tv Bloomberg Markets Americas Bloomberg March 21, 2018 10:00am-11:30am EDT
>> we begin with breaking news. existing home sales crossing the bloomberg any moment now for the month of february, after the january numbers plunged to 5.3 8 million, the lowest in four months. we are now getting february numbers, 5.4 million commodes would be beating the f -- million, which would be beating the estimates. onsting home sales month month has risen 3%, beating estimates of .4% increase for the month of february. also getting back into the green after falling 3.2% in the previous month of january. again, existing home sales 5.5 4 million, so a pretty good figure for the month of
february. vonnie: in the currency and commodities market it seems that equities and treasuries not so much perhaps that meeting. julie hyman is meet -- is with us. what is going on? reporter: it is unusual to see little change in the major averages are ahead of an f1 see meeting, especially one that could be one that is newsmaking. it is expected we will see an increase in interest rates announced today, but it is jay powell's first meeting as chair of the federal reserve. we could see some changes to the dot plot that give us clues about how many interest rates changes the fed expects this year. one stock that is not little changed again is facebook.
take a look at the bloomberg. we have the three-day chart of facebook, now down around 11% in that period of time, it's worst three-day performance in two years. this on continuing headlines about the company's relationship with cambridge analytica, about its privacy practices. ceo mark zuckerberg plans to speak out in the next 24 hours to the public to get some sort of commentary on what has been going on. we will be watching that closely. also one of the drags today, consumer staples. general mills cutting its profit forecast citing higher shipping costs, the worst performer in the s&p 500. we will dig more deeply in our stock of the hour segment. -- smucker'soker getting caught in that as well.
here is the two-year chart of the dollar. we are seeing a little bit of a .5%, evenoday about as we continue to see yields rise, and the two-year in particular. one thing that could be affecting the dollar today is trade talk as we get some headlines from the treasury secretary down in south america. have a lotmmodities of green on the screen as we see that dollar weakness. crude oil prices up 1%, various metals trading higher, and bitcoin as well. thank you for the update. let's continue on our top stories. shery: facebook's problems are going from bad to worse following disclosure that it released personal data of about 50 million users to a analytics firm. they face growing demand from on how the data could
have been exploited to help donald trump when the presidency. -- donald trump win the presidency. selena, let me touch on the latest here about facebook and what is going on here. we are now hearing that facebook could be sending their executive to congress. >> it has been reported that mark zuckerberg may be coming out with a public statement sometime next 24 hours. he has chosen to stay silent on this for quite some time, and that has really left a vacuum for the public and lawmakers to really intensely scrutinize this company. it has even led to increasing suspicion among the lawmakers. right now they are facing a they by the ftc to see if have potentially violated a decree back in 2011 about data privacy. also asking for mark zuckerberg to come out and explain what exactly they are doing to improve the type of control they have to protect user privacy.
also, how was this data shared among cambridge analytica and the trump campaign, and was it potentially even turned over to russia? what facebook representatives have been in washington dc the last few days, and what have you heard from the leadership? >> i think facebook and some of the other companies have kind of escape the spotlight. they had to testify a few months back. they said the general counsel -- they sent to be general counsels, not the ceos. i think the very important yesterday was when senator mark warner, the democratic cochair of the senate intelligence committee, said he does think that committee needs to hear from mark zuckerberg personally to get some answers on this data release. facebook has so far only agreed to send folks to testify before kind of brief six or seven committees in the house and
senate. a lot of republicans are saying, let's get the staff briefings and hear their explanation and then we will decide about taking the dramatic step to haul a ceo before congress. i don't think democrats are going to let this go. i don't think facebook and twitter and such have handled this all that well. i think they thought they could duck a lot of it. i don't think that is going to be the case going forward. shery: it has been a long time since those issues have been pointed, but craig, selena just mentioned that facebook is under scrutiny by the ftc and also attorney generals of new york, massachusetts, and connecticut are getting involved. why? >> was a consent decree in 2011 that restricted the kind of information released that facebook could do. obviously they own a lot of personal data come almost everyone in the country and in the world at the week. there were some rules put in place to try to say, look, you own this incredibly valuable and
private information. you've got to be more careful with it than you were. those attorneys general you said facebook all was not as careful as they agreed to be in this consent decree, and we need to take a look at that. vonnie: if there is one thing we know, it is that ceos watch their stock price. mark zuckerberg cannot be the typical ceo, but he cannot have failed to have noticed what our chart shows, and that is that market cap has declined by $60 billion just in the last two days. it is a small move, but nevertheless it is significant. >> this seems to be sort of the last straw. mark zuckerberg has said that this year his goal is to fix facebook come and that means that operating expenses are going to be significantly increasing. scandallts of this
means they will have to put off their monetization to focus on the score policy issue. -- this core policy issue. facebook is a platform built on trust. that is what social media is. this year we have really seen that fallout. without that public trust, they will be losing users. last year we did see in some regions monthly active users declined for the first time ever , so this is a real problem that can and probably will impact the bottom line. facebookn facebook -- and these tech companies are not only facing regulatory pressures within the united states, but also oversees. >> in a lot of ways the european governments have been more aggressive on them that even the u.s. we all remove the google settlement recently out of europe. i actually think there's a whole chapter there. cambridge analytica is a british company, so the british government is taking very great interest in this.
out, you havets governmental problems, share price problems, decline in users. we all use and like facebook, but it is a little scary to think about how much they have, and if this story is correct, how easily it was turned over to this researcher and cambridge analytica. facebook has some real cleanup work to do in washington next week. you will see where it goes from there. vonnie: what you anticipate happens next? at some point investors are really going to want to be heard. --we are already saying already seeing shareholder lawsuits being filed, saying facebook was not disclosing what they should have been when they should have been disclosing it. i think lawmakers are really going to be asking for substantial evidence about what they are doing to improve these controls. aboutsn't just an issue cambridge analytica and 50 million users that may have been compromised. this is also about dozens, maybe hundreds of other companies may
have also manipulated the same loophole that cambridge analytica did. lawmakers are really going to want to have concrete evidence of what they are doing to solve this problem to make sure it doesn't happen again. shery: great to have you. now let's get to the first word news this morning with kailey leinz. reporter: police in austin, texas say the suspect in the package bombings that terrorized the city is dead. they say a swat team was closing on in a man in his vehicle earlier today when he blew himself up. he suspect is identified as a 24-year-old white male. this month four package bombs have exploded in austin, killing two people. if president trump imposes sweeping new tariffs on chinese products, beijing is ready to
respond. according to "the wall street journal congo they are prepared to respond with tit-for-tat they are journal," prepared to respond with tit-for-tat levees. negotiators are close to a deal on a $1.3 trillion deal that would avoid a government shutdown this weekend. aids from both parties say that key compromises reached overnight. illinois, billionaire jb pritzker has won the democratic primary for governor. facevember, he will republican governor bruce broner. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. vonnie: coming up, the fed is
higgins, manager of the tiaa bond fund. what will you particularly be looking for out of today's news conference? guest: of course we will to see how the dot plots change. we think it is going to be four in 2018. the markets have that price dan about 45%, which is fairly high, so it is certainly likely. if they don't go with four, if they stay with three this year, we would expect the total number of dots to increase for 2019 and 2020. we are about at seven now. in our view it is going to go to nine, which is really where it should be relative to the strength of the economy and whatnot. shery: you can find the bloomberg function on the terminal and see those dots. you believe there will be a fourth. added to that. that.ourth dot added to when we had the testimony of mr.
-- wouldn't that add to a more dovish tone this time around? guest: it will be hard for the fed to ignore the fiscal stimulus, which wasn't in the calculation in december. we have a two-year budget with significant spending, $300 billion deficit spending, and the tax cut effects which likely have that come into effect yet for the consumer. vonnie: what the is for managing your bond portfolio for clients? guest: the changes keep coming. manage,fund that i generally we are short duration and short on the 30 and 30 year key rate duration. highlight -- highly diversified
across categories. we like some off the run sectors. we like abs. it will be a little less correlated with u.s. corporate. shery: why hasn't the 10-year crossed 3%? will attest that later this year? guest: we think we will cross 3% later this year. i think a lot of the benefit of the tax cut and government spending has yet to come through. we think wage growth will show increase. of course, it is supply and demand. there is $1 trillion being issued this year, and foreign buyers may or may not show their appetite that will also impact yields of 10 year. vonnie: i want to ask you about libor. it has been rising for technical reasons,nd many other
but nevertheless impacting borrowing from australia to south africa to emerging markets. does the rise and libor continue , and to what level? guest: it appears to be technical in nature. there is some talk about extending into the longer end of credit curves and impacting markets more so. we think that is unlikely. repatriation of u.s. corporate bonds that were held in europe and are coming back to the states. these should technically be temporary effects, and some of the widening that that has caused in corporate bonds we think is buying opportunity. shery: we are now seeing the 210 spread widening. if we see an accelerated price of -- accelerated rate of hikes, could we see the curve start to inverse order -- invert or get close to inversion? a lot of people say because of
qe that may not even be a predictable tool anymore. guest: that is our view. i would not ignore it if it turned negative in held there, but sure. we still have qe being added this year. there was a lot of global liquidity in the world, and we are still dealing with a global economic synchronized recovery, which should limit the downside to any potential u.s. recession, likely two years off for more. vonnie: we will have you back before then. that is for sure. thanks to joe higgins, of the tiaa fund. shery: steve when plans to sell steve wynn plans to sell his entire state in his resort chain. that the tampa bay makes wy --
that potentially makes wynn resorts vulnerable to take over. board will seek approval on an unprecedented 10 figure award of stock options. , musk plan is accepted could eventually bend up with -- eventually end up with more than $50 billion. the european union has given its bayer's deal with monsanto. that is your business flash update. vonnie: still ahead, facebook the kleins continue to pressure the markets, especially the nasdaq 100. at the a deeper look trade on this bearish chart next.
♪ watching "bloomberg markets." today we are taking a look at the nasdaq 100. here is the intraday chart. we see earlier today, down the fact thatte facebook is down for a third day in a row, shedding more than 10%. an important question is whether or not the overhang of uncertainty facing the social media giant spreads to the trade as a whole or even tech more broadly.
let's look first at the technicals on the thing trade -- on the fang. this is a one-year chart of the merrill lynch index. there is a beautiful uptrend, but this index has had a tendency to consolidate down towards that uptrend. we see right now the index is well above that uptrend, suggesting we could see a move back down to consolidate that. when we connect this to the futures, we see lots of volatility. 13%, nowown 10%, up perhaps setting for an uptrend, so big declines could be ahead. a chart wea look at showed last week, it hasn't even more bearish message now.
this is the chart of the front month contract on the in many futures. here is that volatility we just took a look at. when we took a look at this last year, it was below 7000. the top of that range can be pretty bearish, right now the down ifity of a move they drop below that last low. how do you trade this bearish chart of the nasdaq 100, and some that is a pretty solid proxy for the bank trade? here is the description page. we see a one point move is worth $20. the initial margin on one contract is about $6,400.
if there could be a drop of more than 200 points as those charts did .2, that would be worth .bout $4000 or so vonnie, back to you. vonnie: breaking news on facebook. stock is down 1%, plus users are suing the company claiming the company was negligent in data disclosure. -- data disclosure to cambridge analytica. once again, facebook being sued by users. this is bloomberg. ♪ futuresberg's charting brought to you by cme group. see what having futures can do for you at learnfuturesto day.com.
vonnie: live from bloomberg in new york, i'm vonnie quinn. shery: i'm shery ahn. this is "bloomberg markets." afterw down 2/10 of 1% rebounding yesterday from that tech selloff. the s&p 500 flat at the moment. consumer staples and tech still reading the fines. it did struggle in the last session to stay afloat. right now unchanged. facebook still under pressure, although the nasdaq has turned slightly positive after being in the red in the morning session. investors still struggling for
direction as we get the fomc decision in less than four hours. take a look at treasury yields. we are seeing the 10 year now gaining for a fifth consecutive session. yields continued to rise, the dollar now holding steady and falling 4/10 of 1%. this after rising yesterday. we do have a government shutdown still looming in the background, not to mention this winter storm that could be depressing volumes right there. the pound is also leading gains in the g20. we have some strong u.k. wage inflation data. wti at the moment is rising for a second session about $64 a barrel. we just got data from eia saying crude oil inventories fell 2.62 million barrels. gasoline inventories also fell 1.69 million barrels, and seeing crude gaining for the second consecutive session. vonnie: let's get to the
bloomberg first word news this morning with kailey leinz. kailey: the suspect in the package bombings that terrorized austin, texas has been killed. police say he may have pointed other bombs that have not exploded yet. a swat team was closing in on the suspect when he blew himself up. since march 2, quarter package bombs exploded in austin, killing two people. another exploded in a fedex center near san antonio yesterday. president quoted former law professor alan their through its on fox news, sayingyesterday. mueller should have never been appointed and that there was no evidence of a crime. eu president donald tusk trying to downplay the impact of potential u.s. tariffs on steel and aluminum, telling the block that even if the eu doesn't win an exemption, president trump's terrace will only affect -- tariffs will only affect 1.5% of
transatlantic trade. this month,th time the northeastern u.s. is being hit by severe weather. to latest to storm a drop up eight inches of snow on washington, 15 on new york, and 10 on boston. canceledalready have 3000 flights, and school kids the region are getting an unexpected holiday. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. vonnie: thank you. on capitol hill, a government shutdown back on the agenda for lawmakers. current funding runs out at the end of the day friday. congressional leaders are already promising to work through the weekend if necessary to avert a third shutdown. chiefg us now is washington correspondent kevin cirilli with the latest. is it too late already to avoid a shutdown? can something be passed by the end of day friday? already delayed that vote in the house of
representatives by one day. as a snow storm threatens to shut down washington dc, lawmakers have until the of the week in order to avert that government shutdown. there are a couple of potential sticking points that have made it more difficult for them to process, most notably funding for the security along the u.s.-mexico border wall that president trump has advocated for, but also an issue for new jersey and new york, and underground subway rail system known as gateway, costing more than $900 million. president trump says he does not want to see that throw simply because minority leader chuck has saidn the senate that he is advocating for it. all of this is creating a lot of heightened political drama as we inch closer to another government shutdown. leaders in both parties saying they want to see this through and that they are willing to work round-the-clock even through this weekend and into the recess next week to get the stopgap measure through in order
to keep this government open. shery: we also have more trade drama as the u.s. trade representatives are saying that the u.s. will aggressively proceed -- aggressively pursue more free trade deals. tell us a little bit about what is going on on this front. reporter: the ambassador testifying as we speak with the u.s. house of representatives ways and means committee. about in thing a question one of the other potential country that could receive exemptions from the steel and aluminum tariffs. additionalmember conversations are being had with the likes of folks in the european union and south korea, argentina, and brazil. we are carefully monitoring those developments. what do you imagine will happen today of any consequence in washington, apart from the fomc meeting?
beyond that representatives from facebook are scheduled to be meeting with lawmakers behind closed doors here on capitol hill. it comes as there is increased scrutiny on the social media andt across the political ideological spectrum from republicans and democrats, as well as a new investigation by the ftc. a lot of questions swirling around mark zuckerberg and sheryl sandberg and whether or not they will testify here on capitol hill in the weeks to come. vonnie: we are just getting coverage and that zuckerberg well-adjusted public in the next 24 hours, aimed at regaining trust. it has been confirmed he will do this. we are not sure what for him he will take come about we know that users are suing facebook. they have a large lawsuit against facebook. shery: right. chief washington correspondent kevin cirilli joining us there from capitol hill, and we did
get ceo that mark zuckerberg of faith but will be making an appearance. we know lower-level executives have artie been contacting -- connecting with members of the .anel's coming up, we will bring you an exclusive conversation with jd power's new president and ceo. how he plans to take the company public. that is next. this is bloomberg. ♪ >> bloomberg television's brought to you by invesco, who asks, why invest in average? learn more at invesco.com/highconviction.
zuckerberg will speak in the next 24 hours. we will bring you more details as we get them, and bring you mark zuckerberg's comments. our stock of the hour is looking soggy today after cutting his earnings forecast. shares of cereal maker general mills are falling the most in nine years. julie hyman is back to give us details. of course, everyone likes me to say general mills, maker of lucky charms. [laughter] reporter: and cheerios is what i would say, but appropriately enough. very funny. general mills is cutting its full-year forecast, blaming higher shipping costs. that could be prepping the company -- crimping the company's margins. there has been something of a pricing war among retailers that puts pressure down the line on suppliers like general mills. if you take a look at the company's gross margin, a reported its lowest since the
first quarter of 2015. gross margins have been fairly stable in 2017, but now seeing that drop, general mills says its full-year outlook for earnings per share is going be flat to up to 1%. obviously that is problematic. you have the cost issue on the one hand, the sales issue on the other hand. if you tickle at the bloomberg, we've got a look at year-over-year sales growth. the company has seen a little bit of a rebound in sales under sales, but overall on what is happening in cereal sales, this is a five-year chart in what has happened in cereal volume. yogurt sales are also down somewhat. people are just not buying as much cereal as they used to because it is perceived as not as healthy as it was once upon a time. shery: i still like them.
every morning cereal is for me. general mills, i know they are close to acquisition. reporter: yes. they have a pending acquisition of a company called blue buffalo pet products, and $8 billion acquisition. -- how itk at how it will fit into its business, it is about $10 billion revenue. that is general mills' revenue. this would be a little larger than its yogurt business. the biggest portion of retail foods is 65%. buffalo integrated and you general mills would be its own segment separate from those listed here. what is interesting is, could this sales and earnings report affect that? analysts at jb market -- at jpmorgan says that general mills will likely be issuing secondary stocks to help its finance for blue buffalo, which could result
in greater dilution from the transaction. that is a risk, that the effects from this earnings report to how it is financing the transaction. shery: thank you so much for that. jd power has a new ceo. the global consumer data and analytics company has announced their new president and ceo effective immediately. the move comes after his longtime chief executive announced his retirement last year. with us now for an exclusive conversation is jd powers dave dave haddafer. >> i expect we will do more work in financial and banking.
-- dave habiger. profitableanslate growth into the digital space? entrantsthink for new it is a tough space to enter. jd power's 50 years old now, so it is not only a trusted brand and measurement company with consumers, but it is also highly trusted with its and to and business customers, and that is where currently the business is focused with our business enterprise customers. i think you will find that it is a lot easier when you have the systems process to scale that exists at jd power. i am lucky i am coming into something that was built already and is highly profitable and successful and growing. fasteris to help grow
and make us a larger, bigger, better company. your job is conducting surveys of customer satisfaction, relying on consumer reporting. you even have in-house vehicle tests. basically you are trying to get into the inside, how consumers think, and understand them. when you look at news of cambridge analytica and how they are trying to understand the consumers, is that the new direction and trend of , tryingnding consumers to mine this data market out there? guest: i think there is a contract that needs to be in place. in our case, our job is to be the voice of the consumer. we are working on behalf of the consumer. a certainly are involved in lot of complicated data sets. it is a data and analytics company as much of a market research company. there is a consulting business that goes into firms and helps on the production line.
of the various businesses, i think the most important thing we have to actually continue with what the company has done for the years -- for 50 years, and that is trusted research, the most of the consumer, measuring and analytics that are produced by the end-user, in this case the manufacturers. a lot of our data work is understanding their business, producing data, and distilling it and giving them real-time feet so that they can use to better improve their products and customer experience. vonnie: let's face it, the plan will be to take the company public at some point. what kind of timeline are you looking at? guest: the company is in extremely good footing, so it is a great management team. we got folks running businesses that have been leading product at apple and plenty of other companies that have done quite
well. i think i am lucky to enter into a situation where i got a great of partnersrs -- and employees, and the folks i've met so far are extremely impressive. we will likely, it we do an ipo, it will likely be in the next year and a half. we will certainly grow in either event, and i expect we will be very inquisitive. we will be buying companies that we can take our brand and process, and ethics all the thing that jd power stands for, and apply that to other data companies and marketing companies. growth will be organic, primarily through acquisition. shery: any concerns about tech firms being under some of scrutiny now? guest: no. i've run a lot of tech businesses, and candidly this one is well-positioned. the entire business is built around trust of both consumer
and our customers. it doesn't work if both of those don't have a strong amount of trust. we have no consumer business, so that will change. i think a large portion of the population has heard of jd power ramy:. they think neutral -- power. they think neutral to positive about it. but we don't sell a product to the consumer. we recently bought a pricing model and engine for vehicles. you will see us by more consumer products and apply that brand, and more importantly, with the business and company stands for should be applied to those as well. shery: thank you so much for your time. that was dave habiger, ceo and president of jd power. ramy: time now for the latest bloomberg --vonnie: time now for the latest bloomberg business flash. at bmw may stagnate
for the first time in a decade this year. pretax profits will be at least in line with 2017. they are ramping up already high investments in new models and electric vehicles. -- world's largest maker of about one third of u.s. farm products are exported. that is your latest bloomberg business flash update. shery: we are now seeing facebook shares turned positive at the moment after losing $60 billion since the revelations of its involvement with cambridge analytica. we are now seeing facebook up 3/10 of 1%. news earlier had that ceo mark zuckerberg set to speak in the next 24 hours. we will bring you more details
♪ aery: the tragic death of woman hit by an uber self driving car in arizona has but autonomous car technology under the spotlight, did any u.s. regulators and lawmakers slow down the roster to bring autonomous vehicles to the nation's roadways. joining us now to discuss from detroit is bloomberg's keith norton. it is very difficult to discuss this because there is a fatality involved, and obviously it is a tragedy. nevertheless, how does it change the dialogue going forward when it goes to autonomous driving, testing them on public roadways? reporter: i think there is this perception that the technology has been worked out entirely for autonomous vehicles and they are ready to go. i think what this accident highlights is that is not necessarily the case. in this particular accident, one of the issues could have been
whether or not all these sensors on a self driving car actually recognized that there was a pedestrian in the median. if it had, then the car would have break, but it did not brake. neither the driver nor the autonomous system braked. say,: what happens when, it is not sunny california or a place where the weather is nice? say new york right now, when we are seeing this snowstorm? how do these challenges company matters? reporter: they complicate them greatly because snow, ice, even rain can obscure the sensors. lidar, thethe cameras that autonomous car is depend on to see the world. that is why you see most of this testing going on a warm places like arizona and texas and california. 70% of the country is in the a verylt, so that is
big challenge that self driving cars still have in front of them. shery: is this something that --vonnie: is this something that could have happened to any of the self driving car makers? reporter: uber has had some difficulties in san francisco before. there is another incident that was not a fatality and tempe. that is something investigators and regulators will be looking at, whether cooper was been eating like others testing autonomous car's or pushing the envelope. shery: having said all of this, how big of an issue is it that even with a human driver inside ae uber car -- that even human driver inside the uber car could have prevented this? is it the fault of technology or just circumstances? reporter: we don't know yet that the human could have prevented this. that is what is going to be looked at. the car itself was going a little bit above the speed limit
of 35 miles an hour, which is curious since these cars are coded to follow the laws precisely. the head should have shown on the industry and who was in the median -- the pedestrian who was in the median. either the driver or the self-driving system should have slowed down or braked. shery: thank you. still ahead, the fed decides. tune into our special programming for the fomc decision today at 1 p.m. eastern. you can catch all of our interviews on the bloomberg with the function tv . coming up at the top of the hour, the eu justice commissioner will join. this is bloomberg. ♪ .
welcome to bloomberg markets. ♪ here are the top stories we're covering. facebook under fire, i will speak to the european justice commissioner in washington, d.c. and amending the social network give answers on its data practices. we are just three hours away from the first rate decision of tenure, a rate hike expected but any change to the guidance? we will ask matthew hornbach of morgan stanley. asse times at deutsche bank the cfo says the headwinds facing the lender are not going away with chairs tumbling on the comments. all of that and a lot more. 90 minutes into the u.s. trading session and abigail doolittle watching individual stocks and the broader market. >> broader market or next with
small movements for the mastec, the dow lower in the s&p 500 and the nasdaq slightly higher with uncertainty ahead of the fed decision at 2:00 where it is expected they will raise rates by one quarter of 1% and investors looking for color from jay powell. and facebook. facebook, in the last 15 minutes, facebook is going higher, its first update in in threes -- up day days despite earlier shares down . hugely down over the last few days and the headline that one facebook user is suing the company over the data crisis. helping investors is the fact that mark zuckerberg is thought to be speaking about the crisis within the next 24 hours. perhaps investors taking comfort in the fact that the company and ceo will address this. damage has been done to the
chart and the market gap. g #btv 969, at the lowe's facebook had lost more than $60 billion in market cap. the actual stock chart may suggest more declines coming up, considering support has been taken out, suggesting more lows could be ahead for facebook. interesting to see what mark zuckerberg says when he speaks. notable movers, let's look at general mills, among other stocks, they are plunging after they cut the full year of profit forecast among rising cost. campbell soup is down in sympathy. the airlines, american airlines and southwest are lower. the storms in the northeast grounding more than 4000 flights according to sources. a bright spot is oil and energy movers, oil is up about 2% after a bullish department of energy
report, giving a tailwind of big energy. mark: 90 minutes away from the end of the wednesday session. investors are waiting the outcome of the fomc meeting. stocks down for the second day in three. rising at their fastest pace since the end of 2016. signaling the year-long squeeze on living standards coming to an end in the u.k. basic wage growth accelerating to 2.6% in the three months through january at the employment rate return to a record high with jobless rates falling to 4.2% to match the lowest level since 1975. good news for households whose spending power has been eroded since brexit, the referendum with sterling declining and wages have risen. the inflation rate dropping to 2.6%, a years at
of declining real earnings may be coming to an end. that is a big piece of news in the u.k. sterling rising to the highest since mid-february, gaining for the third day in four on the back of the wages report which fixed to -- points to a comment saying a bank of england will not do anything this week but is likely to raise interest rates in may. analysts estimate sterling will in the year at 142 against the dollar from 140.66 today. on february 1, sterling closed at 142.64. since thee highest day of the brexit referendum on june 23, 2016. deutsche bank shares getting
hammered today, down as much as 7%, the biggest decline in a year and the shares of the lowest level since november of 2016. the euro gained against the dollar and higher funding costs will reduce revenue in the securities unit by about 450 million euros this quarter, the cfo commenting at an investor conference in london and his comments contrast with the tone of the annual report which was only published last week in which the bank said volatile markets are here to stay and will help a race two years of declines. the bank executives have been pleading with investors for patients, john cryan, the chief executive saying in jaybird that it is hard work -- january that it is hard work and revenue growth will grow. deutsche bank shares down by 5.3% today. vonnie: this guessing that in a few moments.
the european commission is asking data protection authorities to investigate facebook's engagement with data profiling firm cambridge analytica. the new justice committed or met with representatives of facebook in washington and she joins us from our washington bureau. commissioner, thank you for joining us. who did you meet with and what did they tell you? >> i have not met anyone from facebook but i will meet today the presentation of the committee of trade. we need to understand how the united states enforcer will react to this new event. we already have consolidated our bylaws on regulators and we are mobilized to take action. we must better understand what happened. vonnie: what will you be asking facebook representatives? do you know who they will be? >> i do not know if it is
confirmed because of the weather conditions that are difficult. them, i will have , especially onns how this could've happened. -- whethereglected they were careful enough and following the rules which should have made sure the trust of the people. these are essential questions. andie: you are curtailed some extent in what kind of sanctions you can impose were you to find facebook negligent. you said that you would be imposing really drastic sanctions. how would you do that? >> at this moment come in europe, the member states are responsible for imposing sanctions. impose ad kingdom can sanction up to half a million pounds.
these sanctions differ from state to state. stop in may of this year because we are unifying the regulationsotection will enable the member states to impose higher sanctions, which cannot be applied on this current case because it is not possible. vonnie: that starts may 25. you are asking the working group, the 29 working party to investigate this. have you contacted every single nation in the eu? are all on board? >> all member states are represented in party 29. they met yesterday. they confirmed that they are unified in the launching the investigation in case they find privacy rules and the
rights of people in the state have been or might have been breached. this is an important moment if theyi think that join the powers, they can consolidate european actions. vonnie: could not this set a precedent? what are you hoping for as an outcome if facebook were found guilty or negligent in some way? >> i am not happy about this case. this is not only about data protection breaches, this is about the threat of democracy and individual freedoms of people. this will serve as a precedent for the future. in europe, we are ready for these cases. preventive measures.
our regulation is very tough and we require strict rules to be obeyed in the eu, especially as far as consent of the people. we want the providers to have the consent of people. the people who must understand the purpose, white the data is collected, and what the provider will do with the data? the people must know if providers are monetizing the data and they must know what is behind that. vonnie: will you be specifically asking facebook for mark zuckerberg to come to europe and speak before the parliament or national parliament? >> that will likely come, the request at the hearing. tomorrow, the prime minister and the president of all the member states will gather in brussels
and upon request of president macron, this will be on the agenda. we can expect a consolidated plea from member states. very likely national parliaments will require to get the explanation. vonnie: you met in washington, d.c. with secretary wilbur ross and attorney general jeff sessions. can you give us insight into what you discuss with those government officials? >> with jeff sessions, we discussed the possibility of future cooperation in criminal justice. concerning the digital sphere. we want to agree on corporation -- cooperation in getting evidence proving some criminal activities. we have the same enemies and goals. it is appropriate we use the same ways to solve problems. with wilbur ross, we discussed
the system which is called privacy shield that enables private data of europeans to the united states. this facebook scandal is highly topical. the debate with wilbur ross, facebook is one of the subscribers, one of the companies covered by privacy shield and we have to analyze facebook in this case who breached the rules which we require under this privacy shield. meeting today with facebook representatives and we look forward to having you back. you are the european commissioner for justice consumers and gender equality. mark: excellent interview. coming up, fed chairman jerome powell take center stage, morgan stanley's global head of interest rate strategy wage is next. this is bloomberg. ♪
♪ vonnie: live from london -- mark: live from london i am mark anthony conditt. vonnie: -- i am mark barton. the first fed decision and a key debate is whether monetary policy might become more hawkish under his tenure. joining us is matthew hornbach of morgan stanley. market seell the something hawkish because that is what the market wants to see? >> i think the fed is less concerned about what the market wants to see. the fed will deliver a roughly balanced message around the
,conomy but recognize that given what has happened since the december fomc meeting, with respect to the labor market and inflation, and with respect to government policy. i am talking about the tax reform and the budget passed in january. its will look at that in totality and deliver a message that is slightly more hawkish than the message they delivered in december. we expect the dots to go higher, a pronounced drift higher in 2018 and 2019 and the message will be clear. the fed needs to respond and they will do so but at a gradual pace. they will continue to describe even four rate hikes as a gradual pace removing policy accommodation. vonnie: what would cause ripples in the market today? what would be news conference need to suggest or the statements? >> the biggest risk to today is
in how the dot plot is constructed with so few dots. we will lose former fed chair janet yellen's dot, which will be busy number of dots in 2018 through 2020 by one. only 14 participants will be submitting dots for the longer run. the main risk for my view is that you have a shift higher in that is run median dot, not coupled with a shift higher in the median for earlier years in the projection. it could send a message that, yes, the fed will remove accommodations at a slightly faster pace but the neutral level of the funds rate has gone higher. the fed may not be removing as much as a combination as you think. that is the risk, not our base case and something i expect to occur today.
mark: how should fixed income investors be positioned ahead of the fed? >> mark, i think the way people are supposed to be position is underweight and short duration to make sure the instruments and overweight those with longer durations. it has been effectively what i am telling people to do, express a view that the u.s. interest rate term structure, the yield curve, will continue to flatten. we continue to expect the yield curve will achieve complete flatness at some point later this year. --t is a review for same some time and we continue to hold that you and suggest investors position in that way. mark: how should we be positioned, i am in london, a u.k. question, given the strong wage data today, the strongest since 2016, which when you look at market expectations, suggest the boe will hike rates in may. what does that mean for our positioning ahead of the may meeting?
matthew: in a similar way to the way in which we suggest flatten her's in the united states. we are also suggesting the term structure of rates in the u.k. will continue to flatten. it slightly, more underweight in the intermediate sector of the yield curve in the u.k. versus the long end. in the united states, we recommend that investors concentrate the underweight a little bit shorter down the yield curve. in the two-year maturity section . a sector of the yield curve. in the u.k., concerned about the five year maturity point to be underweight. mark: what are you thinking? an interesting week on the political front with the transition deal, provision agreed. we had the inflation data which came in lower than expected. the strong wage data. how many rate hikes are be looking at? a lot of things can happen on both fronts, economically and politically, all things equal, how many rate hikes are be
looking at in the next year or year-and-a-half? matthew: a review has been more hawkish than the consistent -- consent in the market. we think there will be a couple more rate hikes out of the bank of england. we think their focus is primarily on the labor market. the strength and the labor market data today as he suggested contrasted with the weakness in the inflation data temporarily perhaps, but none the less we think the bank of england will be more focused on the tightness of the labor market and high rates of inflation in the united kingdom. we believe that the bank of england will continue to remove policy accommodation, perhaps at a slightly pace than the market is pricing in. vonnie: out of left field but related, your thoughts on rising libor and how it affects central banks and borrowers around the world, continuing to rise, where does it stop? matthew: our view on the widening in libor versus rates more tied to fed policy, the ois
market, has been predicated on an increase, a large increase on unexpected increases in treasury bills supply, coupled with a seasonal uptick in commercial paper supply. mostly aas this is supply story but in markets never quite that easy. other longer-term stories out there that people sometimes can conflate with near-term price action. we think it is a supply story mostly. on a net basis, it reverts to slightly negative territory or even flat. we expect that to occur in april. you will see a reversion and some widening's spreads in the front end of the yield curve. it brings up an interesting point. how much of the fed discussion yesterday and today will have been taken up by this issue of widening higher libor rates? i sense that the fed will
address this internally. when you look at in the context of a holistic financial conditions picture, you will find that broadly speaking, financial conditions are more or less unchanged from where they were at the december fomc meeting. at the big picture, you see one more financial -- the outlook for financial conditions and the economy is brighter than in december and the fed will address that with a slightly faster pace of policy normalization. vonnie: matthew hornbach at morgan stanley, thank you. tune in today for our special report, the fed decides at 1:00 p.m. new york time and 5:00 p.m. london time on bloomberg tv and radio. this is bloomberg. ♪
markets. i am vonnie quinn in new york. mark: i am mark barton. the u.k. international trade secretary liam is having a bullish tone on brexit. -- he says london is in a unique position, especially when it comes to banking. >> i have no doubt that london will maintain this position. of global dominance in financial services. because we have a professional -- great professional services capabilities not replicated anywhere else. we have the regulatory and legal frameworks, and the reputation of the bank of england. vonnie: u.k. international -- mark: u.k. international trade secretary liam fox. breaking news from trade on the u.s. side. vonnie: the trade representative speaking and his most -- the tariffs may start friday for some wanting exceptions and the
hope is to solve tariff exemptions by the end of april. they start friday, even for those looking for exceptions. earlier come he said that we have a serious problem of losing american intellectual property on china ip. that decision will be made in the near future. that is all from robert lighthizer. special coverage of the fomc rate decision, the first under jerome powell starting at 1:00 p.m. eastern and 5:00 p.m. london time. up next, etf iq dedicated to etf. this is bloomberg. ♪