well which on the policy front if you get repatriation that's passed at some point this year, even early next year, that could be a cut in supply. these names could bring cash back to do m&a and buybacks. jonathan: a lot of the story is the repatriation story is in the price. is it in the price of the debt? stephen: tech is underperforming the broader market. investors have room to say a triple b rating than single a rating. jonathan: is it time to move up in quality? kathy: we have been moving up in quality for a while because of our concern how tight spreads are. what we're seeing is a slowdown in loan growth which may prestage a slowdown in overall g.d.p. growth because they're highly leveraged. if you look at this chart i pulled up, you can see the loan growth, commercial industrialen loan growth has slowed down a lot since 2015.
12:19 pm
and really even with all of the optimism about fiscal policy, it's slowing down. so that may be an indicator that things are slowing down. in terms of growth later this year and it's priced into the market. jonathan: you are sticking with us. cathy joens, u.b.s. stephen caprio. twos, tens, 30's in the markets, it's been quiet. unchanged. 125. bid on the margin, we are down a basis point on the 10-year. and 3%, up two basis points so far. still ahead on this program, it's the final spread. trump to meet in florida. the u.s. jobs report as well. we look ahead to next week. this is "bloomberg real yield."
12:20 pm
12:21 pm
12:22 pm
jonathan: i'm jonathan ferro. this is "bloomberg real yield." a full agenda including a meeting down in florida. two presidents. one being president trump and the other president xi. and a presidential debate, fed minutes and the jobs report. ahead of all of that, particularly here in the united states, the long end of the u.s. treasury curve that's been doing the outperforming. the barclay's index that matured more than 20 years out, up 2% from the start of december. that's despite two rate hikes or maybe because of it. brian rehling from wells fargo investment institute. kathleen hays from swab. and stephen caprio from u.b.s. brian, i want to begin with you. what do you think of the outperformance against all the inflation rhetoric? brian: well, i think where we saw the outperformance start to play in is when the headquarter failed. so i think there's some questions there about kind of
12:23 pm
the fiscal policy doing some of the heavy lifting as i think many in the market expected. but also, you're right, fed hiking rates. we should be at this period in the cycle see that curve flatten and we are seeing that a little bit. jonathan: kathy. kathy: i agree, the curve flattening should be kicking in with the third rate hike and it has. i think the market got way ahead on the policy agenda. they priced in and we see nothing shovel ready. jonathan: a lot of conversation this week about policy normalization. fed balance sheet normalization. >> wouldn't surprise me sometime later this year or sometime in 2018 should the economy be performing in line with their expectations that we'll start to gradually let securities mature rather than reinvesting them. jonathan: brian, several years ago 2013 you had bernanke whisper the word taper and the
12:24 pm
market blew up. why do you think they'll normalize with a $4.5 billion balance sheet? brian: we want to know what the new fed will look like. we had several appointments from trump as well as nomination of a new chair. i think this balance sheet normalization is going to be put off to the new chair. so let's see what the new chair's opinion is and what they look like there, but there could be a market reaction once some of those unknowns become known. jonathan: stephen. stephen: i think balance sheet normalization will occur largely in q-3 of 2018. that's kind of the meet yum expectation by the market right now. i think the market is priced for that in the long end. one of the reasons it has held in so well and, again, even the more bearish clients that we speak to, they see it go to 3% as well. before it starts to come down with the high debt loads.
12:25 pm
i think it would be good if they let the balance sheet roll off later this year. and we are talking about 30 base points. jonathan: guys, i want to wrap up the program and ask you each one question. you get one-word answers. the first one, buy u.s. high yield or buy e.m.? high yield or e.m., brian? brian: e.m. jonathan: kathy. kathy: high yield. stephen: e.m. jonathan: buy or sell on tips, brian? brian: buy. kathy: buy. stephen: buy. jonathan: you mentioned this one, -- kathy: no. brian: no. stephen: no. jonathan: and then the big one next week. payroll friday. 175,000. upside or downside to price, brian? brian: upside. kathy: downside. stephen: downside. jonathan: we got a market with you. our thank you to brian rehling. kathleen hays and u.b.s.'s
12:26 pm
stephen caprio. coming up on this program and later on bloomberg tv, u.s. commerce secretary wilbur ross just spoke. he said trade enforcement will be the primary focus of the administration. the rest of that interview is coming up in just a few moments. and from new york city, that does it for "bloomberg real yield." i'll see you next friday at 12:00 new york time. that's 5:00 p.m. in london. it's 30 minutes dedicated to fixed income. this is "bloomberg real yield."
12:27 pm
12:28 pm
12:29 pm
12:30 pm
vonnie: live from new york, i'm vonnie quinn. welcome to "bloomberg markets." let's go to abigail doolittle. she's got some movers. away from the world of stocks and bonds on this final day of the quarter, abigail. abigail: we do indeed. it's the final day of the quarter and we have the tally for quarterly performance for all sorts of asset classes. . will look at the metals this is 7348. it's a quarterly chart. in white is the bloomberg dollar index. it's down about 3.5% on the quarter. it's worst quarterly performance in the year. not surprisingly that has helped gold have its best quarter since march of last year as well. the quarter of march of last year as well. you can see the strong inverse relationship. the strength for metal, though, vonnie, extends beyond gold. you have palladium which is considered to be another
12:31 pm
precious metal. the same thing with silver. along with lead and aluminum, all trading higher. look at the strength for the metal complex, vonnie. again, mainly driven due to the weakness in the dollar and the inverse relationship. we hop back into bloomberg and look at 7345. this is volatility on the quarter and what we're looking at here is the calm, the complacency everybody has been talking about over the last quarter is right there down there in the blue box. the average movement for the v.i.x. on the quarter is -- v.i.x. on the decade. not so much for this last quarter. again, investor fear is relatively low, at least right now. and then finally, you might think that would suggest we could see a spike in volatility in the next quarter and move down in stocks but this chart may suggest the on cis. this is g #btv 7250. up top we see the vix in white.
12:32 pm
at the bottom we have correlation and inverse correlation. so basically when it's low the inverse correlation is high. we see back at the time of the crisis we saw it low. we saw the big reversion for the s&p 500. down the vix higher. it may just suggest, vonnie, this calm we have been seeing for stocks and also for the vix may continue. interesting stuff to take a look at on the last day of the quarter, vonnie. vonnie: and monday it will be the first day of exporters. we will be following on from that there. abigail, thanks to that. despite policy uncertainty, you were talking about consumer sentiment is rising. americans are registering optimistic views about the state of their finances. we heard the manufacturing c.e.o.'s earlier today express confidence with president trump as well. that came out in the manufacturing survey. our next guest has it compared with low rates and sees opportunities in small cap
12:33 pm
stocks. this is simoeon hyman, head of investment strategy at pro shares. you know, there was a time -- simoeon, thank you. the whole market started to rally again. you are looking at the smaller caps. simeon: i think there is an opportunity. they have outperformed a little while now. you have to be nuanced about it. the domestic sort of trade, let's hope for some tax reform, it will come eventually, we all think. but the hair on small caps can be leveraged. that's the one piece of the ointment here because small cap companies have more debt and that means they are on average sensitive to even the short end of the curve and the fed hiking interest rates. so i think the opportunity in small caps is one that you should focus on quality stocks. vonnie: ok. so we'll get to the positive in the case. we are getting two executive orders supposedly at 3:30
12:34 pm
eastern to start this whole episode on trade with the administration and we are getting a 90-day review from the commerce secretary who we will hear from in a little while. all of this would suggest there might be tough times for the smaller caps. when it comes to trade, when it come to border adjusted tax, even things like immigration. simeon: yeah, but still coming back to evaluation, there's still room for those multiples to talk about in the business cycle. it is contingent on the business cycle. look what we found out yesterday. corporate -- we had earnings move up to the upside for the first time in the last two quarters for the first time in the last couple of years. i think you have enough of those green chutes coming out even if there are some missteps or falls even on the policy front. vonnie: now, do you buy small caps across the board, the russell 2000, do you look at particular sectors, capitalizations? simeon: for us what we think
12:35 pm
works well these days is focusing on stocks that have continuously grown their dividends. that's a strategy that people are more familiar with than large caps. it works well -- familiar with in large caps. it works well in small caps. cash flow can be a nice play to have this small cap emphasis in this part of the business cycle when there is that risk of increasing interest rates, particularly on the short end of the curve even. vonnie: how do you make sure you are not getting into the more crowded trades? simeon: well, quality kind of hard to be a crowded trade because it isn't a momentum-oriented trade. so i think that's certainly one way to keep out of the crowded part of the small cap sectors and also frankly not everybody has that same view on small caps. so it's unlikely to be kind of crowded these days because there are mixed sentiment on it. vonnie: you are not just looking at small caps in the u.s. you are+++
12:36 pm
elsewhere? simeon: i think if you look outside the u.s., you look for caption -- there is a real opportunity in both developed and emerging markets. emerging markets had a really good run in the last 15 months or so but that brings the returns up to half of that of the s&p 500 since the crisis and surprisingly just like we found out about the emerging market country sovereign balance sheets, the balance sheets of the corporates are not too bad. they are not what they were 20, 30 years ago. vonnie: you look at chart 7331, you see the flows have been, you know, just phenomenal in emerging markets in general. simeon, would you buy an emerging market index or would you look at particular countries? simeon: again, i think the quality story is an important one because once again the risk of having junky companies is they are susceptible to a normalization of interest rates so i think that whole theme of looking for companies with good solid balance sheets, solid earnings growth, solid dividend growth. vonnie: can you give us an example of places where we can
12:37 pm
dive into and look more? simeon: yeah. we're not sort of name pickers. vonnie: no, but areas. simeon: in terms of areas, i think as long as -- as long as commodity prices are at least stable, then the big hunting grounds ought to work. the big hunting grounds of brazil and south africa, as long as we have at least flattish commodity prices. we don't need a big commodity price rally but if there is a real drop in oil prices that will affect the market. vonnie: i have been hearing it more and more that brazil is getting real interesting. you mentioned south africa. we are getting a lot of news out of south africa. what about currency risk when it comes to -- even australia? simeon: well, currency risk in general is always something to consider in all -- you know, in all international markets. but i do think there is an opportunity over the next, you know, whatever it is, several quarters, couple of years, for there to be a little decoupling
12:38 pm
between interest rates and the dollar. in other words, i think we can see mormalization of rates, at least in the u.s., and not have the dollar to continue to go straight up. so i think there's an opportunity for currency to not be terrible head wind if you will for emerging markets and developed international markets. vonnie: simeon, by definition -- you are not going to be able to tell me but what's the biggest risk we may not be pricing in? simeon: it's always geopolitical. if there's a war and there's risk all over the place, that's the wild card. to me that's the biggest wild card. vonnie: it doesn't make you lose sleep at night? simeon: it doesn't make me lose sleep at night. vonnie: let's get a check on bloomberg. courtney is there with more. courtney: president trump's top lawyer has invited lawmakers from both parties to view classified information at the white house. the invitation comes as the administration faces new questions about possible political interference involving investigations into
12:39 pm
russian election meddling and reports that white house officials secretly funneled materials to devin nunes, chairman of the house intelligence committee. the senate's top democrat is strongly warning that republicans change senate rules to confirm president trump's supreme court nominee. minority leader chuck schumer of new york is trying to line up enough votes to block neil gorsuch. he lost two in his caucus tuesday when democratic senators joe manchin of west virginia and heidi high camp of north dakota said they would vote for gorsuch. in europe, a warning on brexit from european council president donald tusk. he said the process of the u.k. leaving the e.u. may be difficult and may be confrontational. while he said there is no such thing as a brexit bill, the u.k. will still have to pay up. >> we need to make sure that the u.k. honors all financial commitments and liabilities it has taken as a member state. courtney: the u.k. has rejected
12:40 pm
the suggestion that it pay $65 billion to leave the e.u. french conservative presidential candidate said if he's elected his priority will be to fight islamic extremism following a series of attacks in his country. fillon proposed to put in place a european defense alliance led by france and germany. powered more than 2600 analysts and journalists in more than 120 countries, this is bloomberg. vonnie. vonnie: courtney, thanks for that. coming up, u.s. commerce secretary wilbur ross just spoke with bloomberg. ross said trade enforcement will be a primary focus of the administration. the rest of that interview in just a few minutes. stay tuned. this is bloomberg.
12:41 pm
12:42 pm
12:43 pm
vonnie: you're watching "bloomberg markets." i'm vonnie quinn. we spoke to wilbur ross. president trump signing executive orders at 3:30 today. they spoke about what's on the president's agenda. secretary ross: well, these executive orders have two separate but very much related purposes. fundamentally enforcement is very, very primary objective of this administration and trade and then improving exports is the other very important thing. how do these two fit together? the om bus, the 90-day investigation will be the first truly systematic investigation
12:44 pm
that we are aware of into country-by-country, product-by-product, why are we having trade deficits? and hopefully that will lead us to the solutions, how do we reduce the deficits preferably by increasing our exports. so that's the thrust of the 90-day study. and we may very well come with some interim findings. it's not required that we use the whole 90 days. the second order is the one related more to enforcement in that when i got here i was horrified to learn that there are literally billions of dollars of counterbailing duties and anti-dumping fines that have never been collected. and the reason they were never collected for the most part is that the foreign exporters are very clever setting up shell companies here so when we do
12:45 pm
levy the fine, there's no capability to pay. so what the second order will is impose a requirement for debtors of credit or cash or insurance company bonding to be put up so that there is a responsible party when the fines are levied. so it really is to help make enforcement effective. >> let me ask critics who say you're focused too much on trade deficits. what do you say in response to that? secretary ross: well, i don't know what they mean by focusing too much. i realize there are some folks who think that trade deficits are not harmful. well, to those people i would ask a simple question, do we agree that trade exports and a trade balance favorable has been an important factor in propelling china's growth? if we do, then i would like
12:46 pm
someone to explain to me, how can it be the case that both surpluses and deficits are good? >> on the issue of enforcement, do you intend to continue to work within the scriptures of the w.t.o.? what's your message to the world trade organization going to be? secretary ross: well, the world trade organization has been in being for a very, very long time. and it's quite conceivable that there's some modernization needed of some of their processes. also of their mind set. if you read their annual report, it describes almost universally anything by way of counterbailing duties or any sort of trade remedy as protectionist. it doesn't focus on the idea that the reason that there are more trade cases is that there are more countries practicing violent behavior. so i think their attitude, their mind set could use a
12:47 pm
little refinement. >> we are expecting a review of china's market economy status under the w.t.o. here in a matter of days, i gather. what can we expect from that report, from that review? secretary ross: well, i don't think it's quite that the w.t.o. is going to review it. i think what it is is china has rought an action seeking to be granted normal market status. they brought two litigations. one against the u.s. and one against the e.u. the one they're propeling forward the most is the one against the e.u. apparently they think maybe they have a little better shot because the e.u. rules and the way that they've gone about it is a little bit different from the way the united states has. but whether or not one is a nonmarket economy is a very important question because it
12:48 pm
dictates the ease and the quantity of fines and countervailing duties that you can impose on that country so it's a very, very important item and it will have a lot to do with a lot of people's trade balances. >> when the president heads to mira lago next week to meet with the chinese president for the first time, how big an agenda is trade going to be and what are you hoping to accomplish in mira lago next week? secretary ross: well, the content, the exact content are still under way. but suffice it to say that i will be an active participant in the conference next week. >> the president characterized those meetings as very difficult. are there particular things that pose particular difficulties, in other words, things you know you'll broach and create some controversy? secretary ross: well, my view is that the united states is about the least protectionist of the major countries, and
12:49 pm
that china is one of the most protectionist. there's an inherent clash between those two. even though china use a tremendous amount of free trade rhetoric. we'd like the rhetoric and the ehavior to become more congrowth. >> do you think that -- secretary ross: if it does it will come up with steve muchein, our trade secretary. currency manipulation is the province of treasury, not commerce. >> and peter navarro said on bloomberg television said your report, what comes out of this 90-day period, will be the foundation for the trump administration's trade policy. how much of a blank slate is it at this point? secretary ross: well, it's not a blank slate in the sense there have been trade negotiations and trade analysis historically, but they have not
12:50 pm
been pulled together and put into context, and especially it's never been a real systematic effort to separate some of the natural imports that we have to have and are not a function of anybody's state subsidy or bad practices. for example, u.s. does -- is not self-sufficient in oil. we have to import oil. so to the degree that a particular country's exporting oil to us, that doesn't mean they're doing anything in the way of an inappropriate trade practice. that's just one example that not all countries in the study will be found to be doing things that are illegitimate or inappropriate. this will be an attempt to develop a pen pointed, fact-based, very methodical, very systematic approach to trade, not a hippity hop
12:51 pm
approach, this country, that country, scattering all around. >> the very president, very quickly, dispatched with the trans-pacific partnership when he took office. do elements of that trade bill still exist? are you going to build off of things in that document or have you guys thrown it out whole scale? secretary ross: well, there were some improvements made in the t.p.p. relative say to nafta and relative to other free trade agreements that we have. so we're obviously not going to throw the baby out with the bath water. we view the concessions that were granted in the t.p.p. by those countries as the starting point from which we will attempt to build. >> you mentioned the reluctance to go with the himbings ippity hop approach here. your administration has moved to a bilateral approach to trade. how do you square those two things? tenants of trade that are wide reaching and global and pursuing deals that are two
12:52 pm
way? soirk well, there's no -- secretary ross: well, there's no impediment to develop a set of ingredients that is essential to any agreement. it's not inherent in negotiation that you must start every time with a blank sheet of paper. we hope that out of nafta, which has, you know, is the first thing on our agenda, we hope there will come some model agreements for some of the components of a trade deal that we can then roll out into other agreements with other countries. >> you are on capitol hill this week meeting with lawmakers talking about nafta in particular. can you share anything about the conversation, what you discussed with lawmakers on capitol hill? secretary ross: yes. we're in the process now of egotiating the famous 90-day letter. very highly stylized document that we must present to congress and they must accept in order to trigger the formal part of the negotiations.
12:53 pm
that's the process we've been going through. we've had half a dozen meetings with the various committees. the ways and means committee, the house finance committee and the negotiating committee in order to give them a flavor for where the administration would like to head with nafta, and it was the leakage by the congress of one of those documents that led to the recent flurry of news about it. >> is the barrier to beginning these conversations on capitol hill or is it in the white house or the commerce department or you, someone who would like to get started on this as quickly as possible? secretary ross: well, it's really on capitol hill. under the trade promotion authority, the so-called fast track, we are not permitted to invoke that and yet not go through the procedures that we're going through right now. so in a formalistic way, it is very much with the congress, quite specifically with the
12:54 pm
senate finance committee and with the house ways and means committee. i am anxious to get it started, especially with mexico, because mexico has presidential ections coming up in -- next year. the closer we get to those elections the more difficult it will be for any government to make a deal. so i hope we can get going very soon, and i can absolutely assure parties who are involved that the united states will not be a source of delay. vonnie: more to come. that was u.s. commerce secretary wilbur ross speaking with my colleague. well, coming up we have more from that interview with commerce secretary wilbur ross. that's in the next hour. let's get you caught up with all of the data. right now we're seeing the yen trading at 1130, that's
12:55 pm
stronger than in the session it was. nevertheless, we're on a weaker track for the yen. that makes crude oil at $50.38 a barrel. the two-year yield has been a little bit buying and the yield is higher by about 1.25 -- by three basis points. 1.25% there on the two-year yield. two cent spread. 114. that's a little bit wider. although we have been coming in there for the two cent spread. countries markets movers. for the u.s., mostly we're in the green. the dow is down about a 10th of a percent. no huge move today for the jor independent sees even -- indicies even though we are at quarter end. the dollar index down about .2%. yen weakness and the canadian dollar weaker .2%. taking a look once again at
12:56 pm
crude oil futures. we are seeing a big gain there at w.t.i. we're trading now at $50.38. i just want to take a look at le. mexican rub we are still below 19 but we have given up some of the gains we made. it's getting weaker by .25%. the 10-year yield here in the u.s. at quarter end, 2.04%. once again, you don't want to miss more of that great interview with the commerce secretary wilbur ross starting out on a 90-day review period which will be the blpt for trade in the united states in this administration. that's coming right up here with bloomberg. this is bloomberg.
12:57 pm
12:58 pm
12:59 pm
david: it's 1:00 in washington -- from in london bloomberg world headquarters in new york, i'm david gura. and policyn politics
1:00 pm
during president trump's first hundred days in office. here are the top stories we're watching in this hour. president trump expected to sign trade executive orders later this hour. more from my interview with commerce secretary wilbur ross. we will be speaking live with carlos gutierrez that got back from china. what is it stake with president trump chinese counterpart next week? president trump says he is ready to fight the conservative house freedom caucus. it could bring down the gop agenda. paul ryan says he shares the president's frustration as republicans examine the path forward for taxes and health care. we will examine that in washington. michael flynn should seek immunity from prosecution, calling investigations between the russian government and the administration a witchhunt. adam schiff says he will discuss the flynn request with the senate committee and the department of justice. ♪
1:01 pm
later today, president trump is set to order a comp are hence of study that would identify every form of trade abuse that contributes to u.s. deficits with foreign countries. director of the national trade council addressed the longer term issues with these trade deficits. deficits are not bad per se. but when you run large and persistent trade deficits for as long as we have, it is basically a proxy for all of the job loss, the slow economic growth, the low wages we have suffered over the last 15 years. david: president trump's tough talk on trade comes right before the meeting with chinese president ping. to talk more about what's next is our chief washington correspondent. with us from our bureau in washington, d.c.
1:02 pm
ther navarro quibbling with fact that these two things have anything to do with each other. but it certainly is on the mind of people as they read what the president is set to sign a little later today. kevin: i have to politely disagree with all of the sources i am talking with. that this has anything to do with next week's china visit. president trump tweeting last night about distance relationship. they will have a lot to talk about. foremost, foreign policy. when you talk about taiwan, the koreas, south korea. as well as how to combat terrorism. china having been a major player on all of those issues. and not always in agreement with u.s. interest. second, of course, the economy. you heard the interview with wilbur ross about how these trade agreements a really shaping these first hundred days. year of the first presidency. a lot of folks on capitol hill and in the republican caucus
1:03 pm
yearning for details on the white -- from the white house on that particular issue. david: if the currency was going to be on the table, he said it was squarely up to steve mnuchin. tommy what will be discussed in florida next week as you're there for the talks. puntingecretary mnuchin the campaign promise issue of whether or not president trump will label china as a currency manipulator. until a couple of weeks, that report finally gets released. executive orders are newsworthy. later today, president trump releasing these executive orders for a study on just whether or not countries are taking advantage of the u.s.. and that could provide him some political cover by saying he's being tough on china but not going so far as to label him a currency manipulator. david: that is kevin cirilli joining us from our bureau there in washington. us get to the future of u.s.
1:04 pm
trade relations. amanda has had a front row seat -- amanda has had a front row seat is carlos gutierrez. he joins us now from washington, d c let me ask you about the responsibilities of the commerce secretary when it comes to trade. what kind of role does he play? >> it is primarily enforcement of trade agreements. the discussions the commerce secretary has with governments tound the world are related enforcing and ensuring that the trade agreements are abided by. that is essentially the role. anretary ross is playing expanded role here because of who he is. is going to play a very important role, for example, in the talks next week. or in a couple of weeks. david: let's hear what secretary ross had to say when it comes to
1:05 pm
trade right now. the united states is about the least protectionist of the major countries. and china is one of the most protectionist. there is an inherent clash between those two. even though china uses a tremendous amount of free trade rhetoric. david: one of the things that these executive orders call for today is a conference of review of trade abuses in the words of the administration. secretary ross saying an unprecedented review. will this be novel or different from what we've had in the past? sec. gutierrez: the timing is novel. this is something done periodically from the commerce department. it takes the trade deficit and analyzes it. it will roll for the analysis country by country. -- 65% ofthe trade the trade deficit is china. what this means for the meeting
1:06 pm
is that itent xi will allow the president to stay at a high level. it is a relationship building meeting. it should not be a negotiation where they are getting into the details. the fact that we are doing this review will allow president trump to say i have a problem with the deficit. some of the big themes that he has talked about. we will get back to you with specific details after we do our review. becausethat is smart, with such little preparation, we can't expect the presidents to get into detail. to get to negotiating mode. administration is focused on the issue of enforcement. what grade would you give how we have enforced trade deals in recent years? the former u.s. trade representative said there were 20 something cases brought against china during the obama presidency. could the u.s. have done more and should it be doing more?
1:07 pm
there are two: issues here. one is enforcement. it is brought to commerce by companies that believe they have by dumping or subsidies. department of commerce responds -- they have been very active for a long, long time on dumping. on anti-dumping. anti-some cities -- anti-subsidies. andgood are we and collect the tariffs that we slap on some products? apparently, we haven't been that good. there are billions of dollars of uncollected tariffs that we have to look into. david: you have just returned from china and i wonder what the conversation is like about what is happening in washington. the rhetoric about trade. rhetoric they could be construed as protectionist. obviously, a lot
1:08 pm
of curiosity about president trump and his policies. there is a sense in china that we are in a bit of a mutually assured destruction situation. where both sides rely on each other so much. we have so much trade between the two countries. it is something that will not benefit any of the parties. the key here is how do we get what we want? had we get china to move without -- how to we get china to move without going to a trade war? it would be very costly. and we have billions of dollars of direct investment in china. u.s. companies are on the ground in china and they could suffer as well. there is a lot at stake here. has to be firm. he has to be tough on china like he said he would. president xi has a congress this
1:09 pm
year which is very important where he will essentially consolidate his power for the remaining five years of his two terms. ande is a lot at stake, both have the show that they are engaged. and holding their own. will be veryd, it interesting to watch. but don't expect any major announcements. cap's chinese president will come in with announcements of investments being made. jobs are being created in the u.s.. i think we will have to wait for some future meetings. this will be a relationship building meeting. david: these leaders meeting each other for the first time. what is the state of this relationship right now going into the trump presidency? how would you assess the u.s. relationship with counterparts in china? there didn't seem to be a lot of dialogue. sec. gutierrez: it is shaky for a lot of reasons.
1:10 pm
messages were sent across the world. the taiwan issue. it the one china policy issue. it is the most sensitive issue in the relationship. president trump had a phone call with the president of taiwan. that was very sensitive. made thatstatements suggests the relationship will be tense. right now, it is uncertain. it is tense. the two sidesping can find an accommodation so that we don't go to a trade war. david: secretary gutierrez, thank you for your time today. from the stonebridge group, former secretary of commerce. it's get a check on where the markets stand with abigail doolittle on the latest. abigail: on this last day of the quarter, not a lot of action for stocks in the u.s.. slipping averages all between small gains and losses,
1:11 pm
right around even. we don't have it on the board, but the vix fear gauge is up 7% on pace for the biggest surge since march 21 when there is the big cell overstocks. to the point -- the big sell over stocks. g #btv the trading average on the day is less than seven points. again, not a lot of action here on the last day of the quarter. what a quarter it has been for stocks. this is 7344. the s&p 500 up six quarters in a row. a nice winning streak there. it looked for the nasdaq, a real performance of about 10% on the quarter by some of the big tech names. -- a&g.ngie, russell 2000's of
1:12 pm
about 2.3% on the quarter for the smallest quarterly gains since june of 2015. that is the small-cap index that led out of the election. a big piece of the trump trade. the fact that its gain as much smaller than the other indexes may be something to keep an eye on as well as these gains that can extend into the second quarter. david: closing out the quarter, abigail doolittle. itakes takes for tax reform. we'll take a look at what investors are hoping for. this is bloomberg. ♪
1:13 pm
1:14 pm
david: this is bloomberg markets, the first hundred days under the new administration. it let's check in with first word news this afternoon. taylor?
1:15 pm
taylor: the house intelligence committee held a preliminary conversation with michael flynn's legal team, but the include- did not immunity. that is according to committee chair devin nunes. it is too early to consider an immunity deal for flynn. approved an agreement for president trump to pay $25 million to settle lawsuits over trump university. that decision ends seven years of legal battles with customers that claimed they were misled by failed promises to teach success in real estate. under terms of the settlement, trump admits no wrongdoing. attorneys say that thousands will get 90% of their money back. u.k.-based banks may be left out in the cold as negotiations for amicable brexit heat up. officials for theresa may are concerned that an agreement for london bank to access the single market could the impossible. discussionsthey say
1:16 pm
should be put on hold to avoid other delays and other sectors. eu president donald tusk circulated draft guidelines to 27 other members today and said that a free trade agreement can only be finalized after the u.k. leaves the block. and in south korea, the ousted president is in jail. arrested in a corruption scandal. prosecutors have to decide whether to indict her. she is suspected of pressuring executives to donate millions of dollars to foundations run by a confidant in exchange for covet -- government favors. global news powered by 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. david? david: house republicans decided not to bring the american health care act up for a vote. there is concern about the rest of president trump's agenda. over his ability to usher in tax reform.
1:17 pm
investors say the trump rally could fade a little bit. we look at the unwinding of the trump trade. it's asked charles, a veteran of institutional investors and president of capital alpha. joining us from washington, d.c. let's talk about tax reform. i imagine the first question on your client's minds is this going to happen? some extent, they are concerned if we move in a direction of the benefits from seem to be they diminishing and the timing seems to be diminishing as well. a slippery slope and the passion for it begins to decline. at that point, the trump trade would be fully unwound. we don't think we are there yet. listening toe you for guidance on a timetable in particular? who are you listening to? charles: it is really like a three ring circus. health carent, the
1:18 pm
reform, affordable care act, repeal and replace -- it had to go first because republicans have an ambitious agenda. they have a very narrow margin in the senate. do somethingo quite amazing. it to use the budget process twice in regard to fiscal budget 2017 and passing a resolution to make a bill they could pass with replace to repeal and obamacare. and quickly move everybody off the field, so to speak and pass another fiscal 18 budget resolution that would make it more tax reform. like the animal house band marching into the alley, they've run into problems on health care. it is notn hiatus and clear if they are fully going to abandon the field. reform, and a tax number of problems will emerge right off the bat as soon as we go there. david: you think this is going to be comprehensive. that is the word of the day. is it going to be easier for congress to pursue corporate tax
1:19 pm
reform and personal tax reform as two separate things? charles: no, they have to do the two together. a politically and in other ways, how do you drop the corporate 25%.from 35% to when you still have an individual rate of 39.6%. and a surcharge on capital gains on top of that. togetherto do the two just to make sense because so many people file on the individual tax code for small businesses. end,olitically, in the members will have a hard time corporate rates in a way that confuses voters and not providing some sort of reform and relief at the lower end. david: here we are at the end of march and i can count how many legislative working days we have on two hands before the deadline where we could face a government shutdown. what are you telling clients? first, in one week from
1:20 pm
today, we will have a very contentious vote to confirm supreme court justice nominee gorsuch. if the democrats filibuster, it could force senate majority and wemcconnell's hand could expand the nuclear option to pass with just a simple majority. then they take two weeks off and then they come back. there is a worry about a shutdown at the end of april. fears areike those somewhat receding because republicans will back off on forcing the really tough issues of planned parenthood and the border wall. april is shot. they get to may and have to pass a budget resolution to make an order tax reform. they do have all kinds of problems made harder by the cbo annual a date. -- update. let me dovetail that with the proposal from the white house. how do those fit together? and his president trump
1:21 pm
office have redefined "skinny budget." they put out a proposal that dealt with one third of the budget. it deals with domestic discretionary and defense discretionary spending. they have delayed until made her proposals for two thirds of the budget that deal with entitlements. all of this is to guide the congress and held the congress -- help the congress. in a way, since the president all guns at the expense of butter, it is not really helpful in sorting out how to deal with that one third of the discretionary budget. the problem isof that right now, you have a $19 trillion national debt. the baseline suggests it will grow by $9 trillion over the next 10 years.
1:22 pm
the cbo darkened that cloud in its report yesterday. just to pass a budget resolution is equivalent to throwing the k and starting the next hockey game on taxes. you have get republicans to agree to that baseline. there are a number of fiscal hawks that won't do that without something that will address the debt. that makes it harder. david: charles gabriel joining us from our bureau in washington, d.c. three ratethinks hike this year is a reasonable assumption. that is next. this is bloomberg. ♪
1:23 pm
1:24 pm
david: new york fed president dudley says it is reasonable to expect three rate hikes. here is his interview with michael mckee. .> look what happened the consensus was for hikes in 2016 and we did one.
1:25 pm
2017, going into the year it was three and so far, we've done one. think the foc is at a reasonable place with a couple more hikes this year that seems reasonable. -- economy is a bit >> what tells you it's time to raise rates? it took time to convince wall street you're going to move in march because apple said nothing really changed. william: nothing really changed. the economy was on the same trajectory, growing above trend. we have been trying to communicate to people that if congress stayed on that trajectory, they could gradually move monetary policy accommodations. it was in line with what we were anticipating. michael: would you consider moving in may? do you want time to see what will happen with the rate increased to see if there are changes in the economy?
1:26 pm
there is no press conference on mechanically, it's more difficult. william: i don't think there is a great urgency for monetary policy because the economy is growing at just a little bit above trend. inflation is still a little bit below target if you look at the underlying pace of inflation. if you look at the core personal consumption, about 1.75%. the economy is clearly not overheating. at the same time, policy is accommodative. we're pretty close to full employment. gradually taketo back accommodations for monetary policy getting closer to neutral as we go through 2017. david: the new york fed with michael mckee. this is bloomberg. ♪
1:27 pm
1:28 pm
1:29 pm
1:30 pm
david: this is bloomberg markets, trump's first hundred days with a focus on politics and policy under the new administration. let's start with headlines with taylor riggs. taylor: we are starting with politics. president trump's top lawyer has invited lawmakers from both parties to view classified information at the white house. the administration faces new questions about possible political interference involving investigations into russian meddling with the election. and reports of white house officials secretly funneling unes,ial to devin nne chairman of the house intelligence committee. signaling the u.k. will only get a year to work on a post-brexit trade deal. that will only happen if prime minister theresa settles the financial demands first. they say trade would be discussed only after there was sufficient progress on other issues. in south africa, the ousted finance minister met with his successor to ensure a smooth handover. -- president fired him
1:31 pm
praise for reining in government spending. it could lead to political who hasgainst summa been up located in a number of scandals. south carolina church shooter dylan rufus said to plead guilty to avoid a death sentence. you enter a guilty plea in charleston. roof has been awaiting trial for the death of nine black churchgoers in june of 2015. the deal won't save roof from a possible execution. a jury sentenced him to death on charges including eight crimes. over 100 20 countries. i'm taylor riggs. this is bloomberg. david: president trump is expected to sign trade executive orders aimed at tackling foreign trade abuses. white house trade a visor peter navarro told bloomberg the orders are not related to the visit next week of chinese president xi jinping.
1:32 pm
countries with which we have significant trade deficits. united states is the freest trader in the world. the lowest we have tariffs. we have the lowest nontariff barriers. we have the largest trade deficit. david: joining me now to break it all down is senior white house correspondent and trade policy analyst for bloomberg intelligence. and alex wayne with them as well. caitlin, let me start with you. these executive orders we are getting today, peter navarro maintaining there are separate from the visit next week. let's start with what they contain, first of all. what will we learn from wilbur ross? what we know so far is that the first executive order is really a study looking at trade barriers and trade abuses.
1:33 pm
they will not be shy about shaming you for these violations. they look at anti-dumping duties and whether or not these duties are being collected to the degree they are supposed to be. margaret, let me ask you about the meeting that will take place at mar-a-lago next week. commerce secretary wilbur ross saying that trade is clearly on the agenda -- squarely on the agenda. what else will they be addressing? margaret: north korea, china, easing concerns. this is all on the national security front and driving reasons for the timing of the meeting. of course, trade, the economy, and it is entirely possible for
1:34 pm
climate change. the trump administration's posture to reach a global commitment could also be on the agenda. very much president trump's home turf. having a relaxing setting. this is really about where president trump is comfortable holding court. it is a really important first meeting on all of these front even his national security is what is driving the imperative of the meeting. trade and the economy will absolutely be on everybody's mind. david: alex len, there is a dating game quality to these visits. this one a little different. it will be taking place at mar-a-lago. the president hopes he can develop one and foster one with the chinese leader. fair to say they are looking at this with a different perspective? and: the trump white house
1:35 pm
the chinese government are best frenemies. mar-a-lago is a nice setting. there are a couple other interesting twists to mar-a-lago. one, there is very limited press access there. very, of course, is not respectful of a free press. it isre they would -- also worth observing that when the japanese prime minister visited a few weeks ago, he got to mar-a-lago and play golf. it china doesn't like to be seen as the second-best country in asia. tell us about the expectations that china has going into these talks. as we were discussing with carlos gutierrez a few minutes ago, they are paying attention to the rhetoric coming out of washington, d.c. what is your approach when it comes to trade?
1:36 pm
caitlin: the approach will be trying to defuse tensions. alec said this is a very challenging relationship. effort will bee on the chinese part to really try to contain the tensions. step back anyto sort of confrontational tone. i think it will be really more of an attempt at accommodation and a more constructive dialogue. david: margaret, let me ask you about tax reform. something getting attention on capitol hill. what are you hearing about timetable? the white house was going to be driving this train going forward. the president met with steve mnuchin. margaret: previously on health care, it gives us a peek behind the curtain that is the difference between best laid plans and the actual education of those plans.
1:37 pm
and democrats as well. a lot of the speculation has been on if anything can get done this year or if we are into next year before we see some action. that is a deadline for a continuing resolution and will give us better signs about what is really possible with the timing and pacing of that. be in how lonely is it to the freedom caucus? the president is calling out members of that caucus. mark meadows among them. what is the relationship like and how much does the president need their participation going forward? alex: there was a great story out of charleston about mark sanford being threatened in the primary from trump through his budget director who is from south carolina. .f course, he was a no
1:38 pm
he did not take the threat very seriously. there is a lot of tension between this group and the white house. i don't think the white house is doing itself favors by threatening members of this group. if one member gets threatened, i think it makes them more cohesive and probably leaves them more liable to stand up to the white house. david: there has been a lot of conversation on the hill about russian involvement in the election. two members of the leadership. course, doing it of michael flynn asking for immunity. does this cast over washington, d.c. right now? is the biggest cloud in the city and it is centered right over the white house and the white house doesn't appear to be doing anything to try to clear it. this offer from flynn did not do him or the white house any favors.
1:39 pm
the latest from congress is that it will be rejected. here, there was a tweet saying michael flynn should get immunity. what you make about that about what the president had to say and what his lawyer sent to capitol hill yesterday? margaret: you see president trump letting off some steam, most likely. and a separate situation playing out between the two chambers. whether the senate is prepared to consider this and whether the house is. the politics are different. republicans and democrats make a concerted effort to say we are working together and sharing information with each other before we go talk to the public or the white house about it. a different set of events happening on the house. even the ranking democrat adam schiff saying that they will be in touch with the senate about what they are thinking about. fors too soon at this point
1:40 pm
lawmakers to make a real calculation about whether excepting any sort of or offering any sort of immunity agreement is in their interest. they probably need to know a little bit more about what they don't know yet to understand whether that would actually serve the public or serve the investigation. david: lastly, we get a good old-fashioned friday news dump. releasing financial disclosures this evening. what will we be looking for? we will be waiting for weeks. margaret: everything, right? anything could happen between now and the end of friday. we are watching the house intelligence committee as well as these disclosure reports. they will be scrutinized from top to bottom. david: margaret, caitlin, alex, thank you for your time. caitlin webber from bloomberg intelligence and white house editor alex wayne joining us. commerceiew with
1:41 pm
secretary wilbur ross, i asked about president trump stick for the -- pick for the trade representative. this is bloomberg. ♪
1:42 pm
1:43 pm
david: this is bloomberg markets, trump's first hundred days with a focus on politics and policy. let's get a check on where the markets stand right now with abigail doolittle. aigail: we are looking at quiet, tired day of trading in the last day of the quarter. 500, andhe dow, s&p the nasdaq largely unchanged. next trading action. -- something that stand out, the fear gauge
1:44 pm
up 6%. the biggest spike since march 21. just a little bit of something since december of 2015. the dow is doing the same thing. the best quarterly winning streak since 2006. a bullish action for those major averages. the nasdaq up 10% and outperforming. than 2% onittle more pace for its smallest gain since june of 2015. perhaps a little bit of a crack there. something that stands out is the fact that not only are stocks rallying on the quarter, we have hans rallying. this is 7351. it measures the quarterly performance.
1:45 pm
of the 10 year yield. the first time we have seen yields fall on a quarterly basis since june of last year. we did see the fed raise rates earlier this month. and finally, putting it together with the vix, this is 7250. a longer-term chart with the vix and white. the s&p 500 and blue. on bottom, we have the correlation and we see it going into the prices. inverse correlation and the big spike in volatility and corrections and stocks. correlation is actually very high. something that suggests we could see the s&p 500 remain near current levels. it will certainly be something to keep an eye on as we head to the second quarter, david. that is abigail
1:46 pm
doolittle. president trump is scheduled to sign the executive orders this afternoon. i sat down with wilbur ross and about the pace of cabinet confirmation and whether he thinks trade is being unfairly attacked. the legal responsibility for trade negotiations rests with the united states trade representative. and we will be scrupulous to honor the legal system. however, we have explained to the congressional leadership that it is the president's desire and it is the mutual agreement among us that this will be a collaborative effort. we believe that trade is so ,mportant and so complex minimizing the amount of intellectual resources brought to bear on it is the right way to do it. there is no need for turf warfare here. david: [indiscernible]
1:47 pm
haus he is an old friend. a skilled negotiator. we obviously want very much to have him on board. but that is not going to hold things up. we have the equipment, we have the firepower. we negotiate trade deals even without them. it is even better once he is on board. we are very unhappy that the congressional people, particularly the democrats, have been slow walking everything. take my own case. they slowed my confirmation down by over a month and i wasn't even particularly controversial. i did get 72 votes out of the 90 potential. there was no real reason for that.
1:48 pm
they are just being obstructionist. and i think that is unfortunate from the point of view of the nation's best interest. david: is the commerce department running on all eight cylinders? do you have everything in place? could use morewe people. there are various stages of going through the process of approval. we have enough people in order to function adequately. our maximumo cruising speed, we could use a few more people at some very high positions. overall staffing, we have 47,000 people. it is hard this a that we are not functioning. listening to this beast that prime minister theresa may gave earlier this week, the council president afterward. have you been in touch with your counterparts since? what happens next in terms of how the u.s. and the u.k. broker
1:49 pm
a trade deal? sec. ross: the u.k. cannot negotiate with a third until they are further along in the brexit. eu, thee rules of the eu is the bargaining for them. , since the u.k. has not had to do a trade agreement for many years, mainly since they have become part of the eu, they are just staffing up and trying to develop some bandwidth. the immediate present, they will be fairly fully occupied trying to sort things out with the eu. to engage wither them at the earliest possible it is both legally and practically feasible. looking at your
1:50 pm
itinerary, where are the places you are keen to go to first? sec. ross: well, there is a trip scheduled for japan and south korea where i will be accompanied by -- i will be accompanying vice president pence. that will be in a few weeks. david: my interview with commerce secretary wilbur ross. coming up, the european commissioner on her visit to washington at 3:15 p.m. eastern time today. the white house press briefing with sean spicer is right now. you can follow live on the bloomberg of course at tv . this is bloomberg. ♪
1:51 pm
1:52 pm
1:53 pm
david: this is bloomberg markets, trump's first hundred days where we focus on politics and the new administration. president trump said his former national security adviser mike flynn should seek immunity from callingion investigations between contact between the administration and russian government and "witchhunt." joining me now is bloomberg national security editor -- help us get up to speed with where we stand now. there are dueling investigations on capitol hill with the senate intelligence committee looking into this. what is this request from his attorney? >> winnow representatives said they had some initial conversations with flynn that there was no offer to testify in exchange for immunity. of thatdemocratic head committee has said it is just too early for that to happen. you might recall the house -- since chairman devin nunes said he received
1:54 pm
information on the white house grounds that he did not share with other members. it is becoming more embroiled with political controversy. the senate intelligence committee went ahead this week with their first public hearing into this investigation. this is the one from the beginning that i think people expected. what we have seen from the democratic and republican leaders of the committee this week. visage ofsee the jerod kushner, senior adviser to the president. he will be testifying on capitol hill as a. what can we learn from michael flynn? there is speculation -- what is your sense of what we can learn? offer can read into this to testify in a lot of ways. it doesn't mean he committed any crime at all. -- onsn't mean that he
1:55 pm
the other hand, he may have quite a bit of information about what went on in the early days of the trump administration. it wasn't even clear trump would win. reaction wasnitial that it is just a little bit early to consider an offer like this. the senate has said that they have 20 people that they want to hear testimony from. five have agreed so far to set a date to talk about what they know in this case. but remember, going back to michael flynn, this guy was not just a campaign aide and national security adviser. he was the head of the defense intelligence agency under obama for a couple of years. this is someone at the highest level of the u.s. national security process. materialquite a bit of that i think investigators could mine from him. -- thethe intendant
1:56 pm
shout for independent investigation has gotten louder. on the houseakdown side accelerated calls from either a select panel or special investigation into all of this. i think that's what you saw on the senate intelligence side this week. leaders want to make sure that they want to keep a firm grip on what is going on with this investigation. starting a new probe from scratch would essentially mean hiring half, getting to curate he clearances, and things like that. it could take process -- months for that process to ramp up. david: he is the national security editor. be speaking toll the european commissioner for competition in washington, d.c.
1:57 pm
1:58 pm
1:59 pm
>> that is 2 p.m. in new york at 11 p.m. and san francisco. imes scarlet fu. i'm scarlet fu. and i'm julie hyman.
2:00 pm
welcome to bloomberg markets. >> we are live over the next hour. we are covering stories all over the country -- around the world. new york says bill dudley three rate increases seem reasonable. the ceo of the national manufacturers association went to the white house today. also for the president's plans on the border text very scarlet: -- border tax. wise the networks holding on to the pay-tv bundle even for the highlights on the go? u.s. markets close in two hours time. but take a look at stocks with abigail. >> not a lot happening.
2:01 pm
arch is going out like a limb after coming in like a lion. we did have an all-time high for s&p 500. with the dow, there might not be too much happening. if you can believe it, the nasdaq is on pace for another record close. we do have that record action there. 55241. g #btv it helps to show this chart. the quarter chart. look at amazon over the last year. up. apple is also up. ther head -- ahead of nasdaq. lots of strength for technology. on the day we had some movement in the building material lots of green.
2:02 pm
it seems to be giving the entire space a list, and finally, we hopped back into the bloomberg to look at the quarterly chart. g #btv 7348. it is up about 9% on the quarter. a small little blip up there. that is being held by the dollar index down by three wi-fi percent. it is -- 3.5%. it is had its worst the client since 2009. it'll be interesting to see what happens in the second quarter of 2017. >> thank you abigail. bloomberg is speaking this week on the state of the economy and what to expect for interest rates this year. >> for in one year would be a
2:03 pm
much less than what we had when we were coming out of the recession. at that time, we were raising its every other meeting so it is twice as fast. to that, it is much more gradual. the fourth test that i gave, that would be a good indicator that i could support three. to my to be the right number if there is a little more uncertainty or any modest concerns about whether we are going to get that or not. things really take off if we get strong growth and undermined inflation. we could get for this year. i think we are in a reasonable place and a couple more hikes this year seems reasonable. if the economy is little that stronger than we expect we could do more, and vice versa.
2:04 pm
>> for more on what to expect from the fed, let's go to the correspondent michael mckee. he joins us from florida. michael, you spoke with the new arc fed president, william dudley, what was your biggest take away from that conversation? >> two things. he is in the mainstream with the rest of the fed bank presidents and probably because of his position, as the vice president, the fed will probably do another one or two rate increases this year depending on how the economy of all. dudley says if we continue to see growth at the same pace we 3-wood be justified. it doesn't have to be a big change, month to month. what comes out of that is what is interesting. if the fed raises rates once or twice more this year, that
2:05 pm
finally sets them up to start reducing the balance sheet. here's what dudley had to say about that. surprise me if, sometime later this year or in 2018, should the economy perform with expectations that we will start to gradually let securities mature than -- rather than reinvest. the balance sheet is not our policy -- primary tool. thee do something on balance sheet, it will be something very passive. it will just be running in the background. we want to do this in a way that is not a big deal. yesterday,ested tapering your investments rather than ending them. ,iving the taper tantrum wouldn't the markets take it as a sign that it is ending and adjust accordingly. worried that they will react in a violent way. it has already factored in.
2:06 pm
most people think that sometime later this year, or in 2018, we will gradually allow securities to mature and end the reinvestment process. i think that is already in expectation. the taper tantrum and 2013 was as violent as it was because people had the idea that we were .oing to reduce asset purchases in this case, or my personal opinion, if we start to normalize the balance sheet, that is a substitute for short-term hikes. they would also work in the way that the hikes would. we might even take a little pause in terms of raising interest rates. >> starting to normalize the balance sheet would take place a couple of years ago when they had made significant progress in normalizing interest rates. --says that means maybe 100
2:07 pm
52 100 basis points. we could see that by the end of 2018, them doing it. they areng enough, probably going to reduce mortgages and treasuries and let them run up. wall street speculates they could leave treasuries alone area -- alone. julie: we care about this because reducing the balance sheet is it form of tightening. what we looking for as a catalyst to wind down the balance sheet? >> they said they wanted to be along the path. the path toward normalizing interest rates. according to dudley, the rate will be around 2%, so they are halfway there. they go a little bit further past halfway to possibly 1.5% and he said that is good enough. as they shrink the balance sheet, that is one lever they no longer have. then does the rates become once
2:08 pm
again like they affect monetary policy? >> it is interesting because they could, in theory reactivates the balance sheet worried they don't want to do that, though, and they said they --ted predictable predictability. they won't start buying again unless it were a real emergency. they will go back to relying on the standard tool of the fed funds rate. they are going to stay with the system with a repo system and the interest on excess reserves, because the fed fund rate settles nicely in the middle of that. are going to need the tools they have now for quite some time to come. julie: michael mckee down in florida. speaking earlier today with bill dudley. scarlet: let's give you a check with emma chandra on first word news. try --ident trump is
2:09 pm
will sign to executive orders today. the president wants to identify every form of trade abuse that contributions to u.s. deficits without other countries. the other order is aimed at strengthening trade penalties. republicans are worn strongly against changing rules. chuck, is trying to get enough votes to block it. and europe, a warning from brexit from european council president, he told reporters eut the uk's leading the will be difficult and may be conversational. he said there no such thing as a brexit bill, the u.k. will still have to pay up. >> we'll will also need to make sure that the u.k. continues
2:10 pm
with all financial commitments. >> the u.k. has rejected the suggestion that they should take $65 billion to leave the eu. >> caught in the crossfire, most reach helpcramble to in an area decimated by iraqi forces and the coalition state. they have launched an offensive to retake the west. global news, 24 hours a day, powered by more than 2400 analysts in 120 countries. scarlet? scarlet: thank you, m a. bleeding attop the the sports network before it is too late? i had a baseball's opening day, ,ere is a tight -- chart topping the list is cleveland
2:11 pm
indians. these are the mlb title draws. from new york, this is bloomberg.
2:12 pm
2:13 pm
julie: this is bloomberg markets and julie hyman. scarlet: and i'm scarlet fu. in five years, espn has gone from disney's darling to disney's headaches. what is the problem behind it? fromng us now is ira bloomberg businessweek. not paying for cable, espn, get it? he is on the cover of this
2:14 pm
week's edition of business week. there's more than 12 million 2011.ibers since what is the company's strategy? >> even after losing 12 million subscribers, we are close to 90 million and have a very profitable is this in table and bundling. they are extending that bundle. they are trying to channel everything through some kind of multichannel bundle where they get paid by the carrier. that is their motto. scarlet: so they are doubling -- down? >> more or less. scarlet: you went to visit espn's duties and they explain how they incorporate twitter. >> for the tv product, they watch social media very carefully. software showing what at,r viewers are looking
2:15 pm
what iseady know buzzing among their france so they are not getting overrun by social media. scarlet: so that they can keep pace rather than play catch-up. one thing we have been noting as the stock price has been stalling, espn has been cutting costs. have been laying off people, reducing talents, tweaking its programming. tell us some of the changes. they can trim a little at the margin. the 300 people they got rid of three years ago were production. they are not looking to laypeople out, rather by people -- or let contrasts contracts expire. i think they will be more along those lines. they have also had started to make sports less of a commodity highlights thing.
2:16 pm
they are more about personality. they have a show, michael and jamal at 6 p.m. on sportscenter. it is a little bit more like a talk center. scarlet: like sports radio? >> yes. scarlet: a lot more of the personality and personality driven programming. they have been ahead of the curve on finding what people want. you gave a great anecdote saying that they launched the phone they gave people updates. steve jobs was no great fan of its. >> it flopped about a year before the iphone came out. the reason they want to talk about it in bristol, espn headquarters, even though it didn't work, they have been thinking about this digital disruption for a long time. they made a distribution play and now they are willing to live on other people's platforms. they think, we have been thinking about how people
2:17 pm
consume sports from day one and we are better at it than anybody. bet on us despite the cable companies thinking. scarlet: and they haven't lost toth in disney's ability revive espn. i have the overall five-year chart of the stock. it is pretty impressive for disney shareholders. can they go the hbo route and offer tv over the internet? >> it is tough to replicate the economics they get out of the cable system where they are getting paid by the carriers instead of the customers, but they are beginning to experiment. disney bought a one third share in a company that specializes just in that. they are going to roll out a product later this year that will have a mix of sports that are not on the cable channels. , for now, that is a supplement and that it is as cableeriment
2:18 pm
declines, they can put the mainline products in front of customers and say, hey, $15 per month. or whatever it might be. >> thanks so much. julie: sticking with sports, the final four tips often glenn no arizona. the semifinals are succulent a versus gonzales. -- south carolina versus ga.zal joining us now is jason kelly to give us the latest standings. going intoally funny this weekend because we have two very unexpected teams. we have organ and south carolina which, zero of our people predicted. -- it is a very interesting situation as we get into the final. if it goes as the oddsmakers
2:19 pm
think, we are going to have a little bit of a wall street versus main street showdown. julie: meeting what? >> tony roessler who is the founder of private equity firms based in los angeles, he has gonzaga winning so he would come in first if they won. wins, we have the ceo of voting on that very it is an interesting showdown there. what is further, if you look at it is on the web melissa --n molen -- if nobody picks the final
2:20 pm
four, it will stay as it is and can would be the winner. julie: so when it comes to the final four, the actual contestants in the final four are pretty highly ranked. it is just everyone so a custom to an upstate -- upset and we didn't get it this time. >> south carolina was definitely the real team that surprised a lot of people. south carolina beating duke was probably the most shocking moments. what is interesting about it, duke was not a number one seed, there was controversy as your may remember, they came as the number two seed. villanova went down as well. it's looked like that was going to be a safe path for duke and then south carolina came in. out of all of our celebrity contestants, most people picked duke to win, right? >> almost half of our
2:21 pm
contestants had duke. in second was unc. we may look in what happens on saturday and then on monday as lastbogle, he was in dead in the early part of the beatsition, if gonzaga north carolina, he will come in second and get a big chunk of money for his charity. scarlet: jason kelly, thank you so much. you can check out the brackets on on the bloomberg. the trump administration is turning its attention to financial reform. is there any chance there will be a repeal of dodd-frank? this is bloomberg.
2:22 pm
2:23 pm
julie: this is bloomberg
2:24 pm
markets. i'm julie hyman. scarlet: and i'm scarlet fu. plans of updating financial regulation is coming up. this morning on bloomberg surveillance, steve iceland, who you might know, expressed his doubts. >> i think the focus many people have on what changes the oninistration will make dodd-frank is a waste of time to think about. 60 votes to change dodd-frank. it is going to be very hard to get it. that is not where the game is going to be played. scarlet: he also said he is concerned about the auto market even though credit quality has improved significantly. a look at some of the biggest business stories in the news right now. with potential ratings down looming over south africa, former finance officer says it's
2:25 pm
up to the party to provide stability. gordon, who is just dismissed, spoke to bloomberg. when agencies want to see is equality. .hey want to be assured if they are giving assurance, by government, at least we will be able to show them on that point. julie: the credit ratings are up for review next week. three -- theresa may says there are concerns for london bank to access a single market. is sayingesident draft guidelines are circulating to the 27 other members saying a free-trade agreement and only be finalized after the u.k. leaves the block. in anities agree
2:26 pm
investigation of tax evasion expanding five countries. hundreds of customers are the the issue.ect of credit suisse says they are cooperating. that is your business flash update. >> still ahead we are looking at expansion and the declining -- market affecting prices. >>from new york, this is bloomberg.
2:27 pm
2:28 pm
2:29 pm
>> from bloomberg world headquarters, this is bloomberg markets. i'm julie hyman. commodity markets are closing in new york and, let's take a look at what is moving.
2:30 pm
hogs, they are heading for the biggest decline .5%.ur months down about inventory is rising with cash markets remaining stopped. index, fell for the fifth straight week. although, a year to date, we have been seeing an increase. ising to crude oil, it heading for its biggest increase this year. the market also rose after u.s. government reports showing the nation refineries boosted crude. prizes settling above $50 a barrel. forthe week, they are up percent to 5%. take a look at gold versus the dollar. gold is heading for the best quarterly gain since the first
2:31 pm
three month of last year. investors are waiting uncertainty as was interest and the dollar strength. prices are up over a percent after two quarters of losses. you see the dollar index in ok thishich has been year. scarlet? scarlet: let's get you the headlines with first word news. mathis says russia's history of violating international law is heavily documented. the comment in london today, electiona sign that hacking may have compromised the president's plan to establish closer ties between russia and moscow. international law is now a matter of record with what happened with crimea to other aspects of their behavior mucking around inside other people's elections. >> the presidential candidate trump says, if he is elected, he
2:32 pm
would be to fight islamic extremism. a defense alliance was proposed today between france and germany. the first round of elections is april 23. un security council is counting 500 -- for more cuts and reforms. the u.s. ambassador, nikki haley, accused the u.n. in aiding congo's government. they're going to increase focus fairabling free and presidential elections later this year. i just has approved an agreement for donald trump to pay $25 million to settle lawsuits over university, following seven years of legal battles. settlement,of the
2:33 pm
trump admits there is no wrongdoing. he says customers will get at least 90% of their money back. -- i'm emmandra chandra. julie? says heresident trump will sign to executive orders in about an hours's time. he made a comment during a meeting with manufactures including the ceo of the national association of manufacturers. bloomberg's chief correspondent caught up with him earlier today. >> have a great opportunity to tell the president about his we had. we have done a quarterly survey, economic outlook, that measures how manufacturers feel about the economy. for the first time, there was a record in 20 years that we have been doing the survey, 93% optimism. >> what do you attribute that optimism to?
2:34 pm
administration, trade, global factors? >> i think manufactures are excited about the agenda, but many members of congress are talking about reforming our tax and to reduce regulations, to invest in infrastructure. those are three things that will spur investment and job creation in manufacturing. happinessnd much more than you see in manufactures right now because of that agenda. >> when you take a look at the legislative items, whether it is tax reform, infrastructure spending, but soon infrastructure. is there an appetite in copper -- congress to get it done? is this really a realistic agenda item? >> i think the agenda is is there an appetite in congress on revitalized economy and job creation. significant infrastructure investment, just like we point the creationd to
2:35 pm
of hundreds of thousands of jobs and sustained economic progress. infrastructure is key to achieving that shot in the arm to the economy. >> on tax reform, did you guys talk about the border tax? folks have been divided everywhere. where you stand on that issue and did it come up in the meeting? >> we talked to general of the need of reducing cost of business through copperheads of tax reform, reducing the rates. that small and medium-size manufacturers are part of that, because so many of them file as individuals and not corporations. that was really the context of the conversation. >> the border tax income up? we didn't talk about it there and we are waiting to see what comes out of the white house so we can take a look at the comprehensive plan. >> this is something, where you guys danone border tax and, is there really a way to get tax
2:36 pm
reform done before the august recess? optimist and i think members of congress will jumpstart the economy. the quickest way to do that is reducing the cost of doing business in the united states. i am an optimist, i think it can get done. your other question, we would whatever proposal is going to come down from the white house and whether it will include a that acid or not. and really, what the whole package looks like for manufactures. >> you have concerns about it? ati think you have to look the whole package. you have to see how it is going to impact every sector of manufacturing. until we see that, it is a little premature to determine. that was the national association manufactures ceo. congress voted to nullify privacy rules that say white web history could be at risk.
2:37 pm
from new york, this is bloomberg.
2:38 pm
2:39 pm
>> this is bloomberg markets i'm scarlet fu with julie hyman. she has a look at the markets on the last the day of the first quarter. about,as we keep talking we've seen all these averages do well. the question is, where do we go from here? we have seen the stalling in the reflation trade that has been a fact ever since the election. i took a chart, went back to the election, the purple line is the rough 2000. we saw a big lift in the stocks after the election, but the last time all four of these reached
2:40 pm
records was on march 1. we have largely been moving sideways. the only one to re-attained the record was the nasdaq. it is at that level today. another way to measure that is look at inflation expectations. here, we have breakevens. that's a way for them to bet on inflation. here is the five your expectation and the 10-year expectation in yellow. the two-year inflation break rose above the others and then they have come down. we had a take today with the pce deflator. that is one measure of inflation that the fed favors. these two have sort of stalled out as we have seen inflation expectation start to come back down. finally, one other way that this has been seen is that some commodities have been rolling over. notably energy. this is the year to date performance of the various components of the bloomberg commodity index. energy is down 7.3% below the
2:41 pm
red line. that is zero. commoditiesculture rollover as well. even as precious metals hold up. gold has caught a bid and we just talked about how it is been a strong quarter for gold. industrial metals have interestingly held up well as well. the inflation trade is active in as weubsector, perhaps, continue to see relatively strong data out of china. scarlet? scarlet: and you wonder what the class will be to cause a change in the paradigm overall. dealt tolow is consumer protection advocates on tuesday when the house of representatives voted to overturn privacy rules. republicans were moved to dismantle rules that require bank communities to get explicit permission before sharing personal data. we have the latest from bloomberg plus the other tech headlines grabbing our attention
2:42 pm
this week. >> joining me now to recap the week is bloomberg technology executive editor tom and dan hall. these fcc sound scary. what, practically, does it mean for consumers? gives, this does is takes our way from the fcc to set limits on what internet service providers can and can't do with your information. comcast, at&t, verizon's of the world now have more freedom to work with the information that you are putting out online. your search history what apps and before the fcc had put limits on what they can do with that. now they won't take affect. in theory, the isp can take your browsing history, monitor that without your permission, sell it , and use it to target ads
2:43 pm
against you. make more money from people online. questiont is a sect in for the consumers. these otherean for companies on the way up. there is a lot of hopefulness and expectation that the trump administration will deregulate. they will take away the constraints that lawmakers say the democrats overreach with the fcc. regulation that that , in theory, was holding the at&t's of the world back. they're going to be regulated more by the ftc rather than a fcc and maybe plow some of that's profit back into making innovative products or lining the pockets of their shareholders. scarlet: another big news topic of the week -- in $5tesla, investing billion.
2:44 pm
by percent of the company, i mean. what does that mean for tesla? >> their investors have been u.s. based companies and shareholders, and now you have the fifth largest shareholder elsewhere. they have bolted to the top. elon is number one. kaslow has struggled to crack the chinese markets. what is most notable is that when the news came out, elon tweeted that we are happy to have him as an investor and an adviser. that speaks to the relationship. what practically can they do to accelerate the sale of tesla's in china? toa: they can use we chat reach consumers. china is the world's largest auto market. a vision of not just autonomous cars but embedding doing software into the mapping.
2:45 pm
brad: what about tencent? you have to think of it more as a we -- more than a we checked company. they have the ability to be in a lot of different markets. they're looking at ai technology for self driving cars, they are investing in matt technology. you really need that for driverless. they are making big bets on electric. they are owned, -- started by chinese man. this furthers them down that road. light toid they would get into developing ai technology in the future. brad: another launch from cape canaveral. why was yesterday different for elon musk? the first time
2:46 pm
space x has launched a rocket they used before. no one has ever done that. the shuttle was reusable, people say, no. this is the first time a rocket went to space and went to space again. they relaunched the rocket and landed it again on the drone ship. got a little emotional about it, didn't he? and: he was sort of weeping gave this press conference where he was so excited. this is what it is all about. driving down the cost of space so humans can live on mars. they have promised 24 hour turnaround time. how close are they in achieving? overall theent engines with a fine tooth comb, eventually they want it to be like find 747. they want to be able to fly rocket, refuel it, flight again. he is always pushing the envelope. mr. question for both of you. if the line cause you next year,
2:47 pm
tom, and says we are taking humans to space, you can be the first journalist to space, do you do it? absolutely. i don't think he will be calling me. dana maybe.-- scarlet: -- brad:dana? flat -- dana: he has two private citizens, if anyone knows who paying space xre to fly around the moon late next year. isd: thank you both, that tom giles and dana hull. elon musk is tweeting about spacex: now. maybe guys can explain it more?
2:48 pm
he says considering trying to bring upper stage back on falcon heavy demo flight fourfold you -- reusability. i'd that success low, maybe worth a shot. julie: it is a little journey for me. brad: it's like he is still trying to push the envelope. julie: as you say, this is an important project for him. bloomberg technology's brad stone. you can check up the other headlines on bloomberg .echnology at 5 p.m. eastern all episodes of bloomberg are now live streaming on twitter. dirty jokes and screenshots of physicians. on a wallve more street has a problem with illegal texting. this is bloomberg.
2:49 pm
2:50 pm
2:51 pm
scarlet: it's time for the bloomberg business flash. dow chemical and dupont's have pushed back the deadline for the merger. it is now august. they're looking to secure clearances for pesticide maker fmc. the cofounder of facebook oculus business is leaving the company. no news on his the parts are, which is effective today. , the cofounder, violated intellectual property rights of a videogame maker. million damages awarded. snapchat is dating that's debuting a new tool. submit forbe able to stories that are searchable.
2:52 pm
only if you make them public, though. that is your business flash update. staying -- >> staying on messaging, illegal texting on wall street has been topping bloomberg. --has details that act like apps like what's up, and others are ways to share dubious information. kelly wrote the story and joins us now. this is one of the most read stories. a lot of people on wall street are interested in this. for those not familiar, why can't you text when you are on it trading floor. what are the rules in place? >> two of our agencies that regulate banks and managers say that any businesses that are in financial services have to keep those records. if you are an employee that's texting, it is not you that is breaking the law but it is your firm that needs to be able to
2:53 pm
see anything used for connecting business. know, thatfriend would be fine. nothing in terms of how you're going about with business communications. >> but so many customers are people's friends. some people have already gotten in trouble for this, right? >> exactly. we had two cases in the story that we cited. what happened yesterday and it was in x banker in the u.k. was cited by the authorities there information about pending deals. nothing in that case was illegal in a sense that he wasn't benefiting from that trade, no profit there. but, he wasn't supposed to be doing that and it was supposed to be kept in confidence so he was fine. the other case we found was an for the money manager
2:54 pm
of the u.s. state pension. they are not allowed to accept any entertainment gifts, for anyone that is trying to do business with them. wereave a case there prosecutors are still going forward with. one of the salespeople isn't cooperating and the money manager has pled not guilty. authorities said they were using for that. -- whatsapp we don't have a verdict on that, but those are the two really far securities potentially breaking that. the other thing we looked at, a lot of it really is, i don't want my boss to know i'm complaining about work, or maybe a little bit more gray area where i have a trader that is leaving and shouldn't be spreading that around the street but i want to let my friends know. it does seem rampant from your story. the examples you are talking about are pretty common. what are they doing?
2:55 pm
in sayingoing to far that you can't have your phone on the floor? policy of them have some in place saying we don't want these forms on the floor, because it really opens up all these issues. is whereorcement area we see the differences. some people said we have a policy that we ignore it -- that we ignore. >> turn a blind eye to it. as we talk about financial deregulation, is this a rule that could go way? >> i talked with one professor who felt at-large with a lot of the bank regulation that anyone who has funding might get a pullback on that funding and there won't be as much the fcc oversight. they are just not able to look at it. >> it would be rather enforcement questions and getting rid of it? >> right. it is very well established
2:56 pm
rule. >> one of the most widely read stories on bloomberg today, thank you so much. we will be talking about the european commissioner about what deals are on her watchlist. that is at 3:15 p.m. eastern. as we take a look at markets with an hour to go, the dow and s&p 500 are giving a little changed. and he gained today for the nasdaq was be a record close. up 10% grade from new york, this is bloomberg.
2:57 pm
. .
2:58 pm
2:59 pm
the exit is 3 p.m. in new york. 12:00 p.m. in san francisco. 8 p.m. in london. i am scarlet fu. welcome to bloomberg markets.
3:00 pm
♪ we are live in bloomberg headquarters in new york. uncovering news out of washington, brussels, and beijing. here's a look at the stories we're covering. one hour left in the trading day and the first quarter of the year. the trump rally pushing stocks to near all-time highs. the dollar is off more than 3%. lululemon investors searching for inner peace after shark -- shares tumbled on sales. discussing whether bad karma is spreading throughout the retail industry. how has president trump change the game for anti--trump investigators? from the close of trading on this year to date, on this quarter. have a lot of
3:01 pm
action on the averages. on the last if the quarter. we have the dow and nasdaq unchanged although the dow is down more than it had been. atthe quarter we are looking decent gains, all the major averages are higher. the s&p 500 are both -- and dow are both up. there is some strength there. look at the vix on the day. it is up 7%. the biggest spike. itsl a lower levels but biggest spike since march 21 when stocks sold off in a big way and confirming fear for investors. we had some havens that are trading had -- higher with the 10 year yield down three basis points. the yen is rallying against the dollar. the dollar is down against began and gold and silver trading
3:02 pm
higher. an interesting and to the quarter. one that was relatively risk on even though there was a mixed risk on response. let's take a look at this. this continues the theme that we had stocks higher and we had bonds higher. this is the 10 year yield trading lower. down about 1.6% or four basis points. especially since we did have the fed raise fit in. sometimes it is helpful to pay attention to the movements in asset classes that do not fit into the same. it could be a telephone is ahead. into thet does fit fact that we do have stocks up in a big way. especially the nasdaq on paper. this is the fang trade. chargecebook leading the
3:03 pm
followed by amazon and netflix. below -- up 7%. that is a pretty good gain. the s&p 500 up a little less than 6% on the quarter. >> we are going to talk more about what is going on. scarlet: u.s. stocks headed for the best quarter since 2015. let me start with you. the dollar start is emblematic of what we have seen. the fed raised rates, you would think that would give a boost to the dollar. it has been the signal for the deflating of the trump trade. >> there is a lot of skepticism. with the issues that went with the health care bill. and everyone got excited for the
3:04 pm
possibility of stimulus. the reality will get bogged down in a lot of clinical mayer -- that is not good for the dollar and traders are sellilng off. julie: it is useful not to just look at the quarter but what has happened since the averages hit records. we have stocks in this stalling out over the past month. of: sort of a rotation out the financials and energy. also you could look at it as the value stocks. isk into growth stocks, tact -- tech is leading. he and scaling back expectations for inflation and growth. people tend to go for growth stocks when growth is still weak. and value when it looks like growth is picking up.
3:05 pm
this to me is very telling. the rate of change in the s&p 500 earnings expectations, for 11% or are looking out 12% growth in earnings. what is really good is that those numbers are not coming down drastically. in previous years there was this enteringwn expectations. this year they have come down a little bit. but they are not really crashing the way they did in previous years. i remember last year, that 500ine is the change in s&p earnings per share estimates for 2017. you can see in the top white line it has come down less than 1%. below that is the five year and the 10 year average. you can see how the trend has
3:06 pm
the to ratchet down expectations faster than what is going on now. there is this debate over hard and soft data in the marketplace. i am not sure of you count this as hard or soft. somewhere in the middle. they are not getting ratcheted down. that is a pretty good sign for the equity market. julie: the consensus seems to be for the best relative value go abroad, you go to emerging markets because the dollar is going to stay week for a while or it is not necessarily going to rally. you can go to asia or eastern europe and find better returns in the meantime. guest: one of the issues is trade. if the trump administration clamps down on trade the countries that are big benefactors of trade with the mexico arel, china, going to suffer. emerging markets may not offer the haven that people may think.
3:07 pm
they could be a tricky trade. julie: there are some innate mixed signals in trade. the rhetoric has been pretty heated. -- andu have on nap to after some easing and backing away. when you talk to traders are looking at the charts, it seems like we have some confusion. announced by the trump administration is a country by country review of the trade situation in the u.s. what you might see is a good tell as he is meeting with china. and if trade negotiations go well with china, once you -- you take axpect it is not hard line with a country like mexico. should be positive for the peso but we have to wait to see. we do not know how the stocks will take place.
3:08 pm
>> you talked about how there is .his rotation into tech stocks that is the most global sector in the s&p 500. story backs the old into growth stocks. weighting in21% the s&p 500. getting back to that weight it had. there is that risk that tech could [inaudible] like the rest of the market gotten less volatile. part of that is the return of the sector. apple is more predictable. this is a concern that is making up a huge chunk of the index.
3:09 pm
a lot of eggs in one basket. might be talking repatriation for some of those companies. let's get a little esoteric. the chart on the bloomberg that you sent to me, why is this important? pattern ofa classic a sentiment momentum trade based around this 82 point 25 level. momentum tells you that the canadian dollar will appreciate. week since well this i wrote the story, thank you. and behind all this is what drives the technicals, a lot of people like to look at technicals. this isamentals are counted to farewell.
3:10 pm
the canadian dollar has not rallied. since.has gone long we saw gdp come out today. this is the first good look at a reaction to the canadian dollar which tells me markets are overcompensating. the opposite is true for the japanese yen and we had a pattern since -- japanese domestic names selling french bonds and buying their own domestic paper. the same was true for foreign investors getting into japanese instruments. that looks like it is turning. we have to the end of the fiscal year so that trade could turn and the yen should fall. scarlet: thanks to our guests.
3:11 pm
let's get a check of the first word news. >> the house intelligence committee held a conversation with eiko o'flynn about arranging the discussion but the talks did not include immunity or other testimony. that is according to the committee chair. left outd banks may be in the cold as negotiations for -- amicable setting concerns of an agreement for london banks to have access to single markets. it could be impossible. one minister said discussions on a deal should be put on hold to avoid delays and other sectors. has circulated guide my -- guideline saying than a free trigger may be finalized after the u.k. leaves the block. and in south africa, the ousted finance minister has met with
3:12 pm
his successor to ensure a smooth handover. president jacob zuma fired gordon who has been praised by international investors for holding the line on government spending. the upheaval could lead to a political revolt against jacobs him up. he has been implicated in a number of scandals. fee for has -- fifa has delivered a report to switzerland's the china -- attorney general. from publishing the report or commenting on evidence from the probe. the report will be made available to the u.s. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. julie: thank you. our death at risk under the trump administration? we will take -- talk with the use commissioner. this is bloomberg. ♪
3:13 pm
3:14 pm
3:15 pm
>> this is lumber markets. . grexit is time for the bloomberg business flash. a look at some of the biggest stories in the news. wilbur ross supports the president and blaming china for u.s. trade deficits and job declines. today.scribed the issue >> the u.s. is about to -- the least protectionist of the major countries and china is one of the most protectionist. there is an inherent clash between those two even though china uses a tremendous amount of free trade rhetoric. >> secretary ross spoke less than a week before trump and
3:16 pm
china's president may for the first time. federal judge open the door to competition between top-selling multiple sclerosis drugs. responsible for 90% of the total revenue. the deal would have problems anding antitrust approval would be complicated by political opposition and the netherlands. 23 rejected advances saying the proposal is too low and not worthy of negotiation. your business flash update. .> a busy week giving the go-ahead to dupont's
3:17 pm
takeover. the eu is trying to navigate its initial dealing with the trump administration especially over taxes. >> our investigation joins us from washington. this is a short trip to washington. actingn with the chairman of the ftc. what did you discuss? >> i met with the acting chair and it was a very positive experience. way are very concrete in the way we work. with the case up tames that they are doing fine. i think in the working relationship we are still making progress, it is a very strong working relationship. >> how is this different from the one you visited when president obama was in the white
3:18 pm
house when secretary jack lew was in the treasury department, what is different this time around? >> the weather is horrible. i will not blame the new administration for that. this has been a short trip. is still early days for the new administration. i am looking forward to come back and have meetings and how -- on the hill. >> there is disagreement between you and the treasury department on the issue of the apple tax case. what about tax issues in particular? >> not yet. aboute than happy to tell our approach is different from the approach of the u.s. and we share the concerns that businesses can harm competition and it is important to make sure that governments do not hand out
3:19 pm
selected benefits to certain companies or groups of companies. those are the differences and we will keep discussing that with the administration. >> your mandate is to expand competition. how are you going to continue that as we enter the new year? >> we are about to meet in the international competition a month in that is a concrete way of working together. it is low on protocol. of best exchange practices, how to assess things, to assign merger revenues to make it easy and as swift as possible. for businesses to get approval of the merger especially if there are no competition concerns. it is in that sort of work in progress that we can make it easier for the business community and make sure that
3:20 pm
consumers are not harmed. >> i asked if you had interaction about the apple tax case, what is the interaction with applelike? have there been to medications about apple in that case? >> no. the cases in front of the european court. apple has appealed our decision and they are in the process of recovering the unpaid taxes. is for the court to take their decision with the peel -- if you -- the appeal of our decision. how does the competition landscape change? >> it has not changed a bit. the negotiations are about to start. as long as the u.k. is a member
3:21 pm
the same, we share rules. one of the things i admire is that they have a very strong culture for competition between companies, not handing out favors. so obviously we do hope to continue a good and strong relationship with the u.k. and eventually when they are part of the -- when we are not part of the legislation anymore. grexit wonder how it is bringing out through the streets of russell's. how are you interpreting what he says when president time -- trump talks for putting america first. >> it depends on what it means concretely. to some degree we are concerned europe first. my work is to make sure that european customers can enjoy the benefits of competition and affordable price, choice, it is a european approach.
3:22 pm
i work with the benefit of european consumers. >> is it explanatory, do you go to washington to explain what you are doing or is the goal to get u.s. regulators to get -- to follow suit? >> this trip was to participate in the american bar association annual conference. .t is a huge event for anyone i very much enjoy two meet with colleagues. had a round table this morning. it is good to come together with colleagues and that is the main reason to come here. >> thank you. >> thank you. turning to the markets it is time for options insight. todaying me -- joining me
3:23 pm
, the chief market strategy -- strategist. thanks for taking the time to join us. happy friday to you. what a quarter it has been for stocks. this has been the longest streak since 2006. >> i am very bullish still. the stock surge continues but what is important is the way the markets snapped back one more time. we had the selloff in that sharply opening monday. if we look at the s&p we are at the halfway point of the all-time high march 1 to the low on monday. if we could target that toy for hundred again and 2475, each time it has sold off you come back the same distance of that selloff. >> you are clearly bullish, what
3:24 pm
is the one thing that would worry you, what is the tell that you watch within your work? >> i am keeping an eye on crude oil. isare above 50 which important psychologically. if you look at the charts crude let the market even bore -- before the election. that was the tell and we have seen an extension. a bit of a pause, that is why the market stalled out but as energy companies recover that could be the catalyst for markets to make new highs. give the markets something to chew on. this is the dangers time when -- sometimes you see some selloffs. trade, trading at a deep discount, can you tell us what you like and talk us through your trade? >> that is one of the things that they have talked about. this stock is down 40%.
3:25 pm
it has been trading between 32 and 38 for four months. this is not making new highs and volatility. sellersthe sign that are getting tired. i am looking into january and the call is a strike place that is below the decade lows. the break even on this is $1.50 higher. >> great stuff as always. you have been having a great call with various positive. you have to be selective. what is the chatter down there, what is everyone talking about? >> it is interesting. we have been focusing and we bounced off 11 tuesday or wednesday. it looked like it would rake through the bottom support. when the vix popped up like to call it a vixplosion.
3:26 pm
sidewayseen trading between 1311. keep an eye on the vix as a true indicator. >> thank you. back to you. scarlet: our guest talks to us about the end of the quarter and the peak of inflation. the deflation be around the corner? we will discuss that and at 3:30 p.m., president trump is due to sign an executive order on trade. from new york, this is bloomberg. ♪ careful joe, they've got you outnumbered.
3:27 pm
3:28 pm
the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here.
3:29 pm
something for everyone is awesome. find your awesome with the xfinity stream app. more to stream to every screen. thank you so much for that down home welcome. show me female vocalist of the year. thank you so much. thank you so much acm's, i appreciate it. show me acm best moments. i could never have wished for, asked for and dreamt of anything more than this. catch your favorite moments from the acm awards and an exclusive encore performance by kelsea ballerini following the show on xfinity x1. the acm awards. live on sunday, april 2nd 8/7 central on cbs. >> let's get to first word news. president trump is expected to sign two executive orders on trade shortly. wilbur ross said the resident wants to identify every form of
3:30 pm
so-called trade abuse that contributes to u.s. deficits with other countries. the other order is aimed at strengthening collection of duties for trade penalties. the white house says it will share financial information about cap staff members after concerns the president has stacked his team with some of the wealthiest people whoever served in government. their assets must be detailed and documented acceptable to the public and the administration is continuing former president tradition of warehousing their paperwork on its website. and preparing a final draft for later asking for the power to hold another vote on independence. sturgeon has used brexit as a rationale for calling for a new referendum. voters in scotland opposed leaving the european union. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.


info Stream Only

Uploaded by TV Archive on