tv Bloomberg Best Bloomberg April 7, 2017 8:00pm-9:01pm EDT
♪ >> coming up on "bloomberg best" the stories that shaped the week around the world. face-off, in france in the u.s., tougher these are rules, and jamie dimon's letter to shareholders. >> the bank is preparing for a hard brexit. >> we will find a way to improve and increase our commercial relations. >> jack lew speaks his mind and another exclusive. >> i think it would be a big
mistake to do an expensive tax cut. >> where in the world you should put your money. soggyopean growth looks of the next 18 months. >> when the fed has taken the football the accelerator or slammed on the brakes, somebody has gone through the windshield. >> it is all next on "bloomberg best." ♪ hello and welcome. this is "bloomberg best." your weekly review of business news, analysis, and interviews from bloomberg television. let's look at the top headlines. political turmoil and south africa continue to undermine confidence and that nation's economy. zuma may face a
confidence motion. the rand is lower. >> some top officials are speaking out against the cabinet reshuffle, saying he did not consult them, and speaking out against the firing of the former finance minister. critical as to whether this motion of no-confidence will succeed or not. >> do you think he should step down? >> yes, i do. they have charged him to have breached the oath of office, and that makes it difficult for him which wouldespect sections unite various
of the south african population. >> s&p has cut south africa to jog, political risk front and center with growing pressure on jacob zuma to resign. >> we are concerned about the impact on the fiscal and economic story. it puts policy continuity at risk. there is an increased likelihood that economic growth and fiscal outcomes could suffer. ackerffrey l resigning today. he says i regret that in this instance i cross the line to confirming information that should have remained confidential. 12, like conduct was inconsistent with those policies. >> he is saying he is not the leaker. he was presented with information and sing he should have entered the conversation then and the risk is by not
doing that that it infers the information was correct. it is a nuance, but a significant one. >> it is a serious breach of information. sensitive information was given to analysts on wall street, who passed it along to clients who may have made money from it. i would say there is more to come. >> the fed released minutes from its march meeting that show the fed favors plans to shrink the balance sheet this year. theirnutes indicate general attitude on rate hikes for 2017, "for dissipate anticipated a gradual increase in the federal funds rate would continue and judged it change the committees reinvestment policy would be appropriate this year." what is your big takeaway? forhe markets were looking
the possible start of the balance sheet unwinding, q4 or next year. the minutes provide that guidance of it being pushed into 2017. if were getting balance sheet unwind, that is like another rate hike almost into 2017, some more hawkish can may be too much push from the fed. you can see the reaction in equities and treasury yields. >> how do you calculate how many hikes the federal reserve will deliver in 2018 on a good day, never talking about normalizing the balance sheet. >> the context is obvious. the fed is slowing going to raise rates and address their balance sheet. for years since the great recession, we have had the fed as a tailwind for the stock market. they will turn it around and eventually become a headwind. that is what investors need to know. >> president trump is about to
open a high stakes summit with resident xi jinping in florida. on the agenda, north korea, tensions over trade , hanging over the meeting between the world's two largest economies. >> they have been saying they are proud to have both president xi jinping and china's first lady in town at mar-a-lago. ahead, that isg when the hard stuff comes. for example, they would talk about u.s. jobs and the export of u.s. jobs to china. the tradething is surplus that china has with the united states. in 2016. $347 billion substantivet to the talks tomorrow, donald trump will be trying to figure out how he can get china to buy more u.s. goods and services. >> we do have breaking news crossing the bloomberg.
there have been u.s. missiles launched against targets in syria. >> it was a targeted military strike on the airfield in syria from where the chemical attack was launched. does nothonest, this change the balance of power in syria. targeted strike. they knew the assets they wanted to get. they warned russia it was going to happen. the next steps will be crucial. this has catapulted tensions between the u.s. and russia the highest since trump took the presidency. where did they go? do they ramp them up more? is it a potential point to deescalate? 180,000 is your estimate for payrolls. here is the payrolls report. one?ve you spend this
just 98,000 jobs were created. 98,000 jobs in march. the unemployment rate falls to 4.5%, the lowest since may 2007. >> i would not say it is a weak job report. was unexpected, so this tells you the economy is gradually transitioning from job creation to higher wages, and it is in line with the gradual recovery we have expense for a number of years. >> overall, we are pleased. and you look at the unemployment number going down, the 4.7 6umber going down and the u number coming down by .3%, then you put on top of that what we know is coming with the jobs
being created by the companies we have talked to and moving manufacturing back to the united states, we are excited about what is going on in the future here. david: still ahead, exclusive conversations with the president of argentina and jack lew. sees sheila patel investors searching for emerging markets. coming up, top business headlines. would you believe teslas market cap blue past forward this week? david: "bloomberg best" david: this is bloomberg. ♪
u.s. immigration policy that resonated worldwide, especially across the tech industry. the h-1b fisa application process has opened despite president trump's plan to reform the program. new guidelines were issued late friday that require additional information for computer programmers. are you still expecting it to be oversubscribed? >> yes, because we were expecting tougher rules out of the administration. we have not seen that. a lot ofxpect technology companies will use this window to fight for as many as they can. >> when we talk about tech employees from silicon valley, who exactly will be hurt by this? >> you could see a tightening, particularly for the outsourcing companies. it would reduce their use of
these work of these is, and that leave more for american technology companies. the idea when it was set up three decades ago was to bring thatrkers from overseas companies could not find in the u.s., and it may go back to more original intent of the program. shot up 5%hares after the carmaker reported deliveries that exceeded estimates. is $2.7market by you billion more than ford motor company. how is this possible? >> you have tesla sang their sales were 25,000, but any good news sends shareholders into rapture, particularly those bullish on the stock. on the other side, you have established automakers march
sales that were softer. it says we are at peak auto. there are more incentives to keep sales going. inventories are rising. it's not a bad market, but it is headed south and tesla has growth. >> let's turn to the latest on credit suisse, facing a tax invasion and money laundering investigation that could involve thousands of account holders. targeted,y is being and is credit suisse cooperating? >> the evidence suggests that the bank is not the target in this investigation. this is about account holders, individuals, who may have held a counselor credit suisse and there might be money laundering involved. the bank said it is looking into the matter and pledged that if
they find wrongdoing that they will take measures against it. to shareholders, jamie dimon address concerns about europe and >> of negotiations and factors causing damage to the u.s. what did he have to say about brexit? did he say about how the process is unfolding in what he hopes to see at the uk's it's down to the table with the european union? >> he said the bank is preparing for a hard brexit, which most banks are, which would mean the loss of passporting and having to adjust their businesses to serve eu clients. is not expecting a lot of job movement and next two years, but after that, they will face pressure from the eu to move things into the trading block and not do everything from london. >> jamie dimon said government
and pose capital requirements are holding back lending, and relaxing them could spur economic growth. neel kashkari responded saying those assertions are false. >> i know jamie dimon and like him. when he says things i believe are incorrect, it is our responsibility to speak out. too big to fail has not insult. the biggest banks are still too big to fail. the american people and congress need to know that. we have offered solutions in the form of higher capital requirements. economicite house adviser was to take banking to the old days. the goldman sachs president said he would like to separate banks, consumer lending businesses from its investment banking effectively bringing back the depression era glass-steagall act. story setomberg everyone was surprised.
he has had a long career as a traitor, and it goldman, mostly as a broker. full banky as a holding company is relatively short since 2008. if you think of the trade mentality, goldman might have an advantage given its exposure to investment banking. i don't see why he would not be opposed to that idea. >> what we are worried about is the one size fits all regulation. regulations bill as if theyegulate banks were equal. if we come up with the modern glass-steagall, we can tailor regulations, and that would to lend more aggressively to small and medium-sized companies. france, aocus on
platform to all 11 hopefuls last night, but allowed room for fiery exchanges between the two favorites. >> we need clever protectionism because we cannot accept we are in competition with products that don't respect the same norms. >> nationalism is war. i come from a region filled with cemeteries, and i don't want to go back to that side of the black line. >> april showed far left candidate outperformed expectations. >> everyone turn their fire on marine le pen. she was attacked by those who want france to stay connected with europe. there were two candidates much further to the right than her who attacked her for being soft, saying they are the real ones in rexit.of fe
macron managed to avoid any mistakes. you would have to say that he came out on top last night. surgings of a narrow agreed to be bought. much bigger premium. >> it is a huge price. commandit was going to a high price, 19 times is astronomical, so puts it in line , louisiana kitchen was bought by the owners of burger king. it is expensive, but it is a huge brand with enormous presence across the country. they have paid to get access to
that. >> steve bannon has left the national security council, been removed rather in a shakeup today. why now? exclusive byn jennifer jacobs, the chief strategist to president trump has been removed from the national security council. this comes just two months in which general h.r. mcmaster has taken over as national security adviser. thatf the first hires general mcmaster did was bring as his deputyell to the national security council, a former goldman sachs executive was previously working in the administration for first ka trump, so what you are seeing is a restructuring of president
trump's inner circle. that stevenderscore bannon still does have significant influence on a host of policy areas, including infrastructure and politics. higher thaneported expected profit. shares have been on a tear, close to record highs, despite the bribery scandal and the exploding phone note 7 debacle. >> what is important to look at is the profitability of the company, all time profits in the first quarter, up meaningfully, and that is powered by the strength and components, particularly memory, and that is the most important thing for the stock, the earning power of the company, and surprising everyone to the upside at the moment. neile senate has confirmed gorsuch to the u.s. supreme court, 54-45.
neil gorsuch will be the next supreme court justice. the senate needed to have that vote this morning. >> that's right. everyone knew this would happen. voted topublicans change the rules and remove the 60 vote threshold for nominations for the first time in american history. the senate advance the nomination to a final vote with a simple majority of 51 votes. the supreme court confirmation is a huge win for conservatives. for presidentn trump who had a troubled start to his presidency and has not gotten any major legislation done. ♪
best." erik schatzker travel to argentina for an exclusive interview with president mauricio macri. argentina has a cordial relationship with united states, but now mauricio macri must establish ties with the new administration. he ask them what will be on the agenda. >> discussing about the future relations between both countries. have startedhat we with the obama administration. it is the base. believe we have a space to deepen relations and find out ways of mutual benefit and future cooperations. erik: he is a protectionist.
you are a free trader. >> i leave him globalization. ways toe we can find increase relations between argentina and the states a lot, because we have very weak relations. erik: where does argentina fit in and america first foreign policy? spite of relations between argentina and the -- es, we have to talk erik: so you need to have a united front? >> we need because we are members, so we will work together on future relations. i expect we will find a way to improve and increase our commercial relations together with any other space of
cooperation. for example, against drug trafficking, against terrorism come in favor of peace. there are many ways we can cooperate. erik: there are many ways you can compete as well. america wants some of the same export markets you want. >> that happens always. harry's andst on which we can be complementary, than to compete, there is always time, no? david: we have more exclusive interviews ahead. . went one-on-one with jack lew we gathered a wealth of intelligence about sectors and market trends. up next, frank talk from some prominent ceos. bankruptcy,ack from so is the company banking on
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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. david: this is bloomberg best. i am david gura. prominent ceos spoke to bloomberg television. relaunchingtrong is global content and prepares to absorb yahoo!'s internet assets. >> how is it going? how is this merger going to work? the main question, can you run up against your old google? somebody will have to take them out. >> i will say this. let me start with verizon. we were the first acquisition
they did. yahoo! was the next one. we will touch over one billion consumers. we are in ago position to launch in the digital's rent -- digital space. they are all partners of hours. we are focused on brand advertising. for 20done advertising years. i see an open lane and that is where we are going. >> is marissa mayer going there with you? >> the executive team is marissa plus me planning all of the leadershipall of the which we will announce during q2. i will repeat what marissa has said before and i have, marissa will stay in the next stage. >> about bringing back: mining jobs and so forth.
the world.00 around how many more can you create in the united states? >> the actions of the administration that we have seen sweepingwe have seen statements, the actions we have seen have been targeted on protecting jobs. we are recruiting across operations in the united states. i also believe the foundations have to been laid to enable clear signals to occur around the generation environment to either delay, defer or turn around what we see 50 gigawatts of capacity coming off line the next five years. if we can get exports of coal going forward, that would be future increases. inherent coal are benefits for with the scalability and affordability. has beenal in the u.s. shrinking the past five years.
the president may sign an executive order. 2017think we have seen being higher than 2016 and is the way the current projections are. that is widely a story about natural gas. a year or so ago, we had a natural gas one dollars $.67. the competitive environment for is muchmuch bet -- coal better today than a year ago. there is no more global industry than the aerospace industry. our chain has been global and has been. the customers we have sold to is airlines and their job is to fly people. and the passengers job is to promote trade and international business. there is no more global industry. as the case of airbus, 40% of our airplanes come from the usa.
he is the largest export customer. if we look at competitors at boeing, about 40% of their airplanes come from global suppliers, japan, italy, canada, from the u.k. aerospace industry is very, very intertwined and difficult to unwind. jonathan: do you see more pressure from the administration? not sure yet. we have not seen that pressure. we have assumed we have seen the pressure. jonathan: what will you do on the margin side? will you suck it up and take a smaller margin or something to do with cost? >> we are certainly not ready to take a smaller margin. to be moreys looking cost competitive and encouraging the supply line. alix: would you be willing to source in the u.s. for a no fax tax? >> we saw 40%.
alix: would you be willing to source more? the 20% tax onut us and we will source a, b, c. umm, basically would we source the supply chain, we look for the best deals, best quality and on-time delivery. we are not prepared to trade that. another important guest was former u.s. treasury secretary jack lu i sat down for an exclusive conversation. his first media interview since he left his post. something that came up numerous times on the trail has come up less is currency manipulation within the treasury's pretty. you have china with a trade deficit, is it enough to declare china a currency manipulator? jack lew: if you look at the
criteria generally considered and now a part of the treasury's technical process, the key issue are they taking -- shoes -- actions to drive down the currency to get an unfair advantage? are they intervened in order to devalue their currency? for the last year, china has been intervening to prevent the devaluation, to support the r&b. that makes it challenging to look at the current situation and reach a conclusion that there is currency manipulation. there is a transition underway from a very managed exchange rate to a more market oriented exchange rate. it is not a pure market oriented exchange rate. the intervention is in the opposite direction from what you look at in terms of measuring manipulation. onid: you have a person keen
implementing tax reform. train, in aving the their words. how much would fall on the treasury department? that nomineeseard have not even been named. how handicapped is the treasury department going forward with tax reform? jack lew: what you do not have is your policy leaders, your adversaries who can represent you the way you would if you had a full deputy secretary, undersecretaries and business secretary. situation, perfect but i think it would be a mistake to think treasury comes to the tax reform debate without very substantial resources. i think the question as with so many issues is where the ed -- fall,cision-making will the treasury department or elsewhere? and within the white house, which camp in the white house will be making the
recommendation that ultimately shape where the president goes. there's a lot of support for business tax reform to clear out the loopholes and lower the rates. if you want to do something that to 28%, ithan going gets very expensive. looking seen congress at ways to pay for a lower rate. the border adjustment tax and that is very problematic. the first question is how big is at this, do they decide to do in a revenue neutral basis am a do they pay for or create a big hole in the deficit when we were in the point when we should be thinking about the baby boomers? i think it will be a big mistake to do a big, expensive tax cut that is not paid for. it would put enormous pressure on cutting programs like medicare. stick to answer is to
david: you're watching bloomberg best. i am david gura. investors and asset managers offered insight into markets one fiscal, trade and monetary policy seemed to be facing a host of potential inflection points. here are highlights from the conversations. >> give me your sense of what's going on in retail right now. >> retail is a mess, to say the least. from a 10,000 foot view, this trend, these retailers have had
of the top line for a number of years now. this is not a cyclical issue, ok. the economy has been good. consumer sentiment is good. oil prices are low. this is a secular issue. if you think about how things will look 10 years from now, 20 years from now, our parents would be dead, do the more people will be shopping online or less? >> the amazon effect is here forever. to get these credits, they are trading in the distressed around six times cash flow and that is a multiple of a stable to growing business, not a decline in business. >> they are overvalued in other words? >> they should trouble at three or four. >> when you say day, the neiman marcuses, the macy's, the sears, the list goes on?
>> that is part of the problem. retailers are smaller. you listed a large one. there are 50? file for bankruptcy. >> 50 that could file for bankruptcy? >> american apparel is gone. they have filed twice. lare's, reasonable size company but not the neiman marcus of the world. >> we talk a lot about energy and retail. you are looking at europe in particular. tell us why europe in whereabouts. >> and the european credit space, the 800 pound gorilla is in the role. that is the european central bank. the european central bank was buying 80 billion euros a month and now it is 60 billion euros. if you say look a european credit and where you want to be invented -- investec, i will .ite the western
you look at the index, 4.6%. if you take out the u.s. dollar denominated bonds, it is close to three .5%. to us, that does not sound like high-yield. when you look at the investment grade space, the index trades less than 1%. less about that. is 2%.10 year treasury european corporis less than 1%. what is more than likely to default? we're looking for opportunities, shorter duration, less correlated things, smaller and under followed capital structures and staying idiosyncratic. to do related to that data and technical trade. >> it feels like to some extent em is more stable than developed. they want a little more of safety?
>> there are a number of investors who say they feel more stable. they are looking for the pickups and yields and in many cases, e.m. s decoupling from dm. not how much china trade with the u.s., they also trade with europe and around asia. india is almost purely a domestic story you look at the biggest returns. that is why you see people investing and the eye mtf. taking a step back every deploring the money into more active strategies because when you look at the embassies, they are backwards looking, over 20%, financials, telecom and when you look at emerging markets, thatnet, mobile banking things forward-looking and about growth. alix: we saw over $6 billion of inflows in the first quarter and that moves to specific regions
of or companies or sectors, how does the allocation have -- happen? >> in some cases, looking at countries allocations. em, taking what countries do i have confidence in? india certainly one. cautiouslyle are optimistic. i have seen more clients that are saying they are mature up to latin america in the next month or two over the past two weeks than in two years. growth looksropean to be soggy over the next 18 months, not short-term. were gettingwe better pmi. where is it a soggy? the u.s. growth rate which we think will be well above 2%. more subdued much growth. next year, we are more bearish on the ecb.
for the ecb, there is no inflation. you look at somewhere in germany, you would think inflation is the place, the labor market is tight. the reality is we are not getting rage -- rate hikes. in italy, a lot of slack but you can see how difficult it is to get inflation. without inflation, the ecb will be stuck with the race and continue quantitative easing. alix: the president saying we have to tailor a buying program in a year and time for the ecb thetep aback, it is like rhetoric we are what to say that is not material change? to hear the unusual german, northern europeans to talk about some of the easing. you have to look at the end of the line fundamentals and without inflation, mario draghi will say we cannot afford to
take our foot on the accelerator. the quantitative easing program carried on through this year and probably talking about tapering in 2018. we think there will be accommodative support through 2018. >> last night, we saw a shift from the fed talking about a predictable manner to reduce the balance. how do you interpret? a predictable manner, is there a predictable manner? >> i think there is a path of predictable manner if they thought about it and phase out gradually and do not put the market on cold turkey. they are keen to the exit. the risks are rising. debate this morning on the bloomberg is that can they really stick to three hikes and reduce the balance sheets at the end of the year? what do you make of that? a potential interruption in the hike plan? >> i think they will probably
more times hiking 2 and probably announce in december, they are exiting and reducing the balance sheets. i think you will get a slight n the cycle. they are keen to get away from the zero balance. the dreaded zero for interest rates. it raises some risk. has taken theed foot of the accelerator or slammed on the brakes, somebody is going through the window. >> the equity market, the biggest yesterday in 14 months. from the bond, the equity, the fx, where is the biggest risk from this potential policy from the fed? >> the most risky assets, equities, high-yield, they benefited from qe when we went into qe, we had the premium compressed.
investors went into higher-yielding assets and equities. when the fed reverses, the biggest risk is equities and high yields. market has to do with south africa. downgrading the rating agency to junk and also local currency debt. this is the market reaction pretty the dollar bond in the terminal end of the jump in yield we saw on that. two schools of thought. too much risk. bank of america said you want to go in and buy. of a time to buy south africa. i think we have to give it time political the situation is difficult to ascertain. if you can pick up 9% plus in brazil and no, probably not
perfectly stable, but a lot of yield and inflation coming down with. we do mexico in the sevens. i would rather take that risk. give south africa a time to play through. david: there is risk with mexico and brazil as well. their own difficulties. how do you factor that in? do you hedge against it? what do you do? ofit has to be -- a series metrics we look at when we evaluate where do you go into a country or a company and that is a big one. emerging markets, the politics usually is a bigger driver than anything else. you saw that play out in argentina and brazil. the politics more so than anywhere else. you have to be acutely focused. south africa, you have to give it a little bit of time. you can get spiked moves, as you saw. ♪
>> a.l. looking at when my favorite functions on bloomberg, the supply chain analysis. one of the reasons it is so u.k.-based because a company that does the chips discovered that apple which pays them for their chip technology is no longer going to be using their technology or licensing it. this function, on the right, the company's biggest companies are. of apple accounted for 50% of the revenue. david: about 30,000 functions on the bloomberg and we enjoy shoreview our favorites in the hopes they may become your favorites. here is another function. werell take you to our quick takes where you can get important context and five --
fast insight into topics. it explores the issue of climate change. >> 2016 was the hottest year on record. the previous devotee years was the 16 most scorching. scientists agreed that global warming is the corporate. -- culprit. extreme weather. wildfires. droughts. and the hits keep coming. what are we doing about it? in 2015, the world took the boldest step yet with an accord in paris. now comes the hard part, nations must change energy policy and invest huge amounts of money and they may be doing good out -- doing it without the u.s. >> i am taking steps to lift the restrictions off american energy to reverse government intrusion into cancel job killing regulation.
16 days into his administration, president trump signed an executive order that style sure for withdrawing from the paris agreement for decades and the making, the paris agreement united in u.s., china and more than 190 countries to limit fossil fuel -- fossil fuel pollution. --promised to cut green gas green house gases in an effort to avoid the rising seas and other disasters. but, even if all pledges are met, the globe is expected to warm more than the you in but -- u.n. target of 2 degrees. it is estimated the deal will require protein $.3 trillion of spending through 2030. here is the argument for unless past pacts, each country set is
on target and promised to revisit and reset them. ae u.s. was primed to play key role but president trump reverses obama era roles and -- rules. >> my administration is putting in end to the war on coal and have clean coal. >> the resulting policy makes it hard for the u.s. to keep is commitment. even if trump pulls out, the accord would live on. stays are investing in wind and solar and taking other steps to make it work. ani have been called environmentalist if you can believe it. david: that was one of the many quick taste you can find on the bloomberg and at bloomberg.com along with the latest this news