tv Bloomberg Markets Americas Bloomberg February 20, 2018 12:00pm-1:00pm EST
sales and transfer of guns. they could have to wait 12 days purchase a gun. a week after ae gunman killed 17 people at it for a high school. from that florida high school are going to the state capitol today to pressure the legislature to vote for a package of sweeping gun control laws. president trump has said he's open to tightening background checks. robert mueller has unveiled new charges in the investigation of russian meddling in the 2016 elections. lawyer has been accused of lying about talks with former trump campaign aide rick gates. alex van der zwaan has been charged in a criminal information, which usually precedes a guilty plea. has a plan toteam
halt brexit payments at the european union backs a trade they believe withholding billions from the eu could be necessary. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm courtney donohoe. this is bloomberg. yorke: it is noon in new and 1:00 a.m. in hong kong. shery: welcome to "bloomberg markets." vonnie: here are the top stories on the bloomberg. u.s. stocks are mixed today. treasuries retracing now as a toing of auctions of be billion dollars gets underway
-- $250 billion get underway. -- pizza party. we speak with domino's ceo patrick doyle about the company's fourth-quarter artificiald why intelligence may be taking a key role in their delivery strategy. taylor riggs is with us. taylor: a bit of a mixed picture here. you have the dow jones off .2%. the s&p 500 up .2%. upeye is on the nasdaq, almost .8%. i'm thinking the qualcomm bid that was revised higher is pushing everyone else higher today. whathing i'm looking at -- is not higher today, the next
short positions on the nasdaq 100. we are taking a look at net shorts. we've had a good record month. my eyes will be on what happens here with the nasdaq 100. some of the other stocks we are watching today, the movie theaters. black panther had incredible opening over the weekend. are the ones i'm looking at. amc had one of the biggest sunday's in history. they are keeping a look on the theater stocks. we are looking at the walmart dependent suppliers. we talked about how walmart missed on some of the e-commerce growth numbers. what does that mean for the foods they sell? those are trading lower in sympathy. we willentory issues --
wait to see how all of this plays out in the coming quarter. vonnie: thank you. shery: stocks edging lower today as the 10 year yield climbs ahead of a key bond auction this week. we already have the three-month and six-month auction just a few minutes ago. selloffheets saying the at the end of january was just the appetizer, not the main course. he spoke with alix steel and david westin earlier about the implications of higher yields on u.s. stocks. >> that difference is something the market may have to assign a higher discount rate for. that's the reason we are not expecting any more multiple expansion out of the u.s. equity market. it has to be earnings driven from their. shery: here with more, alexander dryden from jpmorgan asset management. just a few minutes ago, we saw the six-month auction.
the percentage of bidders jumping to 60%. are we getting central bank action trying to bargain hunt? shery: that will be an interesting -- alexander: that will be an interesting focal point. they been a really quiet over the last couple of weeks as we've seen yields grind higher. personally, i think they are comfortable with it. the markets are starting to bake in inflation and take the prospect of monetary stimulus properly. which is something that been trying to get the markets to do for the better part of two years now. they are finally starting to price that in. vonnie: there's different ways to look at returns. if u.s. 10 year inflation linked notes -- this is positive. where is the real yield? alexander: i think the real
yields right now are pushing up this idea of higher inflation pressures coming through over the course of this year. go back to the beginning of the year, if you'd asked me do we think inflation will be on the agenda in 2015, i would have said not really. we were not seeing the wage pressure coming through. now, we have seen a good wage pressure come through for january. we got it back about that in the cpi numbers last week. we are watching that closely. it is too early to be answering that question. i need to see whether the data we saw come through in january was just a blip or something more meaningful. shery: at the same time the dollar continues to fall. with the dollar becoming devalued this much, how expensive is it becoming to fore fx currency risks
overseas investors and what will this mean for fixed income markets? alexander: going back to the fixed income markets in today's auction, some of this is international investors stepping out of the market. the yields overseas are starting to grind higher. the hedging cost is where the challenges have been. look at the difference between hedging as a european investor coming into the u.s. market, attracting --nger you can't get a real yield pickup going into the tenure on year on a basis -- 10 relative basis. as that difference in short-term interest rate differentials get bigger, that will be a challenge on a hedge basis. shery: where will we see any guidance? alexander: this is a good question. we have ecb minutes coming out later this week. i don't think we will get any guidance from there. we will be in a holding pattern until april.
they will be shutting off their asset purchase program come the end of september. the economy is looking better, inflation is starting to come back up. they will push out that timing for a first rate hike. the markets have started to get excited about how much progress europe has been making. hike has been priced in for the fourth quarter of this year. that is unlikely. the fed took over one year before raising rates. vonnie: if you're a global market strategist, what are you telling your team? what are you telling the people who have to go out and speak to clients? how fast will the yield go up? what do you tell them? alexander: this is the pending point. for the last be years, it's been an easy discussion. overweight equities underweight bonds.
we think thats, crossover point where equity start to become less attractive and fixed income starts to look that's where you start seeing investors pivoting away from equities and back into fixed income. we are encouraging investors to look at a more defensively minded strategy in equities. give up upside to protect the downside. ising to pinpoint where that is the difficulty. i would not advocate market timing around that. but strategies in place now sooner rather than later, that's what we've been telling our clients to do. vonnie: our thanks to alexander dryden. up, robert mueller
shery: this is "bloomberg markets." developments in the mueller probe after the sweeping indictment of 13 russian nationals and three entities on friday. new charges are aimed at alex van der zwaan, a former associate of the prominent law firm in london -- he's charged with lying to federal authorities. person us now -- another
presumably cooperating with mueller. how much pressure is mounting on manafort right now? >> potentially quite a bit here. lawyern der zwaan was a who worked with manafort and rick gates back in 2012 when putine had a pro government. he worked on a report for the regime,which -- for the trying to justify the prosecution of the previous government. the line here is interesting. the government says he secretly reported rick gates, who's also been indicted as well as the months after the last time he told authorities that he had spoken to gates and years
after the last time he had spoken to person a. we don't know yet what's on that butrding, who person a is, he's potentially a very interesting figure. he was married to the daughter of a russian oligarch, he knows russian. he potentially could be a very big player here. we don't know a lot of the specifics because mueller is keeping a lot of the specifics close to his chest as he tries to get more guilty pleas and unravel whatever he can in this russian investigation. shery: the only thing we know so far is that prosecutors have charged him by criminal information. does that typically precede a guilty plea? how serious are the charges? >> this is serious charges, lying to investigators. we are expecting a hearing this afternoon.
maybe here a little more information, more details. busyweek, mueller was very with a number of indictments. potentially now a guilty plea or another one. every time you get a guilty plea, you get more evidence, you can then use that against other people. if you are manafort, the major you are startingar, to get more and more people who worked with you very closely now potentially turning state evidence against you. vonnie: is this evidence that mueller is still concentrating on manafort or is it too early to draw that conclusion? >> he's definitely foe focusing on manafort. he was the campaign manager when the potential conspiracy was
happening. when things like hacking and emails started getting released. we don't yet know if there's any real collusion, but that's clearly a focus of the investigation, to get everything that manafort knows about what happened between the campaign and russia at the height of the campaign during that summer in 2016. certainly, there was a lot of information from those big indictments against the russians on friday. that's only one piece of the russian efforts, the social media effort online. there's also the hacking of other things they are still looking into. vonnie: is there any possibility that manafort will change how he's approaching his defense on this if pressure does mount further? -- ift's probably what you are robert mueller, you want to see manafort agreed to some plea deal.
it may not be the slap on the wrist plea deal -- the accusations against him are very for a lot of crimes has been charged with. who knows what ends up happening there. clearly, there's a lot of attention on manafort by the mueller investigation. shery: also a lot of attention on president trump's tweet storm during the long weekend. he just carried out one endorsement of his rival. he said mitt romney has announced he is running for the senate for the wonderful state of utah. he will be a worthy successor to orrin hatch. he has my full support and endorsement. they had a few issues not long ago. is the white house concerned about the midterm elections? >> they are paying a lot more attention the last few weeks
were the polling has been pretty terrible up until recently for republicans. there's been a bit concerned that they could lose the house and maybe the senate as well, even though the map looks good for them. whether it be mitt romney in utah or getting bob corker to , theyain in tennessee clearly are paying more attention to it. mitt romney and president trump, all you have to do is look at their twitter feeds from six months ago, they didn't have a lot of kind things to say about each other. the president has previously endorsed people who didn't like him and vice versa. reminder ofrt of when mitt romney was being interviewed for secretary of state and he had that hostage video look. this was like a hostage tweet.
we will see how that goes. vonnie: thank you for the wonderful context. shery: time now for the bloomberg business flash. profits rose to a three-year high -- it was less than expected. the ceo tells bloomberg tv the company is utilizing shale sales to pay down debt. >> what we have been able to do is to take our debt, safe haven below 15 -- west will continue to pay it down. our that has been cleared, capital for the next few years will not exceed $8 million. shery: the ceo expects a significant amount of shall profit to be returned to shareholders. qualcomm has raised its bid for an excuse and a conductors --
nxp semiconductors. the new all-cash offer is valued at $43 billion. qualcomm in itself is fighting off a takeover attempt. it has rejected a $121 billion offer from broadcom. that is your business flash update. still ahead, the floodgates are open for the u.s. treasury to step up issuance. vonnie: that is next. this is bloomberg. ♪
>> you are watching "bloomberg markets." time for charting features. today, we are taking a look at treasuries, given the huge amount of supply this week with $250 billion in options in just three days. we have treasuries and selling off modestly. we will take you look at an intraday chart of the 10 year yield. the 10 year yield on pace for
the biggest move since 2013. rates moving up, rising pretty quickly. let's hop into the bloomberg to take a look at where the short end of the curve and the long this is a curve -- five-year chart of the 2-10 spread. that's the difference between the two year yield and the 10 year yield. the big theme was the flattening of the altar. then comes 2018. right now, we are back in two the middle of this range, suggesting we may see the curve steepen. if it does, the fed is likely to raise rates three times this year. it could mean pain for other asset classes. let's bring in michael o'rourke of jonestrading. ,efore we talk about yields let's talk about the auction
calendar this week. it's a quarter of $1 trillion of bills being auctioned. we have this huge tax that we passed -- we will have trillion dollar deficits for the next 10 years. the government will have to issue $1 trillion of new debt this year, next year and the following year. >> you told me earlier this is what really stood out to me -- the two-year yield is set for 3%. michael: the two-year yield is currently -- >> up 30 basis points. 2.22, that's another 75 basis points. that will bring the two-year yield up to 3%. when you go back to the 2-10 stays, if the 10 year above the two-year, we are
talking about a 10 year yield tot is 2.9 right now going somewhere between 3.65 and 3.75. that is changing the whole landscape of investing in 2018. thef we take a look at commodity curve, talk about what you are seeing here. michael: this is the commodities curve -- those are out months at the end. what you are seeing here is the downward slope -- that's the market saying we expect those treasury futures to be trading lower because yields are rising. >> the value of the bonds going down. you are short. michael: the trade this year is yields will rise 65 basis points in the 10 year. sell treasury futures.
this is the current contract line for today. this is where it was a month ago. is 2.65ago, the yield and treasuries sold off and the yield pushed up to 2.9 and that's where we are today. >> a lot of movement there. michael o'rourke from jonestrading, thank you for your insight. shery: thank you so much for that. coming up, domino ceo patrick doyle -- domino's ceo patrick doyle joining us for an exclusive interview. this is bloomberg. ♪
well. live from bloomberg world headquarters in new york, i'm vonnie quinn. in stark at their and very bright in here. i'm shery ahn. a mix in equity markets today, the dow being weighed down by consumer staples and telecom after the long weekend. the ascent p5 hundred -- the s&p 500 is holding steady and nasdaq is up 7/10 of 1% after declining friday. today all eyes are on the treasury markets. we had the three-month and six-month bill treasury auction. we are still waiting for that option for the two-year notes. we are seeing yields at their highest since 2008. volatility on the 10-year note is also rising after three sessions of declines. the dollar is recovering and than above --s
gains above last year's -- last week's three year low. >> the trump administration is taking another shot at obamacare, clearing the way for -- doing away with comprehensive medical plans under the affordable care act. insurers could sell policies that last up to 12 months and would not have to meet obamacare coverage requirements. the european border agency is warning the number of migrants trying to reach europe through the mediterranean will remain high as your. they are expecting more to arrive through spain. were told today that overall numbers have decreased since 2015, when 1.8 million people entered europe. but migrants are finding new ways to cross borders and forged documents are a major challenge. puerto rico got needed help restoring electricity five months after hurricane rio black that much of the island. a federal court has approved a
$300 million loan for puerto rico's bankrupt power authority. officials warned that without the power -- that without the loan officials would impose rolling blackouts. the billion or koch brothers have turned thumbs down on a proposal to raise the gasoline tax $.25 per gallon. two groups tied to the koch brothers say the increase would fall hardest on states donald trump won in 2016. the chamber of commerce suggested the tax hike and president trump has reportedly supported it. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. its a busy day for domino's as the pizza maker delivers fourth-quarter earnings. its the first revenue miss since the first quarter of 2016. joining us now from ann arbor michigan is domino's ceo patrick doyle.
congratulations. investors obviously like what they see, up 2.6%. tell us about a slowdown in earnings growth. anything to be concerned with? patrick: our earnings were up 41%. earnings growth was terrific. we had big numbers previously but the fundamental strength in the business is continuing and we feel great about the quarter. >> the fact remains that locations, company-owned and franchise, grew less than expected. is this a shift in consumer trends? patrick: our long-term guidance says our comps will be up 3.6% and we were right in the middle of that range. this is where we expect them to be over the medium term. talk to us about international expansion.
patrick: 95% of the world lives outside the u.s. so there are still big opportunities for us, even though, you know, we are much bigger outside the u.s. today than inside the u.s., tremendous opportunities. and really, if you just look at where the the big population centers are run the world, in china, in india, russia, brazil, indonesia, that's where a lot of the growth will come over the medium and long-term your it >> i have enjoyed your pizzas in both japan and south korea. youe go to the bloomberg can see the international revenues but compared to total revenue it seems international revenue shrank a little bit coming from 10% to 7%. why is this inward you see the best growth potential? patrick: if you look at the rev you on the business, our international business is 100% master franchise, so it is a pure royalty collection
business. business, we own our supply chains there so we sell the food to our franchisees. that accounts for the big difference in revenues but if you look at overall retail sales, which are the sales to what you'reumer, going to see his we are much larger outside the u.s. and the growth of that international business is very fast. viaalf of domino's sales is online. how are you competing with other other chains,ith yum brands for example, on digital sales? >> 60% of our sales and our are in theie and we digital space but ultimately the percentage of sales is less important to than what you do with those customers once they are there. so if you've got a great analytics group, which we do, you are finding ways to drive more sales from those customers
once they have signed up with them. program, i think, has been terrific for us and for our customers. ultimately, what you get them into your database, and you know those customers and who they are, what they are buying, where they are getting a delivered, that gives you the opportunity to get repeat orders from those customers. cutsw much will u.s. tax help your business, not for 2017 the for 2018? patrick: we said to the market that our tax rate will be 22% to 24% for 2018 which is down pretty materially from where it was before. that will accelerate some investments into the business. overall, its great for our business, great for investment into our business and we are feeling very good about it. 97%ou are something like franchise owned here in the u.s.. i wonder about the proliferation
of other food delivery services, and if that's attacking your core business at all. is there a threat there? patrick: it is certainly something we watched but to date we have not seen a material effect on it. i think what you have seen so far is, there are customers of other brands that have chosen to get their food delivered instead of going in picking it up. so it hasn't really affected us yet. i think it kind of cannibalized ' takeaway or carry out business a little bit but it is certainly something we watch. we are really the original disruptors in the space, we've done digital and the liberty for a very long time and have gotten very good at it. >> you will be stepping down as ceo this summer. what will be the biggest challenge and opportunity for your success or? -- your successor? investing as we keep
taylor: like you said, record fed for them on a global basis, after $53 million they pulled in in february, $35 million of that was from "black panther." so an incredible 40 we can for them and we have good video. i haven't seen it yet. basis, this is very much a global story. domestically they pulled in $24 million and internationally, you had key countries reporting record sales across the board. nigeria, kenya, indonesia had the best opening weekends ever. so its not only imax. we are seeing other movie theater shares rise. i am looking at amc, regal, cinemark holdings, amc came out and said they had the biggest sundae ever and that 23% of the theaters were reporting record ticket sales from admissions. so kind of incredible. havingn attest to it
seen it at my feeder. and also the idea that they put in a movie every half hour and you might have three showings of a particular million a day. you had 25 showings of black panther. >> every half an hour. up, lots ofaning popcorn everywhere. the jpmorgan actually to go over this analysts rating and they put it as overweight. tells the reason, that's surprising. >> the really like imax. the j.p. morgan analyst, it was of her picks theater stocks with $28 per share going into 2018. she says she sees really strong box office and revenue growth. there's an interesting chart in my terminal. you can see both of them now starting to turn positive after a couple of quarters of negative revenue growth. in december with "star wars" and now february with "black panther, call one
would assume that this has room to grow on the upside is more people come back to theaters. >> you have to wait it out until people go away little bit. its that crowded every half an hour. >> that's the fun of it though. don't you want to be at a movie theater where everyone else is. its a community event, right? >> definitely. although its expensive here in new york city. is expensive. the ticket is just part of it -- just have to get the merchandise as well. shery has a little phobia. am i right? >> a little bit. taylor riggs, thank you so much. we will talk about another company, walmart, following -- following the most in two years after a disappointing forecast. as itsp in stocks comes
once torrid e-commerce unit begins to decelerate, sparking fears among traders in walmart's chances to battle amazon. joining is now the matthew boyle. even myself, when i think online shopping, i don't think about walmart. i go to amazon. this must be huge when people decide where to go online. matthew: that's a big part of it, shery. walmart is a brick and mortar retailer and not synonymous with the commerce like, talk -- like amazon. but they've done a lot to improve that. but today's results show they still have a long way to go in -- to go and the investments they are making to catch up are taking a toll on profitability. >> amazon started as an online retailer and it has been around 23 years. so if you gave walmart 23 years wouldn't it be crushing the online space? >> i don't think anyone's going
to be crushing it in 23 years or does a lot of pie and walmart is trying to grab what it can. when harry doing well despite today's selloff is online grocery, where they have online grocery pickup in over 1100 stores and they're going to put it into another thousand stores this year. --d at walmart is excellent walmart is excellent and getting food to the customer. walmart did implement ways -- implement measures to help employees that could eat into the margin. >> walmart gave hourly employees a race starting this month, up to $11 per hour and that's another cost weighing on profits . we are about to put out a story today that shows their operating margins are the lowest that we've ever recorded per terminal. maybe its something like that, for which investors are punishing the stock because the stock is down 10%.
it feels like a crucifixion. a run-up.quite this might be a little overreaction. it was one of the best performers on the dow last year and is up 6% this year. so people are waiting for just a little bit of bad news to jump on and there is plenty of bad news today for them to jump on. >> walmart has said they have a few operational issues. what are they? that's a good question. they refuse to tell us. i spoke to the ceo this morning and they said one of the reasons for the shortfall in.com sales was inventory replenishment but when analysts asked for details they were forthcoming. >> that's not good. at some point will we figure out what that is? matthew: we might. i will do my best to ferret that out, but look, this is a complex supply chain and things can certainly go wrong, especially during the holidays when you have product and orders all over the place. >> there has been consolidation in the industry. could we see more?
>> absolutely. today, look at albertsons picking up the rest of the rite aid stores the walmart -- that walgreens was in grabbing. everyone's wondering whether walmart is going to make a play and health care consolidation we see playing out. they certainly have the war chest, they have billions of dollars in walton family money to do to -- to do it if they want to. its not meant to be a walton. bloomberg's matthew boyle. thank you for breaking it down and joining us with the latest on walmart. our bloomberg business flash. the ceo of qatar airways says the ongoing saudi led economic blockade against his country has been mostly ineffective. he spoke today to bloomberg tv. >> we have expanded our network hugely and are at continuing to do so. we are continuing to grow. so the main purpose of the blockade, to intimidate us, has
failed. it has increased our operating costs and has also put financial straight -- financial strain on the airline, and that's why i mentioned to you last november that our bottom line would be woulded and qatar airways be impacted for the first time in seven years. >> meanwhile the stock market turns bullish on u.s. stocks. it means already strong momentum for earnings growth. in a note to investor blackwell -- blackrock said its bullish on u.s. stocks. home depot is cashing in on americans pouring money into their homes. sales at the world's largest home improvement chain roads -- rose larger than expected in the fourth quarter. home depot was also helped by hurricane recovery spending in the south and in puerto rico. automakers are looking to capitalize on your data. the regulatory hurdles they may
-- $1332 and300.32 $.60. : cars are racing to a new future combined with artificial intelligence, powered by drivers ' personal data. but can automakers profit off all the data they are capable of or alienating consumers and risking backlash? joining us now is bloomberg's gabriela coppola. what kind of data are they collecting, i can only imagine gps data. gabriela: location is a big one that will be very valuable but also, your driving. slam ondrive, do you the brakes a lot, they could also look at how your car is performing, if you are having engine trouble they want to know that right away so they can figure what the problem is. >> is this going to be beneficial from the --
beneficial for the consumer or is it a breach of privacy in the sense that they will know that you are ordering pizza from the car. is giving the option, that's what they always talk about. its up to every consumer to decide of its beneficial for them. there's a carrot for you, a discount on your insurance, five dollars off your lease payment, but you will be letting them make a lot of money at off of you in return for that exchange. >> how are they going to use this data? whereas going to pop up in the car? example, thereds is a company that i saw in las vegas this year that is looking at putting pop-up ads and your infotainment screen and the winner would happen is, you would be, it would be free to you but you have to have fancy services in the car, like ubs navigation, maybe its a massmarketed car not very expensive, and it would give me
these features in exchange for looking at the ads. that could be about three years away, that's what they are thinking. will decide whether this goes into any individual cars. will it before, gm, tesla, or will it be consumers? bethe technology is going to in the car. and the consumer choices are, yes i will it use your data with certain parties are companies. so there's going to be a terms of service agreement, something like that that will inform you of what is going on and you have to choose whether you are ok with it or not. >> don't drivers have to get permission from the stated to be shared with the automakers? yes, they do. that's a rule. they do. the ftc regulates this. a set ofrs of sent out principles on how this is going to operate which has now become the law for them. i think the question is whether people are paying attention to what they are doing. i have a 50 screen terms of service, one i am swiping. i don't care, i just want my app. agreements service
are so complicated and are so long, that should ring alarm bells in the first place. if they are not complicated you really should have your laura look over it. >> for every dozen apps we have on the phone, its true. i do read them. when could we see this technology and this system being implemented? of pop-upin the case ads, they're talking about it now so maybe three years from now we might see that on cars on the road. but there is a big picture and game for a lot of automakers and that is they want to be like google and facebook, and want to get all this data from you and aggregated to third parties whether it is a bank or a hedge fund or retail stores or gas stations or starbucks or whatever. that can be personalized and anonymous said they are all kind of scrambling to build the digital infrastructure for that now. it is still a few years away. >> a new source of revenue, right there. thank you, gabrielle coppola with the latest on cars and ads.
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shery: here are the top stories we are watching. its a huge week for u.s. treasuries with the results from the two-year auction coming in just moments. earlier the treasury sold three-month and six-month bills that yields not seen since 2008. special counsel robert mueller files more charges in the russia probe, this time against a former attorney. we will look at how this new charge impacts the broader mueller investigation. and as the u.s. doing enough to protect its voting systems from cyberattacks? fireeye. is the ceo of ♪ david: let's check in on the markets as we await results on the two-year treasury auction. here is bloomberg's abigail doolittle. abigail: