tv Bloomberg Markets Americas Bloomberg April 27, 2017 10:00am-11:01am EDT
vonnie: we will take you from new york to london this hour and cover stories out of washington and frankfurt. first we have some breaking economic data. pending home sales for march down .8%, not as much of a drop as economists were forecasting. pending home sales once again down month over month .8%. year-over-year it was actually a gain of .5%. not much market reaction from that. the 10 year yield at 2.31%. major indices are relatively flat. the nasdaq is up .3%. the ecb kept its stimulus
program and rates unchanged. delivered this message to investors. >> incoming data since our meeting in early march confirms that the cyclical recovery of the euro area economy is becoming increasingly solid. risks havewnside diminished. let's get to matt miller in frankfurt. we are always talking about degrees of dovishness. was this a slightly less dovish draghi? matt: absolutely. slightly less dovish than last month. they said the risk to the downside have diminished further. they kept the nod to the downside in and they allowed themselves to increase stimulus if they like in size and also in maturity if they want to
continue buying bonds past december. asre are more and more hawks the european economy continues to improve on the governing council. they got their claws in a little bit today. mark: they discussed whether to alter their assessment of growth , which now isn't balanced. does that suggest we are just a month away from draghi altering his forward guidance? may be the forward guidance. the ecb continues to be concerned about inflation. they don't see inflation at above 2% across the eurozone as they did during the recovery in 2013. they don't see inflation as self-sustaining because it has been driven by commodities prices as well as package vacations which really boosted
inflation over the last month because easter was pulled forward. it is just not at the level they want it to be. vonnie: he did sound more confident and said downside risks had abated somewhat and are more global in nature. matt: he did sound a lot more confident about europe. he said the pressures are coming more from outside of europe than from inside of europe. he didn't specifically mention the french election. he took pains not to mention the french election. clearly the ecb feels more comfortable having gone through the first round. he also said back in 2013 when we got the recovery, we said the economy was fragile and recovery was uneven. now we are saying that it is solid and broad. certainly seemed a little bit more confident about the economy.
a lot of that is down to the monetary accommodation the ecb has provided. great job, matt miller in frankfurt. have a look at the euro today. it rose a bit when draghi said the risks have diminished. that is drifting low once again against the dollar. down .4%. the euro is still up this week in the wake of the result of the first round of the french election. investors have a lot to weigh on has just meeting that taken place. that's the situation in the currency market. stocks are lower today for the first time. we go now to washington as the gop health care bill gets a second chance. the house freedom caucus
formally endorsed a revised version. that happened yesterday. verye following events closely out of washington. it's just one of the moving pieces. kevin cirilli has an exclusive interview with mark meadows of the house freedom caucus. >> we are joined by mark meadows. we're also joined by bloomberg radio audience as well. votes to passe health care reform on saturday? >> if the votes held on saturday certainly the votes will be there. as late as last night and again this morning some of those undecided members of congress primarily on the republican side are so close to yes that i'm very optimistic whether the vote is tomorrow or saturday or next week the votes will be there to actually pass this and make sure -- it is not
necessarily a more conservative bill. it is a bill that lowers premiums to the american people and allows us hopefully to get on to tax reform in a very quick fashion in the coming days. >> i want to be clear. the votes are there from the house freedom caucus as well as the republicans in the house of representatives. >> i'm not the web for the entire gop conference. whip for the entire gop conference. a little bit more than 80% are on board. hiped on a previous wit count i think we will be there. the jury is out. we are very cautious to not set an unrealistic expectation. i wanted to vote last month. we just need to make sure we got it right for the american people. stay here and vote
on saturday on behalf of the american people we are committed to do that. >> you have been in constant communication with the white house. do you speak with them regularly daily? dayertainly every other talking to someone in the administration whether it's the president or vice president. i know we have had good communication with the vice president over the last two or three days. it has been all hands on deck to make sure they get this done. been extremelyas influential in helping to navigate all of this. if your viewers and listeners understood the level of engagement from the white house they would be astonished. i am. i'm surprised. normally those negotiations happen at a staff level. these have been really at the highest level. it's important. it's a campaign promise they want to fulfill.
>> this has been labeled the macarthur meadows amendment. tell our viewers what exactly it would do. >> it's really tom macarthur's amendment. i have spent a lot of time with tom. i want to make sure he gets the credit because it was his willingness to engage when negotiations broke down. it was two members of congress getting together. it allows states and governors of those states to waive out of some of the obamacare federal mandates. it pulls the decisions back to the states, allows premiums to come down. we have independent analysis that would indicate as 36% drop in some of our premiums. we are encouraged by that. that was the big thing for the freedom caucus. as long as the average consumer can open their bill and say,
this went down and not up. >> i covered president trump's campaign for more than a year. what do you say to voters -- democrats, republicans who voted for a republican controlled congress and white house because they wanted the of for the care act either repealed, replaced, fixed. they wanted their premiums to go down. what do you say to folks watching this all and saying, why can't washington get it done? it is about getting premiums to come down. they could care less what you call it as long as premiums come down. this is a president who will not take no for an answer. he's going to get it done. of thousands of people that would show up. the white borat in house that takes every campaign promise and checks it off. he's not going to let congress
stand in the way. it took 17 months to get obamacare put into place. we will probably have this out in 17 weeks. sometimes the expectation doesn't realize the slow pace at which congress works. >> you have a big tax policy plan coming up. is your caucus concerned about how to pay for this tax plan? >> we are concerned about how to pay for a lot of things. when we look at that, there has been a big push. does it have to be revenue neutral? we are more in favor of making sure tax reform happens. if the markets are listening you've got a conservative saying we are going to do tax reform, lower corporate and personal rate to get the economy going. does that mean we may have some flexibility on the revenue neutral part?
i think the answer is yes. that's not necessarily a fiscally conservative position. as long as we have a longer-term plan -- >> there has been some questioning amongst the financial crowd about where exactly conservatives lie on the durban amendment. >> we haven't taken an official position on that and we probably won't. we are looking at trying to get the tax policy right for people on main street and people on wall street. when you do both of those together the economy drives -- thrives. we are notething looking at taking an official position on. are looking at having meaningful conversations so that we don't fumble. we are going to run and get in the end zone very quickly. >> to talk about the prospects
of a government shutdown. >> i think the government will be open on friday. there is no one that has an attitude of shutting it down. cr -- weeklyy budget extension -- >> no, i am a business guy. we shouldn't be surprised by a deadline that we have known about. that's like a florist being surprised by valentine's day. we knew it was coming. my encouragement to the administration as recent as yesterday is maybe we fumbled on this but the next funding we need to do 30 days in advance. i think the wall is important. i don't necessarily believe it will be in this short-term cr. i have talked to the president himself about that. he's going to make sure it gets done. >> here we are on the eve of day innt trump's 100th
office. what has been his biggest success and misstep? >>'s biggest success would be a supreme court nominee. that's going to have implications well beyond when he leaves 1600 pennsylvania avenue. if you're talking about legislatively, the congressional review act he was able to actually roll back rules and regulations that are 1000 times more than any previous president in the history of our nation. back that to roll regulations to allow minors to go back to work, farmers to be able to do it. he has used that power with the help of congress to get that done. that's a big plus. a lot of his executive orders are already having impact. his willingness to engage on health care out-of-the-box was important. >> biggest misstep?
>> possibly the biggest misstep would be believing that congress moves faster than they really do. i don't know that i chalk that up to anything other than a business guy -- when i came here i said, gosh, a good idea should be able to get through. it's about learning who to trust and who serves him well. >> the leader of the house freedom caucus, we appreciate on bloomberg television as well as our audience listening on bloomberg radio. back to you. vonnie: kevin cirilli, thank you for bringing us that exclusive interview. we want to bring you some headlines from the senate floor. senator mitch mcconnell was speaking on the senate floor saying things like tax reform rumors are not worth anything at this point. he also said reconciliation would likely be needed for any tax bill and mcconnell earlier said he's hopeful we will get
spending agreements in the next few days. you're looking at senator chuck grassley speaking right now. let's check in on the bloomberg first word news. won't beent trump pulling the u.s. out of nafta immediately. the white house says the president ruled out terminating the free trade agreement right away after talking with the leaders of mexico and canada. the three countries will renegotiate. taiwan will provide an early test on president trump's rapport with chinese president xi jinping. trump's pit president goal of boosting exports against his attempts to increase cooperation with china. u.s. arms sales have been a source of irritation to the chinese. angela merkel says some in the u.k. still have the legions
about brexit. she told german lawmakers the u.k. will not keep the same rights and privileges it had in the eu and she vows to put the european union's interests first. i'm emma chandra. this is bloomberg. watching aluminum prices. the trump administration opens a trade investigation into aluminum imports. this is bloomberg. ♪
aluminum fluctuating on it news the trump opened a trade investigation into whether imports international security. further,s to discuss scott barr. is it going to lead to a curb and imports? >> that's what the trump administration would like. i think that's probably down the road a little bit. that's the path that they are on right now. we are seeing the price in a stock like ach take a big hit on this news. mark: what does it mean for the price going forward? aluminum gaining 16% this year. rising 12% last year. by stableeen held demand. there are reports china is stepping up efforts to curb excess capacity. what's the outlook given this pledged to investigate?
>> the outlook is still on the upside. any sort of tariffs we may see coming from china is going to help the american producers. i think the pressure is to the upside. hopefully when the dust has settled if we can get increased capacity and supply here in america eventually that could drive the price down. right here the pressure is to the upside. mark: where's the pressure on oil. it's down today. you've got stockpiles declining more than double the amount analysts expected. down to 48 and change right now. is the path of least resistance still lower? >> no question. technically we just reached the 200 day moving average. i have been saying for the last
few months that 47 is really a critical area. i am lowering that about 45. you are also seeing a little rise in the dollar. any commodities tied to the dollar makes those commodities more expensive to buy. that will drive down the price of oil as well. with the rate change the ecb helping that is really fuel the price downward in oil. i would look for 45. that is next place i would jump in and he a buyer. mark: great to see you, scott barr. another four dollars a barrel of a drop. time for the latest bloomberg business flash. american airlines is strengthening its grip after a two-year slump.
revenue for each seat flown per mile will increase this quarter and that will be the third straight quarterly gain. it's just in time for american airlines to cope with rising costs from higher wages and fuel prices. plastic sales rose 21% in the first quarter. after its historic merger with dupont. regulators approved the deal last month. that's your latest bloomberg business flash. mark: still ahead, earnings reports pouring down today. we will look at some of the biggest movers in the early u.s. session. this is bloomberg. ♪
earnings day for u.s. stocks. roughly 13% of the universe of s&p 500 companies are reporting today alone. julie hyman has a roundup of the hits and misses. we are not seeing a lot of change today because investors are looking for more direction from washington. we are seeing so many individual movers. a couple of surprises here. they are going in surprising directions. under armour posting a smaller loss than it had guided to back in january. since thee first loss company went public in 2005. those shares are soaring because of the lowered expectations. lowered also expectations. that was a smaller drop than
estimated. the company says the first quarter was likely the first of the year and the shares are still down 2%. -- you willrom ea see that we have earnings growth reported for the s&p 500 of about 11% sales growth. just over 5.5%. growthto double-digit for companies in the s&p 500. one of the companies, ups in a little bit. still ahead, deutsche bank is apparently all dressed up with nowhere to grow. we'll explain as the german lender reports earnings. this is bloomberg. ♪
emma chandra has more. emma: police have arrested a man in london for possession of weapons near the houses of parliament. witnesses reported seeing police blocking off whitehall. security has been increased since march 22 after an attacker stabbed at police officer just inside the gates of parliament. boris johnson says britain will probably join the u.s. in further military action against syria if asked. johnson said it would be difficult to say no to u.s. whether or not parliament gets a vote on it. in washington, republican leaders may hold a vote saturday on their proposal to replace obamacare. that's according to a republican eight. a group of conservatives who scuttled the first attempt has another version
of the bill. it's unclear whether the moderates will support the legislation. white house hardliners lost their battle to get trump to threaten to withdraw from nafta. he has agreed not to terminate talksade agreement after with mexico and canada. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. mark: deutsche bank shares falling. german lender reporting lower than estimated first-quarter revenue. to deutschespoke bank cfo marcus schenck. >> when you compare the first
quarter of last year with the first quarter of this year you have the following effects. in the first quarter of last year we had a substantial widening in our credit spreads. accounting wise that lee is -- leads to positive revenues. in the first quarter of this year we had a substantial reduction in our credit spread. at least accounting wise that negative revenues. none of this has an impact on capital. when you compare with the first quarter of this year there is a 700 million difference explains by that affect. when you adjust for these items our revenues are slightly up versus the first quarter of last year. what the analyst community was looking for was a sign that you had client balances back to levels we would have seen last year or the year before.
have you got that? business,me brokerage we recovered about 50% of the balances that we lost in the first quarter -- fourth quarter of last year. not fully back. we see this in all businesses. one needs to be mindful of the fact that when clients come back and say let's reengage, it's not that to the following morning you record new revenues. it takes time to work on transactions. in reality what we are seeing is revenues in corporate finance in the first quarter of this year is largely stuff that we worked on in the prior quarter. we see a lot of reengage and of clients across all business lines where you can see some immediate effect in asset management. invested efforts in wealth management. with the fourth
quarter of last year we are up 100 million and we have recovered 50% of the balance. everyes some time until engine gets turned. peers saw a 24% gain in some fixed income and currency trading. you had an 11% gain. are you firing on all cylinders in this quarter? we are definitely not yet firing on all cylinders. pointe seen the turning in every space. debtyou look into the side, one thing is really important to highlight. in october 2015 we took the conscious decision to exit certain businesses. one of those being the securities trading business. that has performed probably the the last you look at
three quarters. most notably in the u.s. some of our peers are tremendously benefiting from the increase in business volume. we are not because we are no longer an active player in that space. against that backdrop we are actually very pleased with the 11% that we are seeing. on top of that we are very strong when it comes to more complex structured solutions. that is stuff that tends to not happen overnight. i am optimistic with regard to the future. mark: matt miller with marcus schenck in frankfurt. bank we aredeutsche lionel laurent.n outla deutsche bank dressed up with nowhere to grow. i commend you on your title.
revenue underwhelming. you are saying. when are we going to get some impetus on revenue? >> is a good question. they are definitely not firing on all cylinders. we need to cut them a bit of slack. we didn't know if deutsche bank was going to be around in three months. that is reminding investors they are still in turnaround mode. shares have gone up a lot. there is some disappointment today. in the next quarters it's going to be important to show there is potential for growth. they are not interested in risky growth right now. mark: how difficult is it to win market share from those big five in the u.s. who when you look at revenue have beaten deutsche bank this quarter by double? >> i think it's tough. even in wall street you saw different performances. goldman not doing so well as its rivals have done more restructuring.
europeansll for that deutsche bank has finally done its capital increase. capital is not a danger for it right now. thetill haven't seen all plans come back. i am just not sure in this environment that it's going to be easy. vonnie: is it the correct strategy? is so muchke there uncertainty in europe that it to buye the wrong time business. maybe it's better to let shareholders weight the few quarters and move slowly? >> i completely agree. .hat's the strategy i think essentially markets got ahead of themselves. if you look at the share price it is up 80% since september and that is a complete switch around in the market view.
it has gone from the eurozone is going to crater to when our interest rates going to rise? obviously the question is when is this revenue going to come back and just how tough is the path ahead going to be? vonnie: we are still awaiting barclays result it a lot of questions surrounding brexit and where it will position itself and the reelection of the board. what will be the focus for you? think it's got to be the theormance but also explanation of that very strange incident that was revealed and led to some punishment by the board and perhaps him losing his bonus. credit he has taken a lot of blame for that incident.
whether he is a force to restructuring in barclays has been limited or struck -- stunted by this incident. he is crucial to recovery. if anything harms his ability to do that that is going to be a problem. mark: lionel laurent. great story. coming up tomorrow on the back of what we were just saying, bloomberg daybreak with the man himself, barclays chief executive. look for that 7:00 a.m. london, 2:00 a.m. new york. don't miss it. still ahead, a busy few days in washington as trump unveils his tax plan and threatens to withdraw from nafta before backtracking. a look at what the president's agenda could mean for the u.s. and global economies. this is bloomberg. ♪
vonnie: live from new york, i'm vonnie quinn. mark: i'm mark barton. this is bloomberg markets. time for the bloomberg business flash. --ward is keeping dashboard ford is keeping costs in check. it will cut costs by about $3 asiden this year, putting investments for the future. mark fields spoke to bloomberg. our transactions here in the u.s. much more than the rest of the industry. consumers are really responding
to our new products. as we go forward we are andsting one foot in today one foot in tomorrow. we are making investments that will power growth and profitability in the future and we are investing in that now. mark: he has promised to rebound modelsar when ford's new are expected to start paying off. -- lloyds boosting its target for lending margins does -- this year despite record lows after the country voted to leave the european union. that is the latest bloomberg business flash. vonnie: time for a bloomberg quick take. the u.s. federal debt limit was first conceived almost a century ago to make it easier for the government to borrow money. it has morphed into an explosive political tool with the potential to roil financial
markets. competitors thought to use the debt limit against barack obama. now they are debating whether to .aise the debt ceiling the treasury department will still be able to keep paying the nation's bills for a while. first by shifting funds around and then by what's called extraordinary measures like deferring payments to retirees. the congressional budget office estimates those efforts could keep the government running through the fall but failure to raise the debt ceiling could eventually result in a first ever default on some of the u.s. government's obligations. the federal debt limit was to make it1917 easier to finance world war i by grouping bonds into different categories. in 1939 congress created the first aggregate debt limit and
it was routinely raised without incident until 1953. that your approval was held off in the senate in an attempt to restrain president dwight eisenhower. just getting close to the debt ceiling deadline rattled financial markets and consumers who feared that interest rates would soar and government payments might be delayed. s&p downgraded its rating on sovereign u.s. debt. at least one thing is clear about the debt ceiling. has not restrained the federal debt. it simply lets the government pay for things it has already decided to buy. some budget experts want to just abolish it, arguing the congressional battle costs taxpayers money by increasing economic uncertainty. you can read more about the debt ceiling on the bloomberg. president trump's much anticipated tax plan has been unveiled. the one-page list of bullet
points includes cuts that would benefit businesses, the middle class and certain high earnings individuals. it left many unanswered questions+++ pay for the cuts. joining us now is michael mckee. the democrats hardly falling over themselves to support trump's tax plan. are there any elements they could support? >> there is a feeling that tax reform would be a good thing for the u.s. economy. they disproportionately tend to favor the wealthy and the democrats don't like that. figuring it out is going to be difficult. there are some things that would perhaps agree to talk about. one is changing to a territorial tax system from the current worldwide system. tax corporate profits here in
the u.s. but not the ones made overseas. that would eliminate the tendency to do in versions. moving to end the tax-deductible the of debt. this is one of the biggest distortions in the tax code. by sellinge money bonds or borrowing from a bank you can deduct the interest you pay. youdon't get a break if sell stock. the tax code favors debt which could lead companies into trouble. pair that with immediate expensing, letting companies immediately right off the costs of new investments instead of spreading them out over years and some of the analysis i have seen says that would incentivize to spend more money. it supposedly raises money after that 10 year window rather than contributing to the deficit. it would be ok to put into that reconciliation stuff they want to do to get this through. that might be one area of cooperation. estimatede crf d has that it would cost $5.5
trillion. that hasn't a prayer of getting support in congress. >> not enough support to get it passed. they want to do it through reconciliation so they can do it through a majority vote. there are not going to be democrats who would switch sides and there will be a number of republicans who won't like that. it hasn't been scored. estimates anywhere from $2.6 trillion to $7 trillion in terms of the cost. right now that is a nonstarter. is going to help write the bill says he wants a revenue neutral bill. vonnie: jpmorgan yesterday almost dismissed it in one line saying, the chance of this passing remains small. what are the chances something might get agreed-upon given that thatard from mark meadows he's not opposed to having something that's not revenue neutral? what are the odds of something getting passed that
incorporates and the -- elements of the one-page are we saw? >> the odds are 50-50 but it's not going to look like the one yesterday because that is a revenue loser. you've got to come up with some way of filling the whole, especially after 10 years. be veryoing to difficult to do especially if you have eliminated the border adjustment tax which could produce at $1 trillion. it isn't clear how they're going to get this through or what they are going to do. decide whether to make this a temporary tax cut that sunsets after 10 years. peter roskam told us he wants permanence. vonnie: thank you, michael mckee. we will have much more out of washington today. john kelly sits down for an exclusive interview with our own david gura.
vonnie: live from london and new york, i'm vonnie quinn. mark: i'm mark. this is bloomberg markets. u.k. that the the remaining 27 countries are its chief concern as it seeks to limit the negative consequences of britain's departure. ministers signing off on the brexit negotiating guidelines. nejra cehic has been following developments.
is this the eu toughening its stance towards the u.k.? that's the way some people are interpreting it. thategotiating guidelines ministers signed off on today here in luxembourg do make some more explicit demands in ,elation to financial services the rate of eu citizens in the u.k. and british citizens living in the eu and also with regard to the bill the u.k. would have to pay on leaving the eu. as it were.ill i spoke to the italian jr. minister for european affairs thiser today and he said was not a toughening of the stands, it was a clarification. say that.say he might nonetheless that is what he told me. i wondered what italy's priorities were. he said the right of italian citizens and the brexit bill. to try to limit the damage as
possible because there is not an opportunity to negotiation. we want to limit mutually the damage and have a strong relation with u.k. on security interest at least. zi talkings mr. go about damage limitation. what he talked about was some in london seeing the avoidance of it as tantamount to go into a dinner with friends and not only refusing to pay for the dinner you had but also any of the dinner you have actually promised to attend for the rest of the evening. it was a pretty good interesting analogy. overall the damage limitation has come out. that was one thing he talked to me about. mark: today is an entree ahead of the feast that is the eu
leader summit on saturday in brussels. can leaders speak as one over the weekend? i love that you have continued the dining analogy. willould say that brussels be the feast. that will be an extraordinary summit of eu leaders. in terms of whether they will speak as one i have heard the word unity many times today. we heard angela merkel talk about unity in the eu earlier. certainly when i spoke to the minister of state islands for european affairs on surveillance earlier today, he talked about the fact that there was unity within the eu than most people thought. he didn't think the u.k. would actually approach from a divide and anquer stands either minister from italy said the divide and conquer approach is not in the uk's interest.
it looks like we certainly could see some unity. remember what the leaders are going to sign off on on saturday, general principles for the eu going forward. there will be more detailed negotiating mandates and the real negotiations will not begin until after the u.k. election on june 8. ink: thank you, nejra cehic luxembourg. coming up, the european close. four minutes away from the end of this hour to the beginning of the european close. stocks europe 600 down by .3%. this is bloomberg. ♪
"bloomberg markets." mark: we go from new york to london in the next hour, covering stories out of zurich, stockholm, and washington. here are our top stories from around the world. the outlook brightens further for the european economy. ecb president mario draghi says the recovery is solid but inflation remains lackluster. the euro went soaring after the announcement. vonnie: president trump is set to meet with the president of argentina as the budget deadline looms. tol ryan will meet the press give the latest on tax reform and efforts to avoid a government shutdown. todayan earnings bonanza with companies like ford, comcast, uea