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tv   Bloomberg Markets Americas  Bloomberg  May 22, 2017 2:00pm-3:31pm EDT

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scarlet: we are live at bloomberg world headquarters in new york. here are the top stories we are covering from around the world and on the bloomberg. in israel,rump is wrapping up remarks with president netanyahu, but it is his earlier off-the-cuff remarks that are grabbing the world's attention. let's move on to oil that is trading at its highest price in a month, as saudi arabia says producers are on the same page. we will have part of our exclusive interview with the country's foreign minister. ford is shifting gears and putting its head of smart mobility in the drivers seat. is the former furniture executive the right person to turn ford around? let's get to your markets, u.s. stocks in the green for the third straight day. a trend is in the making. julia: we are seeing a
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round-trip from last week's big declines. the gains are back, and the stability is back, and the lack of volatility is back in the stock market today, as we see technology outperformed. that is a trend that has been in effect year to date, and we see it back in effect today. we've seen the reversion to trend for the major averages. in terms of some of the individual stocks we are watching, we want to take a look at what is going on with altria group phillip morris. bonnie herzog is saying that she thinks there is a deal in the making between two companies. it looks like we have a typo with our second ticker, but we can see that shares are trading up 1.3%. we are also seeing some of the , some weakness.
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amgen, the company saying a study of an experimental osteoporosis medicine did show success amongst 4000 patients in reducing the incidence of bone fractures. however, 2.5% of the patients who took the drug developed serious cardiovascular side effects. that is why shares are down. ,his was in belgian trading down 18%. radius health on the flipside is up by about 8%, and celgene is out with disappointing results from one of its drugs, a drug to treat ms that showed relative success in the study. however, it wasn't more as assful or as successful drug by biogen. of stocks, weside are watching oil prices, and that is after saudi arabia
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announced a willingness to see output cuts extended into 2018. earlier, it was a much bigger gain in oil prices. it has come down, paring the gains on the day, as there is skepticism about what the supply from the u.s. is going to look like. there's not a lot of optimism about oil prices in the long term. we have a couple different ways to slice it. we've got the price of oil, which right now is around $50 a that's not a lotbarrel, so youe the forecast is around $41. that has not much changed. it has stabilized around that level. you can also look at what is going on for the front end traded wti, which is around $51. if you are talking about where oil analysts see oil going into the future, we are talking about $51 a barrel, which is pretty darn close to where we are now.
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>> good stuff. julia: let's get you up to speed on the bloomberg first word news with mark crumpton. president and is really prime minister benjamin netanyahu reaffirmed what both friendshipr a long as the president stopped in jerusalem. president trump said the u.s. has what he calls on unbreakable bond with israel. level ofeve that a new partnership is possible and will happen. one that will bring greater safety to this region, greater security to the united states, and greater prosperity to the world. mark: prime minister netanyahu says he sees real hope for change in the middle east. he thanked president trump for his tough stance on iran, which the president noted was a previous departure from u.s. policy. --sident trump announced
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addressed the controversy over his remarks to russian diplomats. >> i never mentioned the word or the name israel. i never mentioned it. they are all saying i did. i never mentioned the word israel. mark: the president was responding to a question from bloomberg's margaret tala. secretary of state rex tillerson said he would not apologize to israeli officials. north korea says it is ready to start mass-producing a medium-range missile. it called the missile capable of reaching japan and u.s. military .ases the missile flew over 300 miles sunday before plunging into the pacific ocean. north korea's media said more missiles will be launched in the future.
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the supreme court today struck down dirk congressional districts in north carolina because race played too large of a role in their creation. the justices ruled that republicans who control the state legislature and governor's office in 2011 placed too many african-americans in the districts. the result was to weaken african-american voting strength in north carolina. voting rights advocates say the ruling will boost challenges in other states. global news 24 hours a day led by our 2600 news analysts around the world. i am mark crumpton. julia: let's go straight to jerusalem to kevin cirilli, our chief washington correspondent who has been traveling with the president. credible job so far tracking the president. you are only just beginning. give us a sense of what happened in the press conference. this was a president very much
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sticking to the script, minimal not to giveing hard journalists anymore a parent fodder to play with. apparent fodder to play with. kevin: julia, you are right. this is a very different president trump.what you noted in jerusalem , president -- the president making remarks, saying he made no mention of israel during the conversation he had privately with russian diplomats. while those conversations, which were revealing of highly classified intelligence, were legal given the president has the ability to do that, it landed him in political hot water from notches democrats but also republicans. that is why this has become such an important issue in israel. the president, choosing to go to saudi arabia, and then fly directly to israel, hoping to
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reset and correct course from some of the abrasive rhetoric we've seen in the campaign as he looks to broker what he calls "the deal of all deals," and that is middle east peace. scarlet: peace with its neighbors when it comes to israel. according to president trump, that means resolving the dispute with the palestinians. what is the israeli side on that? there is kevin: a bit of disappointment -- kevin: there is a bit of disappointment according to some of the folks i've spoken to injure zola and that the present will not make good on the promise to move the u.s. embassy to jerusalem. while the president is the first acting president to visit the western wall in old city, he did not to sue with israeli prime -- do so with israeli prime minister benjamin netanyahu. some cabinet officials are disappointed about the u.s.-saudi arms deal, totaling close to $110 billion.
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i am told that there could be an effort underway in the senate to block that led by senator rand paul. i can tell you from being in riyadh, talking to business leaders about the new deal than $400 billion in total, about that negotiation, they are excited by that. they than $400 billion in feel, like israel, they too oppose the iran deal. scarlet: kevin cirilli, chief washington correspondent for bloomberg news, traveling with the president, we will check in with you later. while president trump embarks on the next leg of his foreign trip, in washington, his domestic battles remain in focus. to former fbis chief james comey's appearance hillshington -- on capitol . joining us from the white house is our correspondent.
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the budget proposal is a big issue for tuesday, but i want to begin with james comey and any kind of update. the last we heard is he was invited to speak, and he will likely testify, what, after memorial day? >> that is the latest that we have heard. we will likely see former fbi director james comey testify or earlymorial day next month, and before then, we will hear other through news reports or statements from members of congress reaching out to james comey, including the house chairman of the government committee jason chaffetz -- he said yesterday he was going to be meeting with jim comey today. we might start hearing more of james committee jason chaffetz comey's side of the st. we got a bit of that last week when we heard that mr. comey had been making memos as he was speaking with the president over
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the phone, meeting at the white house, and expressing discomfort to what -- with what the president was saying about the investigation. we are likely to hear bits and pieces of that before we hear the full story from mr. comey when he testifies early next month. julia: talk to us about tomorrow and what we should expect from the budget tomorrow and how important this is. i heard one analyst described it as saying "dead on arrival." >> the budget will be the president's first opportunity to lay out his vision, but it's likely not going to be much more than that. we are likely to see some drastic cuts to various social programs. the president is seeking to balance the budget over 10 years, but he is saying he is not going to cut some of the biggest spending items, including social security and medicare. programs for the poor will be cut in the president's budget.
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that is not sitting so well in congress as members of congress say they don't want to cut programs like meals on wheels for the older lee. it's likely that this budget is just an opening bid for the president. it will give us a sense of what the president hopes to accomplish over the next four years and potentially eight years as he tries to get closer to a balanced budget. scarlet: i just want to get an update on health care. the white house and house republicans are asking for another delay in a federal appeals court over obamacare subsidies. what does this tell us about how the trump administration is pursuing the repeal and replace of obamacare? >> the trump administration is in a very tough spot. president trump has already declared obamacare dead, and he said the various exchange markets are going to go belly up without a rescue plan, but he is also doing some things that have thrown some disarray into the
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markets by questioning whether he is going to continue paying the subsidies assurance companies have relied on under the previous administration. he has gone back and forth about whether this administration will continue to pay those subsidies. those payments will continue for three months, at least, but the lack of certainty is already throwing markets into disarray as insurance companies have to file rates for next year. given the lack of certainty, we are likely to see rate increases over the summer with various insurance companies planning for next year without much surety about what is going to happen yet. scarlet: perhaps another sign the trump administration is more like other governments, kicking the can down the road. julia: coming up, a bloomberg exclusive. jpmorgan ceo jamie dimon says he is comfortable about the banks future given its position in emerging markets like saudi
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arabia. we will bring you more of his comments from riyadh. from new york, this is bloomberg. ♪
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julia: this is "bloomberg markets." i'm julia chatterley. scarlet: i'm scarlet fu. jpmorgan ceo jpmorgan, among the corporate a listers who dissented upon riyadh this weekend. dimon spoke about doing business in the middle east. >> jpmorgan has been here for 80 so we're working with the company's here.
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they are having a big forum so , sponsored by the government -enhanced business. the president is here, so we are glad to be part of what is going on here. >> how much bigger will your operations in the middle east and saudi arabia get? >> my first trip here, we had one person. i think almost 30 are women, by the way, including a woman who's a receptionist for the first time. we are part of the banking system here. we are part of the broker system here. we bank a lot of companies and governments. >> you do let up on sales for them, as well. does it make a difference if the 2030 vision works out? >> we do about $27 billion of bonds, and we do it for some of their companies.
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yeah, it makes a big difference, and if they succeed here, it will be good for business. can you grow further? >> we are going to try. some areas, the answer is yes. it shouldn't be expected to continue forever. the world is going to double in size and the next 12 or 15 years. there are print -- there are plenty of threats. we spend a lot of money on technology. we know what we are doing. we help companies around the world. we are pretty comfortable with our future. >> can you break down the units where you want to defend your market share and the ones where you want to push it? >> i want to grow everywhere. it will be harder in some areas because we have a greater market
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share. inlicly, investment banking certain areas, it might be harder to gain share, but that doesn't mean you can't gain share in this part of the country or this part of the world. >> what about fixed income? a lot of your competitors are trying to beef up that. share,, we have a good but i think it will be hard to gain. if you look at the share, yeah, but if you look at what we can do better in this country, there are plenty of things we can do better around the world. we've got to maintain our share. competition is a good thing. i've never been worried about competition. we want a competitive world. >> as long as you are better than them. >> that's what we try to do. >> we spoke in paris a couple months ago, and you talked a lot about regulation. what is the mood now? are you confident for the future of wall street? >> when you talk about regulation, the trump
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administration wants to deregulate certain things, and most of us in business think regulations have been holding back growth. not just jpmorgan. i'm still optimistic that we will have some regulatory reform. esther years of regulations, it makes sense. >> glass-steagall wasn't part of the problem. nobody i have talked to said that was part of the problem. >> glass-steagall wasn't part of the problem. the question is, would you regulate smaller banks different then bigger banks? that is understandable. i don't think it is going to stop our ability to compete. >> would you be opposed to any foreign acquisitions? are you on the hunt to do something? >> we are not on the hunt, but i wouldn't take it off the table. acquisitions will be back in our future one day. >> for j.p. morgan chase, there is no area we can't grow organically. private bankers, corporate
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bankers, ranches and the united states, branches overseas. my first thought is organic, but there may be acquisitions in countries that make a lot of sense, that they have to make a lot of sense for us to do it. it could be sin tech related, customer-related. we already have online self-investing and online account-opening. a $400 milliondo fx trade on their mobile phone. >> how much do think business will be transacted on that side? >> if you look at the consumer side, it has already hugely moved from mobile. bill pay will be moving there. corporate, we have already seen fx, we have seen some equities, but mobile, ipad, online, it's
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all the same to me. >> overall, how are the animal spirits in the united states and also in the world economy? >> looking pretty good. japan is growing more than it has in 15 years. europe is doing rather well all things considered. america is chugging along at 2% give or take. even the imf, which is always worrying about stuff, is saying, the world is going to grow faster than we expected. >> that was jamie dimon speaking exclusively with francine lacqua at the saudi-u.s. forum in riyadh. > still ahead, saudi arabia's oil minister tells bloomberg that will producers are willing to extend cuts into next year, but will it have the desired effect? we will have more of our exclusive conversation with falih later this hour. this is bloomberg. ♪
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scarlet: this is "bloomberg
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markets." i am scarlet fu. julia: i'm julia chatterley. it's time for the bloomberg business flash. brazil's gbs is plunging today. the president accused the company's owner of insider trading. gbs, the world's largest meat producer, is owned by j and s invest amount, which faces several billions of dollars in fines as part of the leniency deal. according to people familiar with the matter, blackstone's initiative is anchored by $20 billion with saudi arabia's and couldestment fund make it the largest infrastructure manager in the world. infrastructure investing, which directs private money to constructing roads, bridges, and airports, is being highlighted by the trump administration. that is your business flash update.
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scarlet: still ahead, we've got the commodities close. a look at why oil hit a one-month high today, oil up by three quarters of 1%, just below $50 a barrel. this is bloomberg. ♪
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across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver. julia: from bloomberg world headquarters in midtown manhattan, this is "bloomberg markets." i'm julia chatterley. closing, markets are and i'm going to kick off with gold continuing its rise. it is the laggard among the broader prater -- precious metal complex, but the move does gains as anweek's investor safety trade following the controversy over president trump's firing of fbi director s james comey and in the handling of sensitive information. in the meantime, oil rose above $50 a barrel and hit a one-month high. we've got opec this week
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preparing to meet extending oil output cuts. you can see it is higher 9/10 of 1% in trading. let's take a look at a chart you can see on the bloomberg. this shows the relationship between oil prices and a number of different emerging markets. if you look at the white lines on the bottom, that is showing you what has happened over the course of this year. the green line on the top, that is msci emerging markets index. the currency index is yellow, and in the purple, sovereign bond index. , evens tracked down though it has been pretty volatile. the emerging markets overall have been pretty resilient so far. sticking with oil, saudi arabia's minister says he is output cuts for through the first quarter of 2018. he spoke with francine lacqua in
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riyadh. >> everybody i have talked to has agreed to the saudi-russian proposal to have a nine-month and a six-month proposal, so i am fairly confident that we will be able to bring that together with the full agreement of all countries of the december 2016 agreement. i would also add that inventories are coming down. we've seen that a number of successive weeks where u.s. inventories are coming down, but if you look at the global inventory level, it's even more pronounced. non-oecd, floating storage has been offloaded into tanks were consumed. we are coming into high demand with a second and third quarter already upon us. i think everything is coming to us.
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we see the global economiesging global inventories to a five-your average. >> are you worried that it will be difficult to while the markets? the'm not looking to wow markets, and i'm not looking for a specific price. what we are looking for is , so we for the market are steady as we go, committed to getting inventories to that five-your average. -- five-year average. i think that should encourage investment. clearly is clarity on where the market is going so people invest. i'm less concerned about prices over the next 12 months than i at the endree years of this decade when supply will
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be approaching 100 million barrels, and we have an annual decline. unless we invest and overcome significant with capacity coming in, we will face a shortage. we and saudi arabia don't want the market to be squeezed. >> i understand you are not targeting a price. i understand you don't want to talk about a price, i've been covering a few decades. the show producers are now part of the equation. let's say it doesn't have an effect longer-term. would you think of over-pumping so the price goes down and you squeeze the americans out? part ofhas never been the calculus. we never over-pump to squeeze anybody out. i think supply and demand need to balance, and we have said saudi arabia has hit capacity. opec will do what is necessary. we feel that the market
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yearsure was off a few ago with the divergence between supply and demand, and any opec action in 2014 would not have done the job in terms of cutting . with the restructuring of supply-demand trajectories that took place over the last three is able to calibrate supply with our great partners from outside to bring supply -demand balance together, bring inventories down, and give clarity for investment to flow back in. >> two final questions, one on opec and one on the forum. talk me through the thinking of certain countries to not cut production? will saudi arabia cut production more? >> the whole premise of last year was collective responsibility, and i'm glad to say that even though there are some deviations we are working
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on fixing, overall, the numbers speak for themselves. we had historic levels of commitment that have been delivered by the producers not only from opec but countries that have never really been part of such an initiative to manage their production. they have delivered well in totality, and i think the markets have responded positively, as we have seen, and therefore, saudi arabia is counting on that record to be improving over time, for the burden-sharing to be complete. i don't accept that saudi arabia or any other country should pick up the slack from others. we did go the extra mile initial lead to set an example, and i think -- initially to set an example, and i think our partners have responded positively. julia: that is saudi arabia's
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oil minister speaking with bloomberg's francine lacqua. about this when we are looking at commodities rallying, and it's the dollar. it's weakening today. i apologize. scarlet: that is exactly what the white line indicates. the beauty, continuing to move higher. julia: opec-related, but of course, we have to check the dollar on this one. also a note about shale. we are going to be talking more about this. he said, we welcome shale. we want it to be back. we want to see moderate, healthy levels. [laughter] scarlet: that's a funny description, isn't it? let's get you a check on the headlines with mark crumpton. mark: scarlet, julia, thank you. there is a report that former national security adviser will decline a subpoena from the senate intelligence committee seeking documents. according to the associated press, flynn will invoke his fifth amendment right against self-incrimination.
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the committee is investigating russia's meddling in last year's u.s. presidential election. the trump administration and congress have informed a federal appeals court a reached a deal to continue for 90 days disputed obamacare payments to help should -- help insurers defray costs. packed willnth enable the trump administration and house leadership to resolve the dispute. british prime minister theresa may is backing down from one of the central pledges of her after polls showed the opposition labor party gaining on may'ss conservatives. her plan to make elderly people pay for the cost of their own care until their assets fall to $130,000 will now be altered. labour called the policy a "dementia tax." the outgoing director general of the world health organization is holding herself personally
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accountable for the agencies reported failures during the 2014 ebola outbreak. director margaret chan gave her last address at the world body's annual gathering of member states in geneva. her departure comes as organizations -- as reports come that the organization spent $200 million a year on travel. a new director general will be elected tomorrow. i am mark crumpton. this is bloomberg. scarlet: coming up, the selloff resumes in brazil as the president continues to lose support. we've got the latest from sao paulo next. this is bloomberg. ♪
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julia: this is "bloomberg markets." on julia chatterley. scarlet: i'm scarlet fu. julia: i want to take a look at some stocks in the liquid category of various kinds. that is my theme. let's start with booze. constellation brands is up. cow when analyst is saying that the three-month dollars sale is 3.1% and 2% at these companies. that is according to the national alcohol beverage commission, the results of various states for april. brown-forman in particular is benefiting from that. sticking to liquid of a different kind, soup. campbell soup shares are up better than 3.5%. down 2% friday following the company's earnings report, even though the midpoint below forecast was
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estimates. they are bouncing back in a big and then we can move to non-edible liquids. that is one of the things that hans smit and makes, the chemical company. lower, eventurned after it agreed to be bought by clarion. there has been a lot of chemicalg in the industry. now it looks like a bad deal is indeed materializing. finally, a place where you can buy liquids made by all of these companies -- i'm not sure if it is too tenuous -- right age shares are bouncing today. these shares have been bouncing on the varying chances of the walgreens-boots alliant steel being successful for the company. today, there was some trigger -- twitter chatter after the stock fell last week, but ca kiev is how you can track on what is going on with various deals.
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here you have the timeline of the deal. it was announced in october of 2015, and the shares maintained their gains. in january, they agreed to cut the price, and the stock has been going south steadily ever since. scarlet: liquids and m&a, not a bad combination. let's move on to brazil. studying it.n julia: what we've seen in the last half hour or so is a lower performance for the brazilian realloc are retracing some of those losses -- the brazilian retracing some of those losses. recording of a are to capture the president endorsing illegal bribes to a disgraced long ago.
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joining us is the sao paulo chieferg chief -- bureau for bloomberg news. just explain what this means. how unusual is it for the supreme court to suspend a decision like this, and can we assume this means they want to investigate this further? >> it's been a long time since we have had a sitting president investigated by the supreme court, but the supreme court said it, we need more time to analyze these tapes. some of the material hasn't been fully analyzed. 's request is to suspend the probe against him. scarlet: the supreme court has given itself more time to position itself. in the meantime, coalition partners are abandoning michelle tamura. who still supports him? >> one of his main allies is still supporting the government, what the bigger parties are
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saying is, we need to wait for the supreme court to make a decision. they will wait for that decision before deciding whether to stick with him, which is key and everything in the survival of the government. we have seen that stabilization in the brazilian real today. one analyst at the racial group is saying they believe the probability of president temer being removed is 70%. what are people in brazil saying about the prospects of this? >> that's right, and it was an increase from 20% to 70% just today. everything in brazil is very much up in the air. people don't know what comes next. biggest question -- what happens if he is removed by the electoral court or any other means? there's a lot of discussion taking place in the media, and people are trying to understand what we do now. julia: i want to ask you about
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tot the government is doing halt some of the pessimism. he's adjusted the budget. what is going on there to ensure some sort of economic confidence despite political turmoil? >> the finance minister, according to reports, is talking to investors, had been doing so as of thursday and friday, trying to calm people down after the massive selloff we had thursday, trying to ensure people the government is pushing to get brazil back on the right track economically and not being distracted by the political crisis. scarlet: final question, we know the impeachment of dilma rousseff took a while. mer is in peach, what kind of timeline are people talking about? >> it's a good question. it takes a while to impeach a president.
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there are committees that need to be formed. would take ant while, and remember, we have elections upcoming in about a year. there's presidential elections. this: a lot of unknowns on one. julia, great to chat with you. scarlet: coming up, a big shakeup at four. mark field is out. hear what executive chairman bill ford told us about these changes. from new york, this is bloomberg. ♪
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julia: this is "bloomberg markets." i am julia chatterley. scarlet: i'm scarlet fu. let's look at bloomberg business flash. cbs has signed chairman les moonves to a new multiyear 2021.ct through he will continue receiving his $3.5 million salary.
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once the contract expires, moonves has the option to become a senior adviser and former a production company for cbs. he's among one of the highest paid executives in the u.s. he earned more than $69 million in 2016. citigroup has admitted to criminal violations through a mexican subsidiary. the firm will pay $97 million in penalties. according to people familiar with the matter, citigroup failed to oversee money moving across the u.s.-mexico border. a three-yeart ends investigation by the department of justice. a surprise shakeup at ford. mark fields is out after less than three years on the job as ceo. shares of the automaker fell 37% during his time in office. the new chief executive will be jim hackett who has been leading ford's moves in self driving cars and ridesharing. julia: on that news, bloomberg
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spoke with executive chairman bill ford. here is how he categorized the need for change. i'm very grateful to mark for everything he did for our company, because he did amazing things, but we are in a different time, and it requires the kind of leadership that jim will bring us. julia: joining us from detroit is bloomberg auto reporter keith noting. we were talking to you about how long the ceo still had at ford, and clearly, he only had a few days. what are you hearing was the ultimate reason for his demise? was it the share price performance or something else he ago -- else? keith: the share price didn't help, but he seemed to be slow in decision-making, g.m. stealing the market from ford in pickup truck's. she wasn't working to fill those gaps quick enough. a also failed to articulate vision about where ford would go
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with self driving cars and the mobility service that is their future. those two things combined led the board to say, we need something else. scarlet: you were at the news conference. what was the message that ford's board of directors were trying to send? keith: jim hackett is an outsider. he was at the university of michigan as their athletic director. the thing that he and bill ford talked about was how they are going to speed up decision-making. if they see something in the market, they are going to react fast to it and capitalize on it and not get caught behind competitors. julia: what about jim hackett here? i have read about his background and why ford believes he is the guy who can shake things up and turn things around. he's painted as pretty ruthless. when he worked for steelcase think, i believe he made 32% of the staff redundant in a four-year period. is this what ford needs, someone
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pretty ruthless? >> they did already announced cuts to the salaried staff of about 10% just last week. ford did a lot of downsizing during the last recession. sure that is the thing that is called for at this moment. it seems they need to charge this new path for how they are going to make money on the mobility services, robot taxis, and how they will fund the development of those products today by making billions off suvs. scarlet: speaking of the future, it is hard to resist the temptation to compare forward to companies like -- ford to companies like tesla and uber. when tesla flashes billions of dollars on electric vehicles, investors applaud. similar, thes market frets about a lower profits. -- about lower profits.
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julia and i were looking at the numbers. ford'sades at four times earnings. should we expect to see more activist investors target these companies? we have already seen david onward target g.m., for instance. keith: that is a hard nut to crack with ford. the ford family has a special group of stock that gives them 40% voting power. julia: jim hackett comes from the future are giggly of the , ridesharing, the electric -- from the future arguably of the business, the ridesharing, electric cars. how can they compete with the likes of gm and the likes of google? keith: it is the dual challenge. they did seem to be struggling in both areas. ford believesbill jim hackett can do it better. he really changed the culture at
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, ridesharing, the steelcase and got them to think in a different way about creating solutions instead of just office furniture, and they did a lot of work in silicon valley. jim hackett has some strong connections out there. he worked directly with steve jobs. they think he has the connections and vision to take them forward. julia: we will have to see. raising itshe eu is hardline on brexit talks. what we can expect as the divorce process gets underway. this is bloomberg. ♪
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julia: it is 3:00 p.m. in new york, 12:00 p.m. in san francisco, 8:00 p.m. in london. i am julia chatterley. scarlet: i am scarlet fu. welcome to "bloomberg markets." ♪
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julia: we are live in bloomberg world headquarters in new york over the next hour. let's get to the top stories on the bloomberg and around the world. is in israelmp pushing for better relations but still managing to go off script. more ahead on how the president defended his handling of intelligence. on the next leg of the trip, the president will travel to italy, testing how he will be received by g7 ministers. we will talk to the number two at the european commission about how the u.s. and eu can work together. jpmorgan ceo jamie dimon says he's optimistic about the global economy and the prospect for regulatory reform under president trump. we will have more from our exclusive interview this hour. we are one hour from the close of trading. let's check on markets with julie hyman. we have this rebound
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today and it remains remarkably steady over the course of the session. it has had a pretty tight trading range of the course of the day, not a lot of wiggling around. technology shares come as you can see from the strength of the nasdaq, have been helping to lead gains, and industrial shares have been strong in the wake of deals being signed over the weekend in saudi arabia as a lot of executives were also participating in the trip we saw president trump take. lockheed martin, raytheon, and boeing among the gains. lockheed martin will be a simile some blackhawk helicopters in saudi arabia, raytheon will toablish arabian division we have beendh seeing consistent strength on some of these stocks as well today. remember, there were a lot of hopes place on defense following the u.s. election. we have a chart of the s&p 500 versus bloomberg intelligence index of defense contractors.
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you can see in white here, they have consistently outperformed the s&p 500 and since the election. if you look at what has happened an etf thatws, tracks defense contractors, we saw consistent and relatively high flows following the election. then they became more muted. a little bit of an object recently but not much of one. we will continue to watch this to see if there's any change in the wake of all of these deals being signed. it wasn't just in the defense industry. deals are being signed with saudi aramco. a lot of these stocks up-to-date even as oil itself rises. saudi arabia says we could see a further extension of some of the cuts to production. some of the gains have become more muted over the session as crude oil itself has come off of its highs. when individual stock we have been watching closely today has --n ford on the mx records
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on the unexpected firing of ceo mark fields. his replacement will be jim hackett, turnaround specialist who came to the company from the office furniture company steelcase. the shares have been bouncing on that news. scarlet: we're going to stick with autos because there has been talk about global brewing in the auto loan market. reportingve moody's some of the biggest support auto finance companies verified income on only 8% of borrowers that it bundled into $1 billion of bonds. the treasurer acknowledged the findings but says it's practice on income verification has been consistent over time. newsscully of bloomberg been following the store and it is one of the most widely read stories on the bloomberg how much of an outlier is santander? how does it compare to other lenders? matt: looking out why the
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-- one of the competitors, it verified income on 64%. right now because of new disclosure rules that went into effect this year, it is hard to tell because the interest of not sold a tremendous amount of bonds. but so far it looks like there is reason to believe it is a low number o. julia: higher loan losses, i believe, which ties to those sp igots. they also say they have greater loss cushioning. we have to make the point that there is an offset to some degree in the losses they are expecting. matt: exactly the right point. the information taken from these deals helps investors and other folks get a better handle on the underwriting process for the companies. it lets them know a little bit secret sauceat the is and how they make the auto finance deals work. of borrowers to have the
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income checked is a low number. we know because of the financial crisis and mortgage lending, not checking borrowers' income and employment verification does lead to bigger losses. these are risks we are watching increase in auto lending today. scarlet: that is where i want to go because it is easy to say, oh, auto loans will be the next catalyst for whatever credit crisis results. compare the auto market versus the subprime mortgage market. it is not apples to apples . matt: right, is a much smaller market, but it is still a big market. american household leverage is increasing at a rate we have not seen in almost a decade. the big difference is student loans, auto loans, make up a bigger share. mortgage is a lot lower. julia: confirming that the market itself is the market plateauing.
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higher incentives for the carmakers. you wonder if, again, questions are not being asked about affordability. i want to ask you about fraud. there is increasing concern about the level of fraud out there. a recent ubs group survey suggested one in five could have some element of fraud involved. matt: it is absolutely concerning. we has seen rising levels of fraud, risks that may not be priced into the market. at the end of the day, we have to remember that these are not just assets for wall street. the big concern is that regulators are looking at consumers being taken advantage of, that borrowers can't afford these assets. scarlet: matt scully, thank you so much. juliet can you have credit card issuers with higher card bios in the first court debt write-offs in the first quarter as we -- higher car write-offs in the first quarter as well. julia: absolutely, and people
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gaming credit scores. i wonder if we've learned nothing from the financial crisis. scarlet: how quickly we forget headlines check on with " first word" news with mark crumpton. mark: an unbreakable bond -- that is how president trump described the u.s. relationship with israel as he met with prime minister benjamin netanyahu in jerusalem. the president said he is optimistic about middle east peace. during mytrump: travels, i see many hopeful signs that lead me to believe that we can truly achieve a more peaceful future for this region, and for people of all faiths and all police and, frank -- and all beliefs, and, frankly, all over the world. mark: prime minister netanyahu says he sees real hope for change in the middle east and he for thanked president trump his tough stance on iran, which the prime minister noted was a departure from previous u.s.
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policy. iran's newly reelected president, hassan rouhani, has called relations with the united states "a curvy road," saying he hopes the trump administration will settle down enough for his nation better understand it. he also criticized saudi arabia after it posted president trump sayingt foreign trip, that the kingdom "has never seen a ballot box, while iran has hosted a successful presidential election in which over 40 million people voted." rouhani decisively won the presidential election on friday, securing another four-year term. the european union has signed off on a tough brexit negotiating stance. negotiators are determined to maintain a harder line on the u.k. departure bill and the will not discuss our trading arrangement until there is agreement on other key issues. former vice president al gore says the first four months of the trump presidency is proof know one person can stop the climate movement.
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president trump has promised to scrap the landmark 2015 paris climate accord during his campaign. who spoke while promoting the sequel to his oscar-winning documentary "an inconvenient some u.s. states have always surpassed the climate efforts of former president barack obama. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. julia: thanks so much, mark. coming up, brexit talks could face roadblocks before they begin. joins us nextns to break down the eu's hard-line stance on brexit. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." i am scarlet fu with the julia chatterley. julia: and i will pick it up, thank you. the eu finalized its negotiation today, continuing to demand a high financial commitment from the u.k. for its decision to leave the bloc. it could lead to a breakdown of talks between the two parties. for more, i'm joined by frans timmermans, vice president of the european commission. thank you so much for joining us. can i ask you about your stance agreed today? is it likely that the bill is going to be around what jean-claude juncker suggested, 50 billion euros? frans: several numbers have been mentioned. i think it is only fair that you settle the accounts, that's what you do. and this will be part of negotiations everybody wants to have a fair deal.
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it is only fair to say to the had somengdom that you obligations can you entered into obligations overuse come and if you want to leave, settle the accounts with us. julia: david davis, the brexit minister for the play, said one billion euros, a lot of money, and they would be willing to walk away if the price tag is too high. frans: welcome at there is an electoral campaign in the united kingdom and we will i wait for e outcome. stay calm and carry on is what we do in brussels. julia: do you think he is fostering? -- posturing? frans: i'm not sure. we at the commission have a mandate to negotiate on their behalf and i hope there is some solution that will do as little time as possible to both sides. julia: theresa may said that fire payments on joint investment should be included. would you agree with that?
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to startm not going negotiating with you here at this table but i understand there will be a number of things that will be brought to the table by the british side and we will make sure we defend the interests. julia: again, over the weekend, things like irish border issues rights,zens' things like this need to not happen before the talks. is this a redline? frans: as far as we're concerned, financial simmons, the border issue, and especially the position of our citizens need to be satisfactorily settled before we can talk about the future relationship. i think it is only fair that you deal with the issues that need to be dealt with before the final settlement and then you talk about the future relationship. julia: if that is your decision and that is how you remain firmly standsd, again, -- firmly
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stanced, again, they will walkway from discussions. the britons seem to be doing a lot of walking ahead of time. frans: we need to find a solution at the table and i'm pretty sure that the united kingdom will stay at the table to find a solution because all of us want to avoid as much harm as possible. there will be harm. i mean, this is a sad situation. i would rather not be in this situation. but now that the brits have decided to leave, we need to make sure it is fair and do as little harm as possible to both sides. julia: is the eu punishing the u.k. and setting a precedent for other countries that, look, you don't want to do this because it is painful? frans: absolutely not. this is about having a fair separation. we need to look after the interests of the 27 member states who remain. the united kingdom was not forced out of the european union. the united kingdom decided to leave the european union. it is only fair that you look after the interests of the citizens could we don't want citizens to be hurt because of
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this. we want peaceful lives on both sides, on the eu and in britain. this is just a negotiation to make sure that finally we can develop a new relationship that is good for both sides. before we can get there, we have to settle the separation. today looksone different to what it might have been a few weeks ago, at a different result in the french election happen. would you agree that eurozone, europe can put populism behind it, the worst of populism behind it? the one hand, you saw elections that are clearly an indication that the european population wants europe tuesday and wants europe to be better than it is today. , this is ar hand phenomenon in our society that is not going to go away. we have been facing it for the better part of 15 years. we need to make sure that people who are attracted by populism see better solutions than to become a nationalist or see the
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other as a threat to their position. we as europeans will only be as strong as we are together. we are able to find common ground on issues that will determine the world's future. julia: how does europe perceive donald trump at this moment in light of the last week in particular and the revelations that have been made in the united states? frans: i think most european leaders are going to meet president trump this week and are curious to know him and hear from him how he sees this relationship developing between europe, within nato, but also between europe and the united states. i think most europeans believe that our strategic interests thesede command that strategic interests have been the same for the better part of 70 years, and not one political personalities going to change that fundamentally. they are going to be looking for ways to work in a positive way with this new administration, and they just want to hear from president trump how he sees it. julia: how would you compare or view the relationship that was
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apparent between theresa may, when she met donald trump, and what looks like a relatively cool relationship between angela merkel and donald trump? frans: well, i thought the meeting between chancellor merkel and president trump was businesslike and constructive. that is how she also came back. she saw opportunity for cooperation between the european union and the united states. i think that is a good thing, because we need each other in a world that is changing so fast. a confrontation between the united states and europe makes no sense whatsoever. if you go back to our citizens, they share the same values, they have the same outlook on the world, they want out world that is fair, they want trade that is fair, they want jobs, they want growth. we have so much in common. we need to face this huge challenge of climate change together. the challenges are pretty, pretty daunting, but if we are united on this, europe and the united states, there is no challenge we can't face. julia: do you think donald trump
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has undermined his position in the international community in light of revelations and concerns about the russian relationship, israel intelligence? policywell, on foreign come most of the messages we have been getting since the administration is up and running are actually in line with strategic messages we have been getting from previous and ministrations. in that sense from many mucheans think, well, of what we are hearing is something we can work with. what is happening in the united states come of course people follow the great teachers, but the main interest in europe is to see how the strategic relationship will develop. i'm sure that all european leaders want to invest in this relationship it all european leaders that this relationship is important for our own security. how we keep president putin at they come how to create a more stable situation in the middle east, how we look at this energy transition together. together we are so much stronger. we cannot solve these issues on
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our own. julia: quickly, you see president trump is a stable partner on that? european leaders are waiting for him to say what he wants and how he sees nato, given the 2 different messages on nato to the latest message was positive, and all european leaders want to create more synergy and take bigger responsibility for our own security. that message has been heard and digested by european leaders. julia: frans jimerson, first vice president of -- rands frans timmermans, first vice president of the european commission. shares are having a huge run this year. can it continue post earnings? this is bloomberg. ♪
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julia: this is "bloomberg markets." i am julia chatterley. scarlet: i am scarlet fu.
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time for "options insight" with julie hyman. bauer trying me is scott -- joining me is scott bauer with trading advantage. event thatolatility everybody was waiting for and it seems like that was kind of it, right? are there any signs that it is going to be more sustained, or was that it? scott: what event are you talking about? seems like we're back to business as usual. vix is almost down into the 10 handle. didn't take long to get there but still perplexes me, and we have talked about this from that you can have a sudden blow back -- sudden pull back. like the vix after last week. it is too low going forward. , we are trading here, and the vix is a future opportunity for volatility in the marketplace. i think it is too low. i don't expect a spike again
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like we saw last week, 40, 50%. but it really perplexes me, a lot of the guys here trading the product, that it is right down into the 10 handle again. julie: at the same time, besides being confused about lack of volatility commits the general sentiment down there and among clients, is it bullish, or is it the lack of bearishness? scott: no, you know what, it is bullish, because things are pretty good here. earnings are good, the economy is good. there is just the overriding feeling that we will get some macro event, we will get some geopolitical event or something else out of the white house that will derail us very short term. that is why i think the anticipation of that is perplexing people that the vix should be trading higher julie: gotcha. let's talk about something else earnings out from a chinese social media company.
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talk to me about what you were looking for. scott: stock is up 60% or so since earnings have been on a tear. the metrics and the remission and what the street is looking for, lofty, lofty expectations. options pricing in about a five dollar move. i'm looking to the upside here. a lot of momentum, no pun intended. a big upside calls for it. i can do that now for about $.75 or so. the stock has been selling up a little bit. that is people taking money off the table ahead of the earnings report tomorrow morning. the upside is really good here. an inexpensive upside play. i like the reward-to-risk on it. it is very conducive to this spread. julie: i'm curious, when you look at something like this versus the u.s. social-media plays, does something like this have more opportunity? scott: i really do.
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long run, look at something like facebook, it is hard to deny something there, but this stock is made such leaps and bounds, and it is in hypergrowth mode and you have to take advantage while it is there. julie: all right, scott bauer thank you so much, coming to us from chicago with trading advantage. scarlet: coming up, highlights from bloomberg's exclusive interview with jpmorgan ceo jamie dimon. from new york, this is bloomberg. ♪
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mark: i am mark crumpton. time for "first word" news. president trump wants to take an axe to anti-property programs.
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-- anti-poverty programs. he plans to cut social programs for low-income americans, a crummy to a congressional aide and a white house document obtained by bloomberg news. democrats say the budget reveals president trump's true colors. the chairman of the oversight committee plans to speak today with a former fbi director james comey congressman jason chaffetz says he is going after any records of comey's meeting with president trump. officez plans to leave june 30. the nation's longest serving governor is on track to win confirmation as ambassador to china, according to the associated press, which says that the senate will vote today on iowa governor terry branstad's nomination to the key diplomatic post be he shares a decade-long relationship with chinese president xi jinping. he will be cast to work with chinese

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