tv Bloomberg Markets Americas Bloomberg September 22, 2017 2:00pm-3:30pm EDT
welcome to bloomberg markets. ♪ we are live in bloomberg world headquarters in new york over the next few hours. here are the top stories we are covering on the bloomberg and around the world. the senate republican health-care bill could be in trouble yet again. senator john mccain announcing moments ago he cannot vote for the graham-cassidy proposal. london slamming the brakes on uber. are lessons to operate has been revoked, adding to the list of problem's the rideshare company faces. and the reviews for the latest installment of the iphone are mixed. u.s. markets close in two hours time. let's get a check on where they are trading. indexes, get to the let's talk about that john mccain headline. >> it has been pretty swift with the reaction, so swift that you still have kim jong-un up behind you as we were talking. this is the bellowing very
quickly on this headline that mccain plans to vote no on the graham cassidy bill. here's the s&p 500 managed care index. this is the spike, it has changed a little bit, but you saw how it is falling going into this headline. some of the large health insurance companies like the united health cares of the world have not been moving much over the past few months, but they have been moving today. united health is still down. those companies are seen as having more leverage in the health care policy changing. ne, which has more exposure to those who would be affected by changes to health-care legislation. , an operator of many urgent care centers, has been volatile in recent days as well. traders try to figure out what
this vote could potentially mean. turning back to broader markets, taking a look at the week that we have seen for the major averages. as we know, the three majors did hit records this week. the dow has been leading on the but, up a quarter percent, the s&p little change, the nasdaq down .5%. it has been small-cap, the russell 2000 up this week. it has been on a bit of a run here. we have a ratio of the russell to the s&p 500. look since the election, because there was a huge surge in small-cap relative to large cap after the election, and then it came down. since mid august, we have been seeing a spike once again on a relative basis of the small-cap stock. get back to what julie started off with their in r john care, senato
mccain of arizona saying he will the vote for graham-cassidy bill. great to have you on, kevin cirilli. john mccain was always going to be a wild card for this. we know that he made the deciding factor in the last attempt by the senate. does this also, by the political latitude for the likes of susan collins and lisa mccroskey to go you know what, we are against this as well? >> that is where all of this is headed. we were just tracking all of these boats just as we were coming on, and with senator john mccain, the republican from arizona, saying that he is not going to some work graham-cassidy, it makes it easier for people like senator susan collins, like senator lisa murkowski to say no, and we all know senator rand paul, the senator from kentucky, is very much against this bill for as opposedeasons,
to senator mccain. i have spoken to several sources in the past couple of days, and all of this has become front and center. there have not been any hearings on this, there has been barely any cbo score, it is very tough to make the case for a lot of these republicans ending this midterm election on such a major piece of legislation that would impact 1/6 of the united states economy. and a little bit behind the scenes drama as well. john mccain's best friends with lindsey graham, so there is a personal relationship involved as well. absolutely. senator mccain, senator graham have been a lyrical prose -- ros for quite some time. i think in terms of where all this is headed, the senate majority leader mitch mcconnell is saying he would like to see there be a vote at the second
half of next week. we are also closely monitoring another key issue. is new details on tax reform, september 25, monday, we are really awaiting some type of blueprint on that front. the white house has capped up pressure on health care reforms, even as behind, really, and now even more publicly they have shifted the push to tax reform as well. issue thether big administration is dealing with, north korea. we got a tweet from president trump this morning, saying president kim jong-un will be tested like never before. for the first time, we have an actual statement given to the north korean press by kim jong-un himself, responding to the "rocket man" rhetoric. the rhetoric continues. what are people saying about the fact that china seems to be on board with these financial sanctions?
it seems like a great result for president trump here. words continues. investors are you looked at the political index, the volatility index, the war of words not having as much of an impact on investors as it did several weeks ago. the president made that fire and fury comment, and it seems like markets and investors have adjusted to the rhetoric. but you are absolutely right, china is really stepping up to the plate, getting the president front -- trump and the united states and our allies the favor of sorts in terms of what they have done in terms of their own sanctions, equivalent to an executive order that the president announced yesterday with u.s. ambassador nikki haley. we should note that russia is speaking out critically against the united states actions, but no surprise to their -- th ere.
ambassador haley has been able to get both china and russia on board in terms of sanctions. i think we will have to look beyond the words, the war of words, the fiery rhetoric, and in between the lines. what is interesting about this tweet is that he directly made any those appeal, so to speak, for north koreans. we have not heard much about that. and when those images inside north korea start to be more mainstream, that could move us closer to beyond sanctions and the need for military action potentially. scarlet: we will see how it plays out. kevin cirilli, chief washington correspondent for bloomberg news. let's get a check on the first word news with mark crumpton. mark: the british prime minister theresa may has laid out the plan for a two-year break the transition. speaking in florence, italy, prime minister may said neither the ek nor the eu would be completely ready to increment all the range been some brexit when the formal -- arrangements
of brexit when the u.k. formally leaves in 2019. >> i do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave. the u.k. will honor commitments we have made during the time of our membership. mark: may is trying to end a deadlock over brexit negotiations. in mexico, the death toll from that deadly earthquake is now at 273. or than half the deaths were in mexico city. meanwhile, rescue crews they there are no missing children at a collapsed school, where they had been searching for a girl believed to be trapped. an official says there is evidence that a school work or may still be alive under the rubble. president trump is once again alling allegations of russian lecture and meddling a hoax. the president appears to be responding to facebook's announcement that it will give --gress 3000 ads brought
bought by a russian agency. the president tweeted "what about the totally biased and dishonest media coverage in favor of cook it -- crooked hillary?" wasw icebreaker in siberia launched in the baltic sea today. country inhe only the world with an atomic icebreaker fleet. ofs was commissioned in may 2015, and is due to be delivered in 2020. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. scarlet? scarlet: think you so much, mark. coming up, a big setback for uber as london revokes the company's license to operate. uber'sat means for global expansion plan. we will discuss. from new york, this is bloomberg.
♪ julia: this is bloomberg markets. i'm julia chatterley. scarlet: and i am scarlet fu. julia: another big setback for uber. companies in london have reversed the license to operate in the city and chastise its corporate cultures. in london is one of uber's largest and most lucrative drivers and 40,000 more than 3.5 million people that use the app. eric, great to have you on. hereus through the details and optically, when you are complaining about the fact that they have not done the right do diligence on its drivers, maybe that was in response to complaints about corporate culture, which is more talk to address. address.to
>> this was a bit of a surprise, london coming out and revoking british license. there will still be this question of whether uber appeals, but it is just another angle of bad news. it had all of these hr problems, but then there was this general level of cooperation and straight dealing with the city of london here. in their objection, the city the software uber uses to help hide potentially illegal drivers from authorities. i think there is a question of uber's general behavior, and whether they were a good actor in london. scarlet: and the concern here is that london could be the first of many cities to take action against uber. certainly a very important city for uber, but what are some of the other markets that they might find their standing compromise? hugely important
market, one of the most lucrative cities. it is not out yet, so we will have to see. in terms of other cities, i think the major city like this so theye door to others can follow suit and find the courage to do something, but it is hard to say yet. i do not think it is totally clear that uber has lost in london here. bill de blasio in new york tried to crack down on uber, and they mounted a very successful campaign to remind its users and bring themd sort of into the fight. i think that is what they will try to do here, mounting some support. we will have to see how this plays out. scarlet: so walk us through again, eric, the license that were has to operate in london expires next saturday, september 30. -- uber has to operate in london expires next saturday, september 30th.
they can operate in the meantime, right? >> that is an interesting point. the city is allowing uber to operate while it fights this you know, iich, if think the uber side would be if it is really that unsafe, why is allowing them to continue to operate? it is a signal that the city might be aware of the potential political consequences of .anning uber outright i think there is going to be a fight over whether this is a political move, what the exact reasons were. and while that fight is going on , uber will continue to operate. julia: of course, and the black cabs are a huge political lobby, and they have been up in arms. scarlet: and the drivers there are world -- thrilled as well. for more on uber's latest --.block, let's talk to
he joins us on the phone. what do you make of this decision to let the license expiry echoes it for political reasons -- expire? is it for political reasons? was think the tipping point a couple weeks ago, when it was discovered russia has kind of subterfuge safeguards and interfered with the election. theink western europe and u.s., to a lesser extent, or sort of regurgitating the innovators. you will see this war break out in europe. they register much of the downsides in terms of drop destruction,-- job general skirting of laws, but they do not recognize the same upside that we in the u.s. do. there are not many hospital wings named after a recent facebook were millionaire -- facebook or google millionaire in europe. julia: we have other things to
do with our money in the short term. nice, ifey have played they had met with the capital commissioners in london, they would have never been able to come in here and disrupt the market. that is not just about london, that is about wherever they operate. what do you think the answer is here? do you think the company says we have to become more mainstream? beit due diligence to sanctioned, and will we go down that route? if they have to do with some margins to do that, that is what happens. what kind of mark do you think this leaves on uber? becould be that they can locked out of the u.k. market? >> i think the keyword is margins. i think much of this or most of this will come down to money and the perception of being a good citizen, and whether that is paying additional taxes or figuring out a way to redistribute some of that money in a traditional industry were creating jobs, or just the
perception of doing these things. that they get a hall pass and play by a different set of rules, which, to be fair, i think they have been. i think media outlets of largely turned to their investor relations department, talking about how amazing they are. the worm has turned, and this is one point in a line we are going to be seeing drawn against big tex. people are fed up. -- big tech. people are fed up. scarlet: and this will also look uber. the courts view do think this is a game changer for the gig economy? >> i think what you will see -- i do not know if the manifestation will start with the gig economy are going to platforms an like google or facebook, but i think you will see the mother of all signs registered -- fines
registered and applied in europe. most of the downside with the most of the disruption these firms bring is going to stiffen the backbone of the eu regulators. it is no accident that the largest fine to date, $2.5 billion, came out of europe when the eu commissioner on competitiveness levied a $2.5 billion fine against google, which by the way, google literally shrugged off. we are on the verge of a $10 million plus fine -- $10 billion plus fine coming out of europe. julia: but consumers can still using uber. at the same time, will this get and in the sharing economy proving consumer? where is the balance here? >> that is a great point really. the bow little -- battle we will have spiritually or intellectually is what is good for the consumer always good for society?
in the traditional notion, it has been yes. but i think people are beginning to question ok, i might love uber in london, i might love eating able to carry google -- query google for every question in the world, but if we cannot find a way to pay our soldiers, neighbors, or firefighters myause they avoid tax, or if neighbors cannot work because they lost jobs in retail and media, maybe i do not feel as good about it. and i do not believe if consumers believe you would charge googlep or more, it would interrupt their service. julia: i think consumers should take a share of the blame as well. social consciousness, but we wanted always. scott galloway, thank you for that. tech gets ale's new tepid response from viewers.
♪ this is bloomberg markets. i'm scarlet fu. julia: i am julia chatterley. scarlet: apple's new gadgets hit the shelves today, but the reviews have been lackluster. everything from the design, issues with wireless connectivity, and problems with the apple tv. mark, i ordered an iphone 8. i'm supposed to pick one up later this evening. what am i getting myself into? by theme start by saying iphone eight and eight plus are perfectly good phones. they are significantly good upgrades over the previous generation, see greek --siri works better. they are not significant upgrades overall in comparison
to last years model. and if you are already shelling out upwards of $700, i would be recommendy to go or the iphone x coming out in november. it is a much better phone that stacks up to the newer competition than the likes of samsung and other phone makers julia:. all of -- makers. julia: all of these other functionality issues, will this be an easy fix for apple to sort this out and shut everybody up? analysts are not changing their forecast so that he not see this is a big issue. >> so the new models of the apple tv and apple are chart seeing some functional problems based on earlier reviews. on the apple watch, there are two things. on the side of the lte models has a red dot on it. on the previous models, it was black. i see a lot of people who think they are designers or pretend engineers saying i cannot believe apple made it read.
it looks terrible. i do not care. -- my watch has read on it as well. we are talking about a circle on the side of the watch. i do not see why anyone cares. that is a distraction for some of the reviews. it is worth noting that there were a couple dozen early reviews, and only a couple had these issues. one of them resulted in a wi-fi related software bug that apple says it will patch soon with a software update. so for most people, this will not be an issue. i am looking forward to getting apple watchthe lte shortly and will put it through my test, and let you know next week about how it is going. scarlet: and the apple tv complaints have to do with the fact it is the same as the previous model, just with a faster chip? some people are reporting problems with the four k hdr video, the upscaling not looking great if you are using non-four k videos or itunes videos.
i am sure they will fix it with the software update, and it is part of a transition, right? so people buying an apple tv six months from now will not be dealing with that because everyone will update their movies as time goes on. from --ark, great hearing from you. i have an issue with the red button, can i point that out? it just doesn't match. an outfit problem. and i want to add we are not endorsing iphone, scarlet is just getting one tonight. still ahead, the commodities close and we bring you an russiane interview with human affairs minister alexander novak. what did we do before phones?
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week. what luck. gold is poised to finish the week out on a slight uptick. north korea's threat of a hydrogen bomb test boosted demand for gold and safe havens, all the traders seem to be taking the latest threats largely in their stride. gold is heading for a 2% decline on the week, the worst since early july. the worst is because that's the reason is because of the hawkish tone at the feds press conference. oil bouncing around, finally over that $50 a barrel level with opec and russia wrapping up a meeting in vienna. the cartel held steady on production cuts, saying they are halfway through clearing the global oil glut and are focusing on finishing the job. scarlet: halfway through also means they are halfway not done, so looking at that. sticking with oil, russian energy minister alexander novak spoke to us from vienna.
in this exclusive interview, he discusses russians use -- russia views on the oil cut deal. min. novak: in the agreement aimed at balancing the market and supply and demand has to end somewhere. we all understand the oil market is a free market that is governed by supply and demand dynamics, and this is the governing force. i believe that once the market is balanced and once the overhang is removed, we will reach the five-year average level and can start talking about our balls in reaching a balanced market, and start a slow exit strategy to not deteriorate the results or derail the effort. as far as my ankles, i believe the best -- angles, i believe the best time for amending these things is in the end of the third quarter, beginning of the fourth quarter, because that is a time when demand is growing
and can absorb any additional supply, and they can put out any more on the market if that need arises. >> i wanted to talk about libya and nigeria. the fight with the demons from within, because countries like russia are complying, and a lot of your peers are compliant, and then you have other countries that are adding production while you are taking out production. isn't it time that libya and nigeria are faced and applied some restrictions as well before this agreement is expireed? conformity as far as goes between countries that are fully conformant and those that are not, you should look at the numbers. 160e countries have reached percent, which means they are 60% above what they voluntarily put on the table. these are opec countries, excusing -- excluding libya and nigeria, that are 100% in
conforming, and that is why i say opec countries that are not conformant are the ones that are -- the other wants to reach 100% conformity. we are looking for better conformity and fork improving it -- for improving it, but we are pleased to see is a group 100% conformity, and there is a question of balancing out the efforts within the organization. overall, we are happy. nigeria'sy eking, growth does impact the efficiency of the whole effort. at the same time, you have to growth, which is faster than anticipated by any forecaster. this is minimizing the effects of libya and nigeria. we are also seeing that reduction in libya and nigeria, which we saw before, has lost steam. so you are seeing big volatility and not big production growth in those countries. that is why overall, we see an
initiative is very effective, as good for the market rebalancing efforts. >> if you look at the i-8 -- eia data, you need to take more aggressive steps, because it suggests there could be a rebuilding of those inventories going into 2018. demand might be solid, it might be growing, but u.s. shale is relentless and it is continue to -- continuing to be a force to be reckoned with. how do you reconcile that, the context of 2018 and 2019? >> we analyzed the situation very closely, looking at the key trends in the market, and will base our decision and judgment after factoring in all of these inc.. -- these things. we take these things very carefully, and i can see that over the past few months, you are seeing a bigger impact on shale producers from various factors, like costs of inflation and reduced efficiency. if you look at the model numbers
are reactingkets to, and compare them to actual numbers, several months later, the discrepancy over the past few months has been in the tires -- been the highest projected values. we're actually seeing production decline in many countries around the world of the current price. you can see it in china, the north, the north sea and in norway, for example. you should also not forget the fact that demand will continue, and most agents these, the consensus of most agencies is that we will be around 1.4 million barrels next year. that is why we need extra effort to satisfy the amount of growth for oil and its products over the next few years. scarlet: that was russian industry -- energy minister alexander novak in an exclusive interview from the anna. let's take a look at the first word news with mark crumpton.
envoythe u.s. special eight to the coalition against the islamic states says that about about 80,000 -- 80,000 square acres taken from the extremists has held. they said at state permit there was a reason why the coalition put so much focus on removing the islamic state from its self proclaimed capital in syria. wrecks not too long ago, isis was not only planning, but planned and carried out a plan aqqa to carry out terrorist attacks. we also do they were planning september 11 type of events that they were aspiring to. about 6 million people, 4 million iraqis and 2 million syrians who used to be living under islamic state are no longer living under isis. senator john mccain says he will vote against the gram-cassidy
obamacare for peel proposal, becoming the second republican to oppose the measure and putting the doubt of party leaders to enact it. senator republicans cannot afford to lose more than two members of their majority and still pass the bill. maria's death toll across the caribbean has climbed to at least 27. there were at least 15 fatalities on dominica and six on puerto rico. other islands reporting deaths guadalupe, and the dominican republic. a facing months without electricity in puerto rico. islandsm hit the caicos today and had for the bahamas next. florida's health care regulators say the state will aggressively enforce new rules requiring nursing homes and assisted living facilities to have
generators. 10 residents of the south florida nursing home died in the sweltering heat and power outages after hurricane irma. the secretary of agency for health care ministry says the state does not expect nursing homes to provide air-conditioning to air entire building, but they must keep patients safe. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. julia? julia: thank you very much, mark. coming up, let's get back to the market. the fed sending a signal this week with a somewhat hawkish tone. we get reaction, next. this is bloomberg. ♪
julia: this is bloomberg markets. i'm julia chatterley. scarlet: i'm scarlet fu. the stock of the hour is a bit of a mystery today. shares of sun tower are rising about 4% after the international trade commission and concluded that foreign cheap solar panels are hurting u.s. manufacturers. this is a mystery, because the solar cells would shut on the market for solar power plants in the u.s.? >> it is a bit confusing, part of this is it was expected. they were expected to rule that cheap imports were harmful to the u.s. solar industry. here, theyir reason have to give their recommendations for what to do about this to impose tariffs, for example, that is due on november 13. then president trump, it is up to him in the administration to figure out if they are actually going to impose the tariffs, and the rhetoric has pointed in that direction. we will see if it happens or not. they just said--
this could be negative for the industry. it certainly could affect demand, if nothing else. you have two parts of the solar industry in the united dates. the manufacturers, which have dwindled and indeed the companies that filed this case in the first place is a company that has filed for chapter 11 as well based in georgia. you have that side of the industry, and the and the still asian -- installation side of the industry. at the cost for solar panels go up, that could be negative for their industry because cost goes up and that could affect demand if they pass on those higher costs to the customers. look across those different segments of the industry, we are seeing increases. for solar, which is a big solar in the u.s.,turer shares are rising, and canadian
solar, which does most of its manufacturing in china -- that is especially confusing. and now that solarcity has been rolled into tesla, sunrun is one of the only ways to look at the installation business in a publicly traded kind of way in the u.s.. take a look at the bloomberg here. i thought it would look at how the shares have done and how theseinterest is in stocks. it is on the top. canadian solar and first solar, they are at 12% and 13% slower, respectively. but sunrun is more than 20% afloat, so higher on a relative basis. we can see how the docs have performed, sunrun has fallen going into this position, and now we are seeing the these popn this decision. julia: another part of this company calling for this, the site the rest of the interesting that industry saying they can do it. i think it is interesting that the united states is accusing
them of dumping in this case as well. thank you for that. now the fed was clear with its forecast, just a december rate hike is quite a possibility, even with lackluster inflation. we turn to bloomberg's real with greg peters, on pdi am, and --. listen in. >> if you look at every rate hike, it was 90% price and two weeks before. the market did not react this week. i think that was because it was the most widely telegraphed unwind of the balance sheet ever. the market is starting extremely gradually, it is very hard for the market to price out a year when there might be $30 billion get in treasury that will issued. and we really do not know a crucial point that the market cannot price in, which is how are they going to fund paying the fed? was he a short, and in this case there will be no market impact.
will it be bonds? if the market does not have that information, we cannot price it in. to start out with $6 million per month, absolutely. that is enough for the market to handle. i expect it will build more cumulatively over time. >> i think the fed is trying to pull a fast one, honestly. has to have some effect. if you believe that qe, the whole purpose of qe was to tighten up risk premiums and force people out of the risk curve, affect the portfolio channel, the reverse of that has to have some effect. it might not be one for one, but it cannot be zero or watching paint dry. i think ultimately, the fed is getting extreme color for mother central banks, and that is the story. -- it is notjust the fed, but the ecb and the boj. >> and we can show the percentage that the federal reserve has of the overall pie, and it has been declining. it has been declining as they
west stimulus, is this what are really seeing here? it is not that the market does not care, but the ecb is giving us some cover. >> i think the ecb's giving them a lot of cover. clearly, the central banks across the globe have on their balance sheets -- it is significant. even dropping $4.5 trillion to $2.5 trillion over the amount of time the fed is talking about, i can understand why investors would be very calm about it. and yelling gave herself some room so that if this is not going well, the fed may just stop and decide not -- they will go ahead and stop the case of bringing the balance sheet down. -- i wonderht up a how much of that is priced into the reaction. the fact that the market thinks this might be a policy mistake -- there are a lot of clients -- maybe one more, that is it.
hike, aelieve in the portfolio runoff might not continue. so i think your point is viewed as the entire this is the unwind that is the smallest of an unwind, and the market does not price it in, but this is actually in the markets plan. >> another thing is on the demand applied basis, they should mean higher yields. if we look at this through the prism of a central bank that is responsible for inflation expectations, we know through history that actually, when they did qe, yields rose, and they did not look at it from a demand-supply perspective, they looked at it from a different perspective. why is the reverse also not true? why can we not see a federal reserve that unwinds the balance sheet, but treasuries will get a hit. >> i think it is clear if it is a policy mistake, so i think the only way to have that argument is to raise real race.
but when they were declining, inflation expectations were rising. so the some of the two rows in all the cases. good what has happened to real rate since they started the portfolio unwind. they have been rising. i do think they can rise some more, but inflation expectation -- there is not a lot of inflation. it willstill believe show up. inflation expectations are a failure. they are not all that attractive and still pretty high relative to where they could be if this is a policy mistake. >> the curve is flattening, so something is happening. if you go back to two-tens from around christmas of last year to today, that was a big move. 136 basis points announced on the 82 -- that is a decent size move. the expectation, i think, is that if the fed continues along this path of tightening, the curve will continue to flatten and flatten and flattened. the yield curve is giving you a signal i think that the fed
could be slowing down the economy too much and entering a policy mistake. guests: those were our speaking on bloomberg real yield. it is time for the bloomberg business flash. a look at some of the biggest business stories in the news right now. in paris, shares upon the -- of maker l'oreal rose the most in several years after speculation that nestle could take a majority share. no longer ar -- is unicorn. the startup, which was once valued at almost $2 billion, just close the funding round with a valuation of about five hundred $50 billion -- $550 billion. online lending has struggled. both of these are valued 60%
your door. locations. u.s. joining us now is craig jim ono, who covers the food industry. great to have you on. why now, because there are loads of other people doing the food delivery service? i get the whole foods angle, but is it just if we are in its now, we are in it to win it? is the way it seems. the food market is estimated at $105 trillion. >> is that the separation between restaurants and groceries? increasinglyare blurring. you see restaurants opening up grocery stores, whole foods having a huge success with that model. i think all of that is blurring together, and amazon is a little bit behind as long as restaurant delivery is concerned. they have only been doing it since 2015 and have not attracted national brands, but think this is a foray to get
into that $1.5 trillion market. scarlet: you said they have only been doing this since 2015. they already have a restaurant delivery service set up in seattle. what did they learn their? ?- there >> that is a great question. i'm sure they are figuring out how to get food to people on time and hot. resistedhy mcdonald's that for so many years. they were worried about what transit.pen in so amazon has been trying to figure out how to do it right, and when they go, they do it right, so you have to expect they figured this out. >> there has been a big rise in mobile ordering apps, customers want to order through their phone, building that technology for about 200 restaurant brands, apps, digital ordering capability. they integrate directly into a point-of-sale system in the restaurant. the orders come in seamlessly,
so they are a tech provider and nobody knows who they are, but they service a lot of restaurants. scarlet: and only one customer has used amazon restaurants, so we will see if the others sign up. to speaking of, we wanted ask you about to pull a because they will be launching their version of case so -- chipotle because they will be launching their version of queso, but there is a lot of controversy over it. a lot ofhas been backlash online, a lot of negative tweets about the case the big issue is that a so is made from bell beta, traditionally. it is a process that. double-a said it is their number one requested item for years, but they said it is hard -- chipotle said it is their number one requested item for years, but it is hard to make a natural version. people say it is grainy, they do not like this consistency, it is not fake enough. and the issue is do we need natural peso?
?s that possible -- queso is it possible? they have a big ad campaign, and the stakes are high. they have to get some buzz back after all of these scandals. julia: interesting that you mentioned the importance of twitter. scarlet: especially with their track record of people getting sick in the restaurant. -- greg, thank you so much. and coming up, we will be sleeping with that -- speaking with that head to partner -- head to partner on inflation and value stocks. this is bloomberg.
>> we are live in new york over the next hour. here are the top stories we are covering on the bloomberg and around the world. hangs inth care bill the balance. senator john mccain announcing he cannot vote for the graham-cassidy proposal. street bull isll going bearish. in he sees reflection stocks. on that and the biggest stories in tech coming up. have lackluster limping into the end of the week. going below the threshold here
as we close out the week. and -- not changed. and little change on the fed week when we caught a lot of talk and back-and-forth in terms of north korean rhetoric. the u.s. stock market went -- has shrugged and if you look at the s&p's performance on the week it is little changed. i want to turn that back to health your stocks. we checked on last hour after we got the headline that john mccain was going to vote no. that is when we saw the spike up in the managed-care stocks. this is the s&p 500 managed index. it has turned back lower. if you look at the individual components within health care, you see a rather mixed picture. you see the unitedhealth group and some of the larger insurance stocks falling after spiking up after the headline. some of the others remain
stronger. centenesurers like have been stronger as are the hospital operators. hca and universal health services are hand -- hanging onto gains. won it to look at the best and worst performer, particularly as we see little change overall for the index. and x on the plus side davita the worst. provide dialysis service was the target of a report by the southern investigative reporting center -- foundation. that talked about its relationship with a nonprofit, the american kidney fund. our jason gorman says this reporting is not new on the
connections and set it could affect reimbursement rates from insurers and push them down, something that davita has flagged. as we mentioned we have this heating up in rhetoric tween the u.s. and north korea. riskou look at the risk on- off and ask it is falling going into the weekend. it had been rising throughout much of the month of september but interesting here that now it is abating to some degree. scarlet: we will stick with the markets and monitor that. we are getting more insight for what is in store for the rest of the year. aining us now is tom lee, former bull turned a bear. higherrs are expecting interest rates. thanks for joining us. here is the thing. you have been calling for a recovery in value stocks.
and stronger gdp and the weak dollar should be ideal conditions for that recovery. it has not been doubt. tom: no. value strategies have been a bust this year and our clients are skeptical about trying to i value. is buy growtho do and you have a great year. julie: this chart shows you the outperformance here by growth stocks and value stocks for the s&p 500. at what is going on in september. especially the last two weeks. tom: that is right. we have seen -- written a series of reports, and expose a of why is value, is it broken, how does it look in the context of history. we looked at 90 years of value versus growth. this is the longest slump ever in the history of value stocks for growth. it is worse than the mid--- the
nifty 50 and the check bubble and we trace it to several root causes. one we think it has to do more importantly this year with flows. veryecond is something peculiar happened. normally the weak dollar is great for value stocks and four of -- four out of the seven biggest flip their relationship to the dollar. industrials did poorly and value tech did poorly even though the dollar is weak. we think that is temporary and some of the diversions is the realization earnings are better so they should pop. julie: what about interest rates, the interest rate value is important especially toward the end of the curve. years, the last 30 years we have had to cleaning rate values had a poor record.
-- declining rate values had a poor record. investors expectations have reached the bottom and europe has incredibly low rates than junk on sinuous tragedies -- treasuries. is coming off the pedal and that fall -- small turn is what is causing value to pop and that ends up being a powerful turn. 10 years is the longest period for value. the hurricanes, in terms of rate rises, that may flatten out. tom: that is a great point. we wrote about this last week. you have to also consider where the fed is versus global central banks. if the fed is more hawkish than the level central banks, u.s.
value underperforms global and that is why this year it has in historic u.s. value has forrperformed global value the longest time in history. europeann pause means central banks are more hawkish. overweight u.s. value, underway global. julie: the u.k. is con in a bind, they will have to raise rates as canada applies for a couple of rate hikes. tom: global central banks are adding to the tightening, it is bullish for u.s. and global value. julie: what about in nation? if we continue to see disappointments in inflation, scarlet mentioned the hurricane issue that will impact the data for a while. they want to [inaudible] rates more materially. tom: it is like inflation has disappeared very at -- disappeared.
this is a separate topic that we are starting to postulate, this whatre like the 50's and made the 50's different is we had a shortage of workers relative to population. eriodsere basically two p of time where population outstripped worker growth. cpi was being driven by labor costs. almost every other decade you look at it is commodities, health care, etc. and if that is the case, our first -- our forecast is a million workers short, that is guaranteed to trigger wage inflation. julie: there are different hearing -- theories we are hearing. hitting you see bitcoin 6000. it got to a five -- two ohio
4921. it has been wobbly. tom: bitcoin is controversial which is why we wrote a piece weighing in on bitcoin. i think it is proving to be a digital story you in the world of cryptocurrencies. very obscure topic area the reason -- very obscure topic. the reason it is rising it is correlated to [inaudible] that explains 94% of the movement. scarlet: there are more people using it. tom: it is an application of metcalfe's law. just usingric, conservative projections you will be at 6000 in a year. julie: people invest in it very briefly. it is volatile. tom: cryptocurrencies is a very real investment space.
it is very relevant for young people. it is the millennial generation's goal. for everyone managing money today it is a very strange, it seems i do strange business model. strange as it is a this model. julie: there are tom lee's calls. input.nt to get your headlinesk out the with mark crumpton. mark: the national weather is failing in dam western puerto rico and people are evacuating. the government called the situation externally dangerous. we will bring you more details once they become available. there is a report that the trump
administration will replace its travel been with the restrictions. according to the wall street journal my the new order imposes limits that very by country. the restrictions will be a stock cooperation with the u.s. and the threat posed by each country and other factors. the international atomic energy agency has adopted a resolution condemning north korea's pursuit of nuclear weapons. the draft was agreed on by the china foria, and was presented to conference delegates were voting. >> this conference reiterates his firm stance against the dprk's position of nuclear weapons and underscores that the dprk should not harbor any illusions that its illicit pursuit of nuclear weapons will ever achieve legitimacy in the eyes of the international community. mark: ambassador champagne also advancedr i sanctions unless it is going to
resume negotiations. describing the insults, lever of said that the world should take it he calls a reasonable and not the emotional approach toward the north korean problem. in response to a question about u.s.-russian relations he reiterated that russia didn't meddle in the 2016 u.s. presidential election. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. scarlet: mark zuckerberg was set to testify next week in an industrial lawsuit but can avoid the courtroom. this is bloomberg. ♪
scarlet: this is numbered markets. a developing story, facebook is said to settle an investor suit. the trial was set to begin september 26. let's head over to san francisco where emily chang joins us now with more. take it away. emily: thank you. joining me is sarah frier. you have gotten this latebreaking information about the settlement. what do we know? isah: what we know zuckerberg was scheduled to testify on tuesday at the start of the trial and there is so much pressure on facebook now that settling this is probably good for them. the fact have been able to do the settlement, that close to
trial. this has gone on for more than a year. we do not have the deal on how much money is involved that we are supposed to get them in the hour. emily: zuckerberg was scheduled to testify and board members were scheduled and the idea of the lawsuit surrounded zuckerberg's level of founder control. they wanted to issue a new class of shares that would be nonvoting but would allow him to maintain control even as he was giving away some of his money. he wanted to invest in nonprofit causes. that would mean he would have to sell his stock. what they wanted to do was create this nonvoting class of shares. what shareholders in this class action suit said is that diluted the value. -- value of their shares and it was something that occurred in a
ard process that did not have shareholders in mind. there were some documents about collusion between zuckerberg and board member and recent -- andre sen. the committee was supposed to protect the interest of shareholders did not do their job in the shareholders' minds. emily: you alluded to the pressure on facebook. facebook saying it is going to work with congress and hang in -- hand over information they get about russians paying for ads on facebook. donald trump tweeted the russia [inaudible] continues. what about the dishonest media coverage in favor of crooked hillary? mark zuckerberg did hold the facebook live event where he talked about this. let's take a look at what he had to say. mark: we will continue our own investigation into what happened
on facebook in this election. do,ay find more and if we we will continue to work with the government on it we are looking to foreign actors including additional russian groups and other former soviet states as well as organizations like the campaigns to further our own understanding of how they used all of our tools. of this has unfolded in the last one for hours. what do we know now about facebook testifying before congress and what else facebook has pledged to do? givenfacebook has information to congress on the us been giveniven to special counselor mueller. they were worried about what effect it would have an they decided that was the way to go. and they are going to put the onus on congress to decide how much to reveal to the public. say they will overhaul the system by which the ads are displayed. sara: it will
be more transparent. you will be able to see what other ads someone is putting on facebook to any audience and who is paying for them. story that is developing and i know you will keep us develop -- updated. what are reviewers saying? for an: i have not used it extended time. faster version of the seven and seven plus create it works very well. there's nothing wrong with it. one gripe i have is it is so overshadowed by the iphone x yet the ice ranges between $700 and $950. you are still paying premium prices but not getting something in the range of an iphone x or
8.sung 8 or note sales ind to gauge terms of the lineup. missing oneare third of the pie and more than 50% of what we would get in opening weekend sales. the people who would wait in line like i used to do are the early adopters. the early adopter is the type of person who would want the iphone x and i still have my seven plus pre-ordered last year and i am waiting for the iphone x and a lot of people are waiting for that. it is hard to know the situation until november. emily: a lot of stuff going on, thank you for stopping by. back to you, julia. julia: thank you. still ahead, options insights. bit [inaudible] it has not always been that way
julie: this is bloomberg markets. scarlet: time for options insight with julie hyman. julie: good to see you. and in -- you noticed a trend that we were talking about a little bit today which is the outperformance of small caps or the russell 2000 has had a winning week. what does that tell you about the direction for markets? for a rubberoking band snap back and that is what happened in the small caps. they were unchanged on the year compared to the s&p and the doubt. looking for them to play catchup
and a half. i do not know how much further we will go but that is a positive sign now that we have seen the four major markets post all-time record highs. we may be seeing a key reversal. we will see where the s&p finishes. there could be a possible weekly close. that could be cautionary but i remain bullish and more bullish. julie: the trade of the day that you are looking at is a company that is decidedly not small-cap. it is starbucks. the stock has been lagging as of late. there is concern about slowing growth for the enormous coffee chain. you are bullish on this one too, or at least you're not bearish necessarily. >> definitely a louche -- bullish on starbucks. it held that the $52 level. we are trading between 52 and 56 now over the last two months so looking at a longer-term option just like we talked aboutit hel.
my we saw 4% move in the russell and the money9% move in option, same kind of thing with starbucks. we had apple release the phone, big deal. the big deal is the maple pecan latte. this is pushing pumpkin spice to the side. it is 90 degrees in chicago so it is not coffee weather. i guess you can put it on ice. i am looking at the april 50 call, trading at 650 so $500 in the money. if and when we do get the 60's in starbucks, we were at 65 in july. we get back to 60's, the first modest major objective, that option will gain 50% in value. julie: you are looking out pretty far. why not target higher for starbucks if you are bullish, if you think maple pecan is the way to go, why not target a higher option? not higher strength was going to give me the delta i
want so it is not giving me the stock substitution pay off it would like area this is more like buying the shares of stock and using the option. you are tying up a lot less money. i am bullish in the overall markets. i am cautious. the vix hanging out at the 10 level still targets eight on the downside. more downside on the vix and more upside with stock and look for starbucks to play catchup with the overall market. julie: all right. thank you so much. have a great weekend. juliette: theresa may signaling the first time she is ready to come to the table. we will discuss. from new york, this is bloomberg.
hassan planted the bomb at parsons green station. 30 people were injured when the device detonated during the rush hour. during a military grade, iran's revolutionary guard unveiled its latest ballistic missile today capable of reaching much of the middle east including israel. the move was a direct challenge to president trump who in august signed a bill imposing mandatory penalties on those involved in a range ballistic missile program and anyone who does business with them. 21 million fewer americans would have health care coverage from 2022 2026 under the senate republicans leaders -- latest plan to repeal in replace parts of obamacare. that is according to the brookings institution. the number likely s -- underestimates the reductions ca