tv Bloomberg Best Bloomberg May 19, 2017 8:00pm-9:01pm EDT
best,ing up on bloomberg the world. leaks, tweets and memos cause chaos in washington and raise concern on wall street. >> they are talking the how much you will actually be able to be taxed. >> we could do with less drama from the white house. inpolitical crises erupt brazil. >> the u.s. will have to join us in this program. >> leading investors react. >> trump trade is coming to an end here.
>> everybody wants to sing come by -- kumbaya. >> another wild week of earnings reports. >> it is not turbulent. we are very stable. ahead on straight bloomberg best. hello and welcome. this is bloomberg best. your weekly review of the most important business news analysis from bloomberg television around the world. signaledbia and russia cuffs are likely to continue.
>> straight to beijing where the oil minister is speaking. >> the agreement needs to be extended. we will not reach the desired inventory level by the end of june. therefore we also came to the willusion that ending probably better at the end of the first quarter of 2018. but the same volume allocations that were included in the agreement we entered into of december of last year. >> saudi arabia and russia are making strong statements including a joint statement they will do whatever it takes to get to their long-term goal of reducing global inventory. >> the market is fresh and healthy. this news came at a good timing
for the markets especially on the back of u.s. data showing inventory has not declined. >> president trump disclosed classified information to the russian foreign minister. mcmaster publicly denied the reports outside of the white house. the story is false. at no time were intelligence sources or methods discussed. what the washington post is reporting is they talked about a specific threat and identified the city which was important for this purpose in terms of inferring the sources and methods. >> the denial was a long -- nondenial denial. he was denying something the washington post did not actually report. >> he believes he has the right to do what he did in terms of
sharing information with the russians. he says he did it with humanitarian reasons. scrambling toe is straighten out their story not that the president has contradicted his national security officials. >> we could do with less drama from the white house so we can isus on our agenda, which deregulation, tax reform, repealing and replacing obamacare. is another example of the president being a loose cannon. sometimes it isn't clear when he is going to shoot for what he is going to shoot. washington.news in the new york times reporting president trump asked the fbi director to shut down the federal investigation into trump's former national security advisor, michael flynn. the white house has denied this report. events, itluence of
couldn't be a more tumultuous time in d.c.. the drumbeat is going to continue. the white house is denying it happened. it does sound like something donald trump, the real estate magnate might say if one of his employees got a traffic ticket. he is president. you can't do that. >> the u.s. dollar has fallen for a six the day. the latest controversy involving president trump. what is your sense of the magnitude of what is happening? that is amazing to think any one of these things, the emergence of intelligence information, this bombshell development yesterday, it would getimpossible to
back on track and regroup. even saying the white house is in a spiral, that they cannot seem to get much of it on their own. >> this is about the united states of america. this is about our democracy. we must have an independent prosecutor. we need a serious investigation now. >> stocks re-closing at lows with the dow tumbling 300 points. the 10 year yields are lowest since the brexit vote. >> this is the biggest decline for u.s. stocks in september. 370 point drop. here.re has been a change some people have been saying the rally has been holding up nicely. only because of earnings and
better numbers on economic growth around the globe. need trump new proposals to take the market higher. i think that people were saying it is ok that a gets pushed up a little bit. the possible scandal coming up, it is all about timing. how much you can actually get past. >> stock markets across the world declining. the white house trying to get a handle on this latest scandal. as well as possible collusion by trump campaign associates.
asian and european markets following the downward trend overnight. figure andespected enjoys bipartisan support. one of the longest serving fbi directors. he's a reassuring figure. >> the last eight days in washington were unsustainable. i have been talking to republicans. you saw an important mood shift. you couldn't find any lawmakers to defend the president after that story. now that there is a special counsel there is some breathing room. he can try to be the president again. >> the entire thing has been a witch hunt. there is no collusion between .yself and my campaign i can only speak for myself and the russians, zero. mnuchin.
of 3% gdp or higher economic growth is achievable if we make historic reforms to taxes and regulation. >> do you feel we learned anything new? flex i'm not sure. the secretary was there a general in most of his remarks very there is a lot of discussion. everybody has their own concept of what tax reform would look like. so far it has been to get everyone around a single plan. given the concerns of blowing up the debt and deficit. president is getting out of town, traveling for nine days to five cities in four countries. he goes all around europe. this, something that
he can do. >> there is no question, they have spent a considerable time planning this trip. i will say this president's staff is not shown it tremendous at logistics. this kind of trip requires intense planning. things can go wrong. they better not if he wants to make his message clear. voters will decide whether the incumbent will be a second term. they look at this election in iran. stake,erms of what is at it didn't go well under barack obama. the saudi's looking into reviving this. they see a lot of gains that could be made.
10 possible big deals with saudi aramco.- saudi you look at the bigger banks like morgan stanley. it could be the biggest ipo in the history of the kingdom. china's ahead, more on belton road forum. d.c.,e distractions in legislators talk to us about tax reform. the sudden return of market volatility. more of the week's top headlines, a rash of cyber attacks around the world. >> it brings home how vulnerable the economy is on a global basis. >> this is bloomberg. ♪
>> this is bloomberg best. let's continue our global tourism. advancested a summit to its initiatives. 60 countries involved in the belton road initiative have issued a joint communiqué promising to expand trade and investment after the chinese president said the plan is already in full swing. how much progress has beijing made on this plan? >> we are getting a solidification of some parameters around this initiative. lots of questions need to be answered. this communiqué was put out by the belton road members who came here. they vowed to continue to push
forward with globalization, trade and investment. we had some details around financing. process may bidding not be transparent or fair. they are pushing for more clarity on that. the question is around whether the u.s. is going to participate. they gave their backing to this trade deal. >> a global cyber attacks snowballed to infect 200,000 computers and 150 countries. i want to talk about the reach of this. what does that tell you about the actual target and intention behind the attack? >> it reinforces cybersecurity is a very important issue. it is a weapon that can be used in the wrong hands in a way that is bad for global economy.
there was nothing novel in this attack. it was leveraging a set of things that have been known for quite some time but it was done in such a broad way that it brings home how vulnerable the economy is on a global basis. >> momentum in china may be softening. factory output, and retail sales growth slipping from the previous month. >> the numbers are fairly good but they are decelerating from march. we finished the first quarter with higher than expected gdp growth. ,hat you are starting to seem that march was the peak. we are seeing a deceleration. 10.7%. 6.5%. we are expecting 7%. we were not going to get that. that was the fastest since
december 14. highest pace of growth of factory output since march of last year. a rocky decade for aig. the company starting to show signs of stability this year. companytime as the names a ceo. peter hancock said he would depart. who is brian? >> he is it well-respected leader. one analyst said he is the white knight coming in. >> there might be some ashes on him. if aigle are wondering will bring another reserve charge. he said the reserves look regional -- reasonable. people are wondering if that will continue because he's coming in to invest. wantedahn set in 2015 he
breakup of the full insured. he said he's not there to break it up. >> ford is cutting its workforce with plans to trim 10% of global workers. the move is part of an effort to boost profit in a lagging stock price. auto sales have been disappointing. they appear to have peaked. is this in response to the slowdown in auto sales? >> auto sales are turning down after seven years of growth. there is pressure on ford. the ford board of directors scheduled extra time to have field explain his strategy. profits were down 42%. they are going to be down for the year. they wanted to know what fields was going to do to turn things around. one of the things is cutting staff. lloyd banking group has
returned to full private ownership most a decade after it was bailed out for 20.3 billion pounds. should the government have waited? are there more great things to come? if you think things are getting better, hold on for more. >> there is lots more to do but i don't inc. government should be shareholders of banks. this was a bailout which was rock, atby northern the height of the financial crisis. taxpayer money was used because it was a major crisis. taxpayer money should not be used to bail out banks and money has many uses to it. they did well in selling their shares. they use the group plan. progressively they diversified. they got their money back.
mored 900 million pounds than what was put in the bank. it did the right thing. >> prime minister theresa may has committed her party to a hard brexit. she outlined the manifest today promising voters she would deliver a clean break from the european union and warned no deal with the eu was better than a bad one. >> we will take control of our money, our borders, our laws. >> this is theresa may sitting out her grand vision for the future. not just what is going to win her the election but the policy she believes in, which are pretty radical in some ways. she's trying to appeal to all these people who voted for brexit who feel left out and left the hind, no single market and immigration curbs. that's one of the big things. she is talking about doubling
the levy on how companies higher skilled migrants. >> that is the kind of language that makes big corporations nervous. stocks, bonds, all tumbled as president became embroiled in a new political crisis. yesterday,ted sinking the most since 2008. he denied claims he endorsed the payment of hush money to the former house speaker. he declared he would not step down. >> this is the biggest event we have seen in the last six months. brazil was the flag bearer of reform. emerging markets came back from the dead. this was a reform.
>> welcome back to bloomberg asked. policy conversation in washington is divergent by controversy. republicans on capitol hill insist their moving forward with their economic agenda. bloomberg spoke to several key legislators about the prospect of tax reform. kevin sat down with mitch mcconnell. >> the president is proposing a mass tax cut. onre could be some tension divisions. what is the timeline?
could we have tax reform by the end of the year? >> it will have to be revenue neutral. we added an and norma sinnott a debt during the obama years. we will have to be revenue neutral. i don't want to put a strict timeline on it. last time it took several years. we certainly want to complete it this congress and make america more competitive. not one year, 3% growth during obama. >> i see
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xfinity x1 gives you exclusive access to the best of the billboard music awards just by using your voice. the billboard music awards. sunday, may 21st eight seven central only on abc. ♪ this is "bloomberg best." i am julia chesley. -- chatterley. road, will belt, one it achieve its ambitious goals? bloomberg spoke with investors about the potential, an exclusive conversation with 'sina national petroleum chairman. cnpc is working on 50 projects in 19 countries within the belt and wrote framework -- and
road from work. some are upgrades of existing projects. some are completely new projects. depending on local resources in different countries, we mainly projects,-- -- gas but oil operations in africa. >> how do you think the country can mitigate its dependence on overseas energy supplies? >> on one hand, chinese oil and gas companies like us must continue to play the role in domestic oil exploitation. on the other hand, we need to speed up our efforts in collaborating with resource-rich countries to jointly develop assets to replenish our y's ever-growing demand on
oil and gas, balancing imports with better use of resources. ♪ >> is there a financial crisis in china? >> with all these outflows, it impacts the exchange rate indirectly or directly from that they have the levers to change and maked to regulate sure money does not go out to partyy, and they have begun that effort so that when money goes out, it is targeted and specific. can they displace the u.s. and trump administration as the most global country in the world? >> the u.s. will be impacted. i believe the u.s. will have to join the one belt, one road program because there is a lot of benefit to be achieved with
this program. the chinese will be careful not to favor chinese companies unduly, so there will be enough for everyone. >> who benefits the most common neighboring countries, or africa? >> considering where they will come from, central asian countries will benefit quite a lot. europe will benefit because the europeans will get a piece of the action and trade will increase dramatically once the whole program is completed. ♪ of the mosty powerful members of the investment community came together in las vegas for the annual salt conference, amid a backdrop of political turmoil in washington. we gathered thoughts and insights on the market from some very special guests. >> the trump trade we have embraced and has driven the
markets to new highs in equities is coming to an end. >> the trump trade is coming to an end? >> the bloom is off the rose. it may have to be that we need to get through this so we can see whether we get these policy measures. >> is there a new trump trade? >> it would be a retracement of where we rally to. the confidence and flow of capital in this country -- europe is getting enormous flows of capital at the expense of u.s. equities on a go forward basis. >> really? we haven't seen that yet. you are saying now every market will sell off? arehe equity markets starting to flow more towards europe because the equities are undervalued.
buy europe, it is undervalued, frontpage, cover page. >> double digits in france -- >> the situation has stabilized 's europe between macron election and what we see in germany, so we think it will be a stable place to invest. we will start to see capital flows move towards europe as the euro rallies relative to the dollar, and the equity market has rallied so much, european equities are undervalued, so it could be a relative value trade that becomes the "trump trade." you gentlemen were expressing surprise at how long it has taken for financial markets to become sensitive to developments in the white house. why? why think it has taken so long? heartoybody once
that melody floating through, and it happens all the time. you said why did it take so long for the stock market react to the white house, but it is much more than the white house. it is north korea, chinese islands in the south china sea, venezuela, ukraine, the middle east -- and are all these and that nyse pretends they don't exist. how do you invest? >> you stay away from things that don't make sense. if i don't understand something, i will not invest because people say it's fine. if i feel i'm not getting paid enough for the risk, i will stay away. >> you agree? >> probably the most frequent question asked is, are we
getting paid for the risk? we are in the business of taking risk. you just need to get paid for it come and you need to get paid adequately for it. ♪ strategy.ocate to >> correct. >> as opposed to individual securities? >> that's right. >> i have been asking how the turmoil in the white house affects the way they are thinking about investing. does it affect the way you are thinking about investing? at the, when you look progrowth policies that could come out of washington, regulatory reform, tax reform, infrastructure, so you can count on regulatory reform. tax reform, maybe, maybe not. infrastructure, overblown and 2018 at the soonest. terribly concerned yet. obviously more details emerge --
it comes back to basics. a good security or theme that could do better if you get tax reform or better outcome if you get infrastructure, that is a good place to be. but still do fine without. >> i see. >> it is apparent that regulatory relief which the executive branch controls, particularly rich a banks, and also -- regional banks, and also energy, you don't need tax reform or infrastructure. >> how much concern have you discerned among the participants at the conference here about what has come out of the white house the last several days, and of course the way markets are reacting to it now? starting point is volatility has been extremely low. beenome time, there has tax reforms pushed back, revenue neutral, big fiscal stimulus? it i
it is unclear. one of the mystery's why volatility remains so low. evidence the markets are pushing back further, if not discounting completely, 2-3 -- sorry, one-to progrowth reforms. some concern, but not near panic. ♪ when the aca was being crafted, obamacare, i remember speaking to one of the staffers who helped to write the bill. she told me something interesting, when i said why is there no single-payer option? she said there will be in 5-10 years. because of the way obamacare has been crafted, everybody will be paying higher co-pays and deductibles than they are now -- this was back in 2010, and when the public realizes how much this stuff costs because they start paying for it themselves,
there will be single-payer, and i've never forgotten that discussion. i think we may be headed that way. >> speaking of obamacare, is you in a trump trade for the unwind if you will of obamacare? >> i think one of the factors that will happen with the aca if it is repealed along the lines of the current house bill which will be watered down i suspect there is ate is that raft of companies providing what are called essential health benefits. >> hospitals? psychiatric, drug addiction centers come all these things were mandated, and now they are looking to water that down as a cost of savings. a number of these companies all their profits explode from 2010 on. those companies will be in deep trouble. in addition, some of the leverage hospital companies. we will see people return to
>> you are watching "bloomberg best." i am julia chatterley. investors holding their breath for the results of retailers, and the biggest did not disappoint. >> walmart with momentum against 2%,on, stock up over e-commerce business killed it, 69% volume up in the last quarter. >> there are a couple of things. a big thing is marketplace. walmart has been able to add more stuff through third-party
retailers and sellers the way amazon has done. the old-school metrics that walmart used to be good at, return on investment coming share repurchases, those investor-friendly things are taking a backseat, and we are seeing they are investing in big andowth, so it is hard to do both at the same time. investment in gaming paying off, posting record quarterly sales and profits the top testaments. honor of kings drove one billion plus users on wechat. >> we are seeing tencent become this hybrid of facebook, amazon, marvel, and netflix. they beat all estimates for revenue and profit this quarter. most of the growth was bolstered by their mobile game,
specifically honor of kings. that game was the top download and top revenue grossing game in the ios store. analysts are expecting it to make as much as 3 billion yuan and will contribute more than half of revenue for 2017. shares of alibaba falling in thursday's trade despite strong quarterly revenue growth and plans for a $6 billion share buyback. investors focused on the e-commerce giant's quarterly profit, which missed estimates due to a tax bill and expenditures on entertainment. in share a huge drop price because of this earnings per share miss you mentioned. a big reason was because of the tax hit, investments they had a tax break had expired. another area of concern is pressure on the margins. core business is still
growing quickly, but are expanding into aries icloud, entertainment, and that is putting pressures on margins. there was hope and bright spots in terms of that revenue and numbers show they are able to squeeze more dollars by getting better content targeting users much better. described as the twitter of china, weibo has outgrown the moniker in more ways than one. it has a larger market cap than peer.p this is looking pretty good. >> they have been able to do what twitter has not been able to do, grow its user base at a rapid rate and managing to turn a profit. they have a walled garden in china because of the great firewall, but there is plenty of competition domestically.
they have managed to beat them. >> what does it mean in terms of competition with others like twitter? does not have major plans to go overseas at the moment. it is china-focus. you have to ask if that is a future area for them, or at least targeting the growing chinese population outside of china. ♪ releasing delayed earnings, saying it has to sell its flash memory chip unit to stay alive. the company facing legal action over the chip unit itself. what is going on here? it is a company with the venerable history looking challenge. problemsa has deep because of the troubles in the westinghouse nuclear business. they have been trying to selloff their chip business to fill the black hole with earnings, and lsoy are trying to a figure out what they're going to
do with that westinghouse unit. we had so than utility agreed to take control from toshiba, which limits some liabilities toshiba may have as long as they are able to finalize that deal. their partner in the chips unit -- western digital is filing for arbitration to slow down the sale. >> they want a say in terms of who it will be sold to. is ae end of the day, it perfectly valid request if you are a partner. >> the pointer she but would make is that western digital was not its original partner. they became a partner in that joint venture because they bought sandisk, and toshiba did not have any consent rights over the sale, so toshiba is saying you can't argue for rights we never got in the first place and there were no consent rights in the contract either way. ♪ three mega banks are rising today despite forecasting a fourth straight fall and combined annual profit.
it comes as the impact of negative interest rates is. >> all three banks achieve their full year guidance, down a fraction from a year earlier. the profit forecast for this year are also down 4.8% combined. the breakdown of that, too banks lower profit,g while mitsubishi ufj is forecasting an increase in profit next year from this year. the banks are being conservative as they typically do, and that is why they our forecasting profit. a little worse than expectations, 236 million pounds in the red. is this as bad as it gets, and what is your expectation for the story going forward?
>> there were no real surprises in the first half loss. movedit down, easter has from the first half into the second half, 40 5 million pounds of loss, and the foreign-exchange headwinds is 80 million pounds comes so before we started the first half, the market new there was 127 million lost against easyjet, that these a normalized lost in the first half comes, so not turbulent, very stable, navigating our way through the referendum. we know what we will do about that come and what we have said is the second half is that we are holding guidance. cisco, the biggest maker of a quiver that runs the internet, beat earnings and revenue estimates, but the stock move down because its sales forecast was cautious. yourof the reason why stock did not do well is because you sit going forward, it is looking soft.
are there mergers and acquisitions you could do with all that cash you are holding to can fix that problem? have more than doubled the amount of dollars sitting on our balance sheet from's instructions in the last eight quarters, and it was up 87% last now $4.4 billion, so that transition is moving. put 500 50 million on the balance sheet in the last 90 days, so we are accelerating that. we have built internally that are contributed to that balance, we have namicsitions like appdy that will contribute to that. as i said earlier, we see our own internal ability and m&a that will be the strategy we will deploy going forward. ♪
is the commodities price forecast function on the bloomberg. it charts oil price and where they see it headed. vix. is the curve of the the green line is about a month ago, and the orange line is where we are right now. >> the number of tweets containing the word impeach and trump together has spiked overnight. you can grasp of these things using the nt function on your bloomberg. about 30,000 functions on the bloomberg, and we enjoy showing you are favorites on bloomberg television. maybe they will become your favorites too.
will lead you to quick takes and insights to timely topics. here is a quick take for this week. seniorn is the world's citizen, birth rates falling and meaningiving longer, japan has a population aging and shrinking fast. now the government is encouraging people to have more babies and industry to use more robots and ways to bring in more foreign workers. here is the situation. japan's population is forecasted tumble by one third to below 100 million between now and the middle of the century if the current trends continue. over 64-year-olds currently account for a quarter of the population and are expected to reach 38% by 2048. the demographic shift is causing a shortage of workers and starving the economy of labor. they are struggling to build -- fill job vacancies.
in tokyo alone, to job vacancies for every applicant. the prime minister is introducing policies to curb working hours and improve facilities. progress has been slow, and it cannot make up the labor shortfall. revolution,bot encouraging automation and everything from factories to medical care. listen labor rules have had had some impact, doubling the number of overseas workers, more than one million, but that is still not enough. here is the argument. brings direulation fiscal implications, including unsustainable debt and contributing to deflation. the electoral muscle of the elderly as far more likely than the young to vote, meaning it is
hard for politicians to do more to trim benefits. while the japanese recognize an aging population is a problem, most are wary of immigration. the reason for that is a desire to preserve the countries unique cultural identity and a fear of increasingly ultra low prime rates. according to a united nations report, japan needs to attract 640 7000 foreigners a year to maintain its population, yet with other asian countries aging rapidly, experts say japan may struggle to attract the number of foreigners it needs. ♪ that was just one of the many quick takes you can find on the bloomberg. you can also find them at bloomberg.com along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week. thank you for watching. i am julia chatterley.