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tv   Bloomberg Best  Bloomberg  February 24, 2018 12:00pm-1:00pm EST

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you ♪ shery: coming up on "bloomberg best," the stories that shaped the week in business around the world. the u.s. treasury auctions off billions of dollars of bonds. >> basically, we are back to the same kind of demand structure that you saw in october, november, and december of last year. shery: the ecb will be getting a new vp. banks make news of new construction and staff reduction. leaders in finance decifer mixed signals coming from markets. >> we are not expecting any more multiple expansion out of the u.s. equity market. we think it has to be earnings driven from here. >> when we look at develop markets, we think the u.s. bond market and australia are the most attractive right now. >> there are long-term opportunities, and we can take advantage of them.
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>> the issuance of costly promises is virtually limitless. shery: central banks release meeting minutes with important clues for investors while neel kashkari shares inside insight on the fed stock proccess. >> wall street overreacts to everything. they overreact to the upside they overreact to the downside. shery: plus, the earnings drumbeat continues loud and strong. >> what is pleasing is all parts of the business are performing well. there is still a lot more work to be done, but we are pleased with where we are today. shery: it is all straight ahead on "bloomberg best." ♪ hello, and welcome. i'm shery ahn. this is "bloomberg best." your weekly review of the most important business news, analysis, and interviews from bloomberg television around the world. markets were closed in the united states on monday, but
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there was plenty of drama elsewhere as a euro group put forth a nominee for the vice presidency of the european central bank. nejra: the euro group has nominated luis de guindos for the ecb's vice presidential role. it is a move that will hand madrid a top seed at the bank for the first time since 2012. >> it is a controversial decision because it is very unusual to see politicians making these transitions from government into the central bank, especially because that is the whole point of a central bank, it has to be independent from political interference. >> de guindos has tried to portray himself as a hawk, so to speak. he has spoken in favor of austerity. he has been a strong supporter of the policies that have been taken in the euro era in the in past few years and spain has been a star performer for the past few years. its economic performance has rebounded dramatically since the crisis.
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he doesn't have much of a track record when it comes to monetary policy. coming straight from politics to the central bank. julia: opening the debt floodgates today, the u.s. treasury sold $179 billion worth of debt. they're working to rebuild their cash balances. yields on the three-month notes and six-month notes rose to levels unseen since 2008. >> what you saw in the three-month auction and two-year auction, was a repricing. you saw two-year notesstarting -- notes starting to flatten a little bit against longer-end and issues. one of the reasons for that is there will be a lot more of them. so the treasury department is going to issue $6 billion more every month of two-year and three-year, whereas they are only going to issue an extra billion dollars for longer-term securities. i think one of the reasons you have seen the front end do a little bit worse here is on the supply. abigail: we're waiting for the results of the five-year auction and they're coming in right now.
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we see that the long end of the curve is just a little bit stronger, but investors care about a few different things here. the one issued rate on $35 billion, five-year note and the actual rate to come out is 2.658%. those are the actual results. in terms of the bid to cover, we're looking at a ratio of 2.44%. that is slightly stronger than the previous auction. that is good. it tells us demand is here for auctions. shery: if we see more hawkish fed, we have the statement coming up this afternoon. what could this spell for bond markets? >> one thing we are keeping a laser focus on is what the fed said at about inflation in the last meeting. the last meeting was a non-press conference meeting. we didn't see a rate hike, but we did see the addition of the word "further" a couple of times in the statement. if that turned out to be a hawkish addition because the fed is anticipating more inflation, what you are going to see is markets getting a little bit nervous that the feds will be
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more aggressive in the rate-hike path. >> a somewhat hawkish set of minutes for the january fomc meeting. a number of fomc participants said they already upgraded their forecast for gdp growth in 2018 when they met at the end of january. why? because of quickening economic activity in the u.s., a brightening picture on the global outlook, and because of the tax changes that appear or may appear to be having a greater impact on the economy than originally anticipated by fed officials. >> i think the markets have gotten the take away pretty correctly, that the fed will continue on the rate path it had already announced, they're not ready to raise the number of rate moves they will make this year. interestingly, we also heard from the philadelphia fed president, who suggested he is still in favor of two rate hikes, rather than the three
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that is the consensus forecast. julia: interesting price action today. if you take a look at the performance, just on the daily session before we got the minutes, we were in positive territory and there you see the repricing. the u.s. 10 year spiking higher, and that impacting what was going on as far as sentiment into the close. >> there was expectation that the fed might telegraph a pullback of that rate hike path that we have for 2018. i think when we first got the statement, it looked like there may be a pullback, but once they read between the lines, they realized the fed is not going lower than three. they will probably not go higher than three. we are basically back to where we were this morning. what this said is there has been a major mispricing in this market or at least a misalignment between what the market sees, the stock market sees, what the bond market sees, and what the fed is telegraphing.
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francine: barclays ended a torrid 2017 on a mixed trading. -- mixed note. trading income slumped 18% in the fourth quarter, but that beat both the 26% decline estimated by ubs and the average 25% drop posted by wall street banks in the same period. the chief executive is more optimistic about the path ahead, and he is putting his money where his mouth is, increasing the bank's dividends and considering a share buyback for the first time in more than 20 years. >> we begin 2018 with a clean operating amount, that is the first time in five years for barclays. but also, we close 2017 with a strong capital position. 13.3%, that is above our target. first time we have done that in a long time. and what that will enable us to do is, the announcement we had this morning, that in 2018 we plan for a dividend of 6.5 cents for our shareholders. that is more than double what we paid in 2016 and 2017.
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we feel good about that. david: we learned from the ecb account of the january meeting out this morning that although they were comfortable staying the course for now, some officials were ready to remove a pledge to expand the bond buying program if needed. this is to quote from the account, "some members expressed a preference for dropping the easing bias regarding the asset purchase program from the governing council's litigation program as a tangible reflection of past inflation." they went on to say however, it was concluded that such an adjustment was premature and not yet justified by confidence. >> it is important not to read too much into this because these governing council members expressed in that, they do not carry the day. for some of them, it is a natural step that you get to the point where instead of continuing to be promising to extend and expand your qe program, you say we will carry on up to a certain date.
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we may extend it, but will not expand it. alternatively, you start to shift to saying at total stimulus, negative interest rates, free loans to banks and the stock of assets hend under -- held under qe provides stimulus, and that is enough. that is what some of them want. shery: so the seven-year ratio is 2.49, which is lower than the previous auction. 62.2% to the right bidders. how would you compare that to the shorter treasury feels earlier this week? >> it is just like the rest of the auctions. back to the same kind of demand structure you saw in october, november, and december of last year. which you know, it was kind of ho-hum. this was an ok auction. the fact that it tailed a little bit shows that there was indigestion in the market that needed to be taken down. interestingly, in two weeks we get the 10 year and the 30 year
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auctions, and those will be telling, because will there be demand for the longer and more interest rate risk product then we have seen this week? haslinda: china is to take control of anbang, removing the chairman and prosecuting him. what do we know? >> what we know is that regulators say that they will be taking control of anbang as of today for one year. as you said, the chairman will be pushed out of his post, and he will be prosecuted for economic crimes, is what they are saying. they also said that the reason they have to step in is because illegal operations at the company were testing and putting pressure on the solvency of the company. anbang has been one of the biggest swaggering conglomerates in the last five years or so, spending billions of dollars in acquisitions overseas. it has about $320 billion worth of assets. including those not just the
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flagship ones, in new york, but strategic hope tells and resorts and also and resorts, insurance companies in countries ranging from the netherlands to korea. and they paid in many cases, for many people, skyhigh valuations and skyhigh prices for some of those assets as well. so, it will be a long process of trying to unwind some of these problematic purchases for the regulators. you have regulators and officials from the pboc, the foreign exchange commission, and securities and banking, all trying to pick apart this problem. shery: still ahead, as we review the week on bloomberg best, neel kashkari says market blips should not not the fed office knock the fed office course. a bank consolidation coming in europe. plus, we sort through a heaping helping of reports.
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up next, more of the week's top business stories, bloomberg reports that deutsche bank plans to cut hundreds of jobs, but how does that square with the promise to grow revenue? >> the challenge is to create topline while cutting costs at the same time. obviously, it is a big conundrum. shery: this is bloomberg. ♪
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♪ shery: this is "bloomberg best." i am shery ahn. let's continue our global tour of the week's top business stories, in new york where j.p. morgan chase announced plans to build a brand-new headquarters. vonnie: j.p. morgan chase is getting a new address. the largest u.s. bank is planning to consolidate its new york city offices and 15,000 workers into a new headquarters on park avenue. the announcement came this morning in a joint statement between ceo jamie dimon and the mayor bill de blasio. >> they are tearing down their current headquarters, which was
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built in the 50's and 60's and was meant for a much smaller staff. and so, they will build a sleek, new, modern tower that is about twice the size. so this will be about getting all of their people into one spot. right now, they have that building, they have the old bear stearns buildings, this is going to be a major project that they are going to tear down the building starting next year and it is going to be five years of construction. so if you work for j.p. morgan , you will be spread out into other offices for the next years but then you have a new tower to come back to. >> in some ways it is jamie dimon leaving a present for his successor. it will be done around the time that he is planning to step down about five years from now. so this certainly commits them to new york in a big way. nejra: germany's largest bank is cutting at least 250 jobs globally at its corporate and
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investment bank, deutsche bank is trying to limit expenses amid a sustained slide in the securities unit. the cuts could run deep, widening to over 500 layoffs. over the past few weeks, they have cut positions in london and at the u.s. >> the challenge is to increase topline while cutting costs at the same time, obviously it is a conundrum. we have to keep in mind that this is part of a broad strategy at deutsche bank to cut costs. i think what people need to look out for is what is happening at the management level, because i think there is a struggle there between the forces that want to cut costs on the one side and the ones that want to invest and expand the investment bank on the other side. it is hard to reconcile those two forces, and we will have to see how it plays out in the future. lisa: south africa is released
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its annualeleased budget today, raising taxes and curbs spending in an effort to avoid another credit downgrade. >> the president yesterday saying that he will take personal charge of the state-owned companies. he will take personal charge of the structural reforms and state-owned companies, giving direction as to structural reforms in the economy. and i think that it will do just enough for us, not stave off a downgrade, but also to realize a change in the outlook for s&p, so we can regain our investment rate. >> siemens is planning new ipo for its health care. the new company will be called siemens health. this has been a long time coming. this is something that i spoke
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to them about many times. asking, what is the timing of this? we are getting news today. >> and it will be one of the largest ipos in europe. they are talking about 40 billion valuation and they might raise as much as 10 million euros. it is also part of this broader thing we have seen across europe and even globally, of these really big complicated conglomerates with businesses everywhere, simplifying and saying what are we good at and let's focus on that. nejra: u.k. prime minister theresa may is planning the trade deal she would like to achieve in brexit negotiations, britain will seek to stay close to the e.u.'s rule book in some areas while breaking away from others. it is an approach that some in brussels are calling cherry picking. at bloomberg, we have gotten the scoop, we have landed that if britain doesn't get the deal it is prepared to hold back from brexit payments. can the u.k. do this, is this illegal? -- is this legal?
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>> there is a chance that this kind of protest statement from the u.k. could cause disruptions. we might end up in a court or a european court to try to arbitrate on this. what we do know is that britain has a contingency plan if the trade talks go wrong if at some point in 2021, 2020, or 2019 -- after brexit has after taken place, the e.u. doesn't honor those promises and the e.u. -- u.k. thinks one option would be to hold back the payments of the money it has already promised. nejra: apple is moving to security supply chain. the company is in talks with cobalt mines to buy the metal directly from the with no middlemen. apple is worried that demand for cobalt in batteries could threaten its own supply, which it needs for its iphone and ipads. is this unprecedented for apple? >> for apple, yes. apple has never gone and bought cobalt directly from miners before. it never had to, because the cobalt market has been quiet,
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a pretty tiny market in the global world. there has never been a question about whether they would have enough supply. nejra: this is to secure the supply chain. how likely are they be able to do it? >> if they are willing to pay up then there are plenty of companies to have plenty of cobalt supply, planning increases in supply, and no doubt at the right price a deal could be done. >> a spacex rocket carrying three satellites went into space from the california coast. the falcon 9 carried a satellite and two, smaller satellites for a system that would provide internet access to remote regions. mark: talk to me about the crossover and how potentially this can be and how important it might be to tesla in the future. >> the idea of tesla and spacex merging together is a tantalizing idea.
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i personally think that this will absolutely happen, there is a tremendous amount of technology overlap, both companies are committed to seeing ai and machine learning develop and incorporate those technologies into their respective businesses. the spacex business is actually a great business. and when you look in the future, call it 2025, it is a business that could dramatically improve tesla's revenues and operating profits. mark: we caught up with a treasury secretary steve mnuchin who is not worried about rising prices and growing debt. in an exclusive interview with bloomberg, he said "there are a lot of ways to grow the economy. you can have wage inflation and not necessarily have inflation concerns in general." we got some insight from jeff gundlach. check out these tweets, i'll run it for both of them. mnuchin, policies will raise wages without inflation. yeah, sure, and we are going to expand the buffalo art museum without making it bigger.
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then he said if inflation is no up with wages, if inflation goes up, it is not good for bond owners. can you get the wage growth without inflation? >> you need productivity, that has been talked about a lot. so hope springs eternal. but i'm not sure there's a lot of credibility coming out of the administration on the policies and what they will do. is it inflationary, disinflationary, progrowth, low growth, it is really hard. ♪
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♪ shery: welcome back to "bloomberg best." i'm shery ahn. the past two weeks have given the fomc a lot to chew on with a january surprising inflation spike, rising bond yields and turbulence in the stock market.
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this week, our bloomberg international and economics policy correspondent michael mckee sat down for an exclusive interview with the minneapolis fed president, neel kashkari, who says he does not think that one month of data should change the policy path. >> i do not want to overreact to one job report that showed the wage increases of 2.9% or the latest numbers. we don't want to dismiss the data, but i also don't want to overreact to one month's blip in the data. we have to look over what is happening and see if inflation actually building toward our target. i hope it is. for almost 10 years that that has been undershooting orientation target. we have tools to keep inflation from going to hide. and if it goes too low. i have always been saying, allow inflation to come to us. we have very limited tools if inflation is too low.
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>> just reaction -- reacting, you can have reaction in the market. we have a jumpy wall street these days, so if you saw inflation breakout are you concerned you would see wall street overreact to the fed moving more quickly? >> wall street overreacts to everything. they overreact to the upside, the downside, we can make policy based on market blip up and down. we have to focus on the long-term economic outlook and the mandates that congress has given us. congress has said our dual mandate is a stable prices and a maximum employment and we try to achieve those on average over the long term. wall street will do what wall street will do. >> if they do that, it could have an effect on the economies. and for years, people on wall street have said that the fed will step in because they do not want a collapse in business or consumer confidence if the markets go down too much. is that so-called fed put still in place? >> i think we do care about
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financial stability. we do note there is a feedback mechanism, just like there is a feedback medicine -- mechanism through the currency markets on the u.s. economy. but we have to that are not targeting currencies, we know there is a feedback loop. we do pay attention to it, but we are not sitting here trying to engineer a certain level of the stock market and obviously we want to avoid crises. so to me, i tried to differentiate a stock market correction like the stock bubble which did not lead to a , financial crisis. from the 2008 housing bust, which did lead to a financial crisis. we have to work hard to prevent crises, but within that we should allow the markets to move up and down. shery: more compelling conversation straight ahead on "bloomberg best." morgan stanley's adam schiff predicts more pain for the stock market. we look ahead to italy's elections, and frederick expects europe's economy to keep expanding, but as for the number of banks, that is a different story.
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>> long-term, yes. i think we will have those banks. shery: this is bloomberg. ♪
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♪ >> have you ever been offered a bribe? >> no. never. i have been hinted. these are thin ice things. you never know. >> so there was a hint. did you report that hint? >> no. >> why not? >> that is a good question because usually you think, ok, maybe i misunderstood. let's see how things are developing. the bank in latvia, the most important thing is we have nothing to do with commercial banking supervision. >> sure. but i am curious to know why you didn't.
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even a hint or the merest whiff of impropriety, why did you not report it at that time? that would have been a clear thing that you could have said, that happened then and you could say that you had reported it. >> of course, you could not imagine, if i could know that this thing was going to develop like it has been developing, i regret that i did not do that. shery: that was latvia's central bank governor ilmars rimsevics, who denied corruption allegations against him this week, speaking exclusively with bloomberg's guy johnson. staying with european finance, frederick today a cash joined -- frederick joined "bloomberg daybreak: americas" this week for a wide-ranging conversation. he spoke about the future of europe's banking sector. >> the most important thing for me is, beyond the long-term opportunity in europe financial
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markets, we are going to complete the banking union. we are going to see deeper capital markets. there are long-term opportunities and we can take advantage of these. on top of this, the economic activity is good in europe. we have growth rates like we have not seen for maybe the last 10 years across the eurozone. that is an opportunity for banks and hopefully we will see rates rising. you know, we suffered dramatically from negative rates. you did not have that in the u.s., it is painful, i can tell you. and progressively, we have a little exit of monetary policy and we will see a much better rate environment. >> it is not just the steeper curve. you need to get out of the positive rate environment. what is your best case for that? >> our assumption, the strategic plan was that progressively in 2019, we will exit the negative rate territory for the positive rate. with growth rates at 2.3% or 2.4% for the next two years for
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the eurozone, normally you should see lower unemployment rates, which is also higher inflation on wages. i think this is much better and the monetary -- the central banks would like to exit the monetary policy progressively to avoid an asset bubble or a distortion on prices. >> as you look forward to a european banking union, which you anticipate at this point, does that mean that socgen has to get bigger? will there be cross-border consolidation? what do you anticipate? >> the completion of the union would be at the top of the agenda of the governments. once we have the german government, there will be discussions on what the next step for the eurozone, on -- in particular on the banking union. long-term, i think you will have less banks. shery: investors had a lot of news to keep their eyes on this week. rising yields for u.s. treasuries, mixed economic data from the u.k. and europe and the
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vestiges of volatility from the recent corrections. let us revisit some of the most interesting conversations about the markets, starting with adam scheetz who said a february selloff in stocks was "the appetizer, and not the main course." >> it is never possible to be as precise as you would like to be around these things but when i look at our economists' forcast, you really do have two overlapping themes that crossover in the second quarter. you will have inflation picking up, not just in the u.s. but in the eurozone and in japan. at the same time, i think that we see a number of activity indicators, including global economic indices are going to be moderating. and so, it is not necessarily that it is going to be a recession or a sharp slowdown, but that the rising inflation numbers will seem potentially more worrying when the economic
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data is not as strong as it has been. >> that is a fair point. let's take a look at what yield you are watching. they look at the 10 year and they say 3% or 3.5%. you look at 10 year yields and inflation-linked notes, and i have the chart, we are right around where we were, around 82 basis points. what do you think is the breaking point in the equity market when it comes to yields? >> unfortunately, you cannot be too precise about an exact breaking point. the reason i like this chart quite a bit, first, i think real rates, the interest rate over and above inflation, is probably the most important rate when it comes to thinking about equity markets and discounting cash flows. for all that has happened in the last five years and all of the shifts in market thinking about growth, inflation and stagnation, we've actually been in a stable range for these long
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-run real yields, long-run expectations for where policy will be. and we are now at the top end of that range. so breaking out of it, while it is not guarantee anything, does suggest something different and i think that difference is something the market may have to assign a higher discount rate for and that is a reason why we are not expecting any more multiple expansion out of the u.s. equity market. it has to be earnings driven from here. >> when we look at developed markets, we think the u.s. bond market and australia are the two most attractive right now on a relative basis. this is a story where the rest of the world is catching up. europe is 2-3 years behind the u.s. economic cycle and their economy is finally picking up. we think the ecb will gradually taper their balance sheet and we ultimately think japan, which is targeting 0% for 10-year rates, could ultimately move that target upward over the next year or so. as the other economies start to
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gradually pick up their growth rates, we should see their bond yields rise and the spread between u.s. and those rates narrow. so overall, what a highlights is -- it highlights is that the u.s. treasury market looks attractive relative to germany, the u.k., and japan. >> what about peripheral spreads in the eurozone? are they underpricing risk at the moment? >> what has happened really, and this has been since 2012 and 2013, we have seen a significant tightening in those peripheral spreads. obviously, that has been the result of not only improvement in economic conditions, but quite frankly massive bank support from the ecb. the issue we have now is that the spreads are quite tight. we are not really taking significant risk in italy, because we think longer-term that the peripheral spreads are at risk of widening.
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so as a function of how tight the spreads are, we are more cautious at those levels. >> are you worried that all of this ultracheap monetary policy, from the european central bank, has taken away the risk that we see in italy and therefore in italian politics? >> to some extent, yes. the ecb made an extremely smart monetary policy and president draghi has been very smart in mastering the support for qe. and he still has that support. i personally believe that the phasing out would be quicker rather than slower. and i believe that among the facts that would explain why the electoral promises issued so liberally and so irresponsibly by all of the political parties, one of the reasons is that there
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is no feeling of pressure whatsoever. >> but what will reality look like? is there a real danger that reforms will be slow with whoever becomes the next prime minister in italy? there are a lot of parties offering tax cuts in italy. how do you fund tax cuts in italy? >> a positive to be put on record first of all is that no party, populist or not, has any longer in their program the idea of leaving the euro, calling a referendum to leave the euro, they have all calmed down. but, indeed, the issuance of costly promises is virtually limitless. but what will happen? i am not too concerned that these promises will be honored. luckily, they will not be honored. but, what will be the explanation of the parties which
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have promised so much, the day that they have to cut down on the promises? the culprit would be europe because european constraints will not allow them to fully deliver on the promises. ♪
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♪ shery: you're watching "bloomberg best." i am shery ahn. earnings season is in high gear. our roundup begins with results from europe's largest bank. a >> the final set of results from hsbc. not quite the swan song he had hoped for as a hands the reigns -- as he hands the reigns over to his long-term lieutenant. europe's largest bank is destined for fourth-quarter
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numbers that are down. is this the legacy of sir gulliver or is this a blip? >> i think it is a blip. they had seen the overturned revenue growth that they were hoping for and this did not come through in the fourth quarter. >> the fourth quarter from our perspective in the industry was a little weaker with respect to global markets, particularly in the ficc space. and, in with some of our peer group, we also took some provisions for corporate exposures in the fourth quarter. so that is really the future of -- feature of the fourth quarter. a couple of things on the unexpected front including charges coming through a global bank and markets business, and lower revenues in the quarter from the same business. vonnie: walmart shares are dragging down the dow jones industrial. investors are worried that e-commerce growth is slowing. why can't walmart satisfy shareholders these days, no matter what it does, from buying
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jet.com, to plowing money into new operations. investors do not seem to be happy. >> it is true. they sure are hard to please right now. what we saw is that walmart had sizzling growth in the last three quarters of plus 50% on their e-commerce and we just saw a drop off. the 23% growth they did post is not that bad compared to a lot of their competitors. it is outpacing the retail industry's online growth overall, but investors are just worried that perhaps the honeymoon is over. with marc lori, the executive that has been spearheading this, maybe his magic is not as sustainable as they thought. vonnie: billiton shares are taking a hit today. it is divesting from its from its $10 billion shale units. >> we will put all of these bits together and figure out how to
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go forward by the middle of the year. jonathan: once those asset sales go through, what proportion could investors expect to get returned to them? from the cash you get from the assets. >> i think it is too early to say. what we have been able to do is take the debt into safe haven territory, between $10 billion and $15 billion. we are just below $15 billion , and we will continue to pay it down to the lower level of that range. but once that is done, we have been clear that are capital for the next few years will not exceed $8 billion and the rest can be returned to shareholders in some form or another. >> anglo american assets pay an annual dividend of $1.02 per share. it is the first time since 2015 they have put money back on the table. that is after the global mining giant reported its adjusted earnings per share. $2.57, a little bit light on what the market expected.
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is the recovery complete? >> no. we have established some very firm foundations with the improvements we have got. we have reduced assets by 47% , yet production is up 9%. costs are down 26%. return on capital employed, 19% against a starting quarter of 9%. we have come a long way, but still a lot of opportunities and in the next 3-5 years we will improve. still a lot more work to be done , but we are pleased with where we are today. >> party like it is 2008, glencore. the world's largest miner reporting is largest profit in decades. and it also surprised investors with $2.9 billion in dividends, and it has -- despair. the ceo saying -- "we are generating $10 billion of the free cash flow on current commodity prices, and there is room if and when we want to do any acquisitions." investors usually do not like it
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when companies have a lot of cash, but maybe it depends what they spend it on. >> given how much debt and how you go about it. i think most investors are very happy with this state of glencore's balance sheet. what is interesting today is that they were able to surprise investors with the dividend. they still have a headwind to do deals if they want to. they are closer to $10 billion which is the bottom of the range so glasenberg has given himself room to maneuver. >> the company saw profits tumble 44%. why is the company struggling when we see a different story with the majors? >> this is all a story of china trying to curb pollution. it is all about the cuts to capacity we hadn't seen over the -- we have seen over the winter months in china. what we saw over the last year was a real shift in the chinese iron ore markets. if you have higher-quality, it
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helps you maximize output amid the cuts. and it also helps steel mills comply with the mandates to cut emissions. that is boosting the likes of -- -- bhp and rio tinto. they sell a higher-quality product. but not good for fortescue. fortescue typically sells a product that is below the benchmark grade. there is an ever widening discount for those products. and we see the results translate into those first half profit results. >> reporting sales growth this morning for the fourth quarter at 2%. the u.k.-based maker of painkillers says it is time to take revenue growth to 13% or 14% for the year. is 2018 going to be better than 2017? >> absolutely. 2017 was a tough year. where we had macros.
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but during that year, we made two transformations. we sold our food business for a good price. and then we acquired me johnson d johnsonohnson -- mea last year, as a result of which 50% of our business comes from higher margins and higher growth in the health care categories. as i look forward to 2018, i think it is going to be a better year. and that is how we are guiding the market today. >> qantas -- giving more money to shareholders. the carrier will buy back as much as 378 million aussie dollars of shares. and has announced a $.07 a share dividend. that is on top of the money returned to investors from late 2015. what is your read on the first half? >> really good. what is great and pleasing is that all parts of the business are performing well. we had a record result for qantas domestic. a record result from the jet star group and qantas loyalty
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and our international was down slightly, but we have a huge change for that business that will be implemented next year and we are expecting a significant improvement in its performance, all things being equal next year. so across the board, we had pleasing results. and we saw today, our shareholders and customers and employees have all benefited from those results. >> hewlett-packard enterprise and hp ink reporting earnings. hpe boosting its full-year forecast beating estimates and hp ink topped estimates with strong computer and printer sales in the holiday shopping quarter. maintaining momentum as the industry is stagnating. what is driving these results? >> a few things. we have to unpack them, because for a long time hbe talked about being better together and this quarter they were better apart. i think you have two companies that have stronger ability to be nimble and to resize their
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infrastructure, particularly in the case of hpe. now, in the case of hpi, the parent company, it is a company performing on all cylinders. they are in a market that is flat for pc's. that is nominally flat for printing and they are gaining share. they are putting up numbers like 15% growth coming year-over-year for total pcs. 14% a year for printing. 28% growth in commercial printing. remember, that includes the samsung business they acquired and this is the first quarter they have had that. but really stellar performance and huge operational efficiency on the part of hpi. ♪
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♪ >> as we take a look at the treasury note commodity, the
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curve in the bloomberg function, can you talk to us about what you are seeing here? >> this is the commodities curve where the futures contracts are trading. what you are seeing here is the downward slope which is the market saying -- we expect those treasury futures to be trading lower because yields are rising. when yields rise, treasury bonds trade down. shery: there are about 30,000 functions on the bloomberg and we always enjoy showing you our favorites on bloomberg television, and maybe they will become your favorites also. here is another function you will find useful. this will lead you to our quick takes where you can get important context and fast insight into timely topics. here's a quick take from this week. [gunfire] >> americans own more guns than anyone else on earth. firearms are involved in the deaths of more than 33,000
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people in the u.s. annually. [sirens] every time another mass shooting occurs in the u.s., it sparks government over gun ownership rights. here is the situation. in 2017, pro-gun advocates got a boost when republicans got control of the white house and both chambers of congress. a month later, congressional republicans rolled back a rule from president obama that was aimed at preventing people with serious mental health problems from buying guns. 235-180, the joint resolution has passed. >> that was just the most recent time congress has dealt with gun restrictions. in 2013, congress defeated a bill to expand background checks, just months after a mass shooting took place at sandy hook elementary school in newtown, connecticut where 20 children were killed. in the u.s., 25 children a week are killed by bullet wounds. gun rules are largely determined by states. in 2013, the democratic -- have
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-- democratic led states like california and new york have expanded gun restriction. the majority of states have weakened restrictions and many permit guns now in more places like schools, restaurants, churches, and public buildings. also, all 50 states allow people to carry weapons that are concealed from public view and many states have expanded rights to use guns in self-defense. the original gun law is almost as old as the country itself. the second amendment right was established in the 18th century to allow states to form militias to protect themselves against the federal government. in 2008, the supreme court ruled that the amendment protected the gun rights of individuals, not gun militias. as many as 310 million guns are now thought to be in private hands. here is the argument. the national rifle association -- >> let's fight for freedom. >> and its allies argue that gun regulations only hurt law-abiding gun owners because criminals ignore them. since congress led a band on
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assault weapons expire violent , crime in america has fallen significantly since 2004, and fatal and nonfatal shootings have also declined. meanwhile, gun-control advocates say limiting weapons would drive down gun related crime and they point to australia where strict gun ownership laws were enacted after a historic massacre in 1996. since then, there have been zero mass shootings. and firearm related death rates have plummeted. while politicians try to tighten or loosen gun laws from one administration to the next, u.s. citizens continue to be caught in the middle of this legislative gunfight. ♪ shery: that was just one of the many quick takes you can find on the bloomberg. you can also find them on bloomberg.com, along with all of the latest bloomberg news and analysis 24 hours a day. that is all for "bloomberg best" this week. thank you for watching. i am shery ahn. this is bloomberg. ♪
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♪ david: you now have had to follow bill gates and steve ballmer, two legendary figures. satya: look, the clear message was don't try to be like us. david: did steve say if you do this well, we will be happy? satya: look, if you do well, maybe you will have another job. if not, you won't. david: has the result of having empathy made you a better ceo? satya: my pursuit is their a -- there is a growing sense of empathy for people around me. david: do you get a standing ovation for what you have done? satya: no, i get a lot of people empathy made you a better ceo? asking me, saying, hey, come and fix my computer. [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪

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