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tv   Bloomberg Daybreak Americas  Bloomberg  March 28, 2018 7:00am-9:00am EDT

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drop and investors left to wonder what is coming next. the president said he will be happy with trade talks. empty, debtg on downgraded and a mysterious fatal crash in california that raises new safety concerns. .david with julia julia: welcome to the wall market west. techw the epicenter of the stocks, 3% decline for the nasdaq. a whole host of things to talk through. facebook, aa, broader crackdown on specific
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sensitive tech investment on chinese investment in the united states. a whole host of factors. that is the performance, off the low 1000 and a half percent. futures, relatively unchanged for the s&p 500. the color it is is green. percent.wn .22 i can talk about the broader action in terms of the equity markets but look at the rate on the tenure. 2.76, breaking below the 50 day moving average. at 8:30 this morning new york times, we are going to get the third reading of u.s. gdp for the third quarter and wholesale data for the month of february. we are getting february's home sales numbers and we will see a list of those products we will
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include in the president's tariffs. bloomberg'sor the first take. trader.ined by a former and bloomberg's columnist. let me show you the chart. this is something david mentioned as well. 7514, we saw the bank stocks having their biggest loss ever. 00 you have a situation where the president wantes -- >> you have a situation where the president wants to limit investment in the united states from the second-largest economy in the world. we saw the industrial sector get hit and now we're seeing the tech sector get hit.
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china has been limiting investment abroad in recent years in an attempt to keep reserves within the currency. regardless of what trump is doing, they have been doing it for us for years. this is most likely an overreaction but it is centered on sectors we mentioned and the market trading. bank -- and a and in the word tech specific stories as well, tesla, there are broader stories going on. >> what is happening is this trade war confusion about valuation concerns. a lot of these tech stocks are fully valued, they have been a big driver for the market. all of this is com pouding on itself.
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tesla says it is going to roll back its self driving technology and facebook has is woes as we ll. >> it explains why tech stocks go down, but i do not understand why they are down at the end of the day. the chart shows 5 days, and at 2:00. is that is where it ends every day. .> is momentum in sentiment market order is as close. it is following up based on how the trade goes during the day. downtrend,d -- in a the market order is skewed to sell.
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and depending on what margins affectsre dealing with the volume. up, theolatility goes volume goes up. as this trend continues, we will see smart money selling at the close. tom: this story closely related to our first. david: there is more expected of bena trade, there will curtailment of investment as a julie reported. wilbur ross said it is not my practice to get ahead of the president and what he announces. there will be limitations on foreign investment. and they may invoke a very insecure statute which is called the emergency economic powers act of 1977 to stop china from
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investing in the u.s. thehis gives the president ability to seize assets. there is not really a lot of chinese investment in the sensitive sectors such as point anyway.this us -- a crackdown on city and we saw qualcomm trying to sell itself to a chinese equity firm and that was stopped by trump. chinese m and a has slowed to a trickle in the u.s. as far as the actual investment, i'm not sure how much of a deterrent it is going to be. it is a good example of how chinese takeovers of technology companies will not happen. >> facebook has an announcement.
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a series of headlines breaking across bloomberg. they are proposing updates to terms of service and data. they say users will be able to review what has been shared and delete. they'll have new controls that make it easier to find privacy. this is not a big story to me. we heard yesterday that mark zuckerberg will testify before congress. at the time i said, it is not enough to say you are sorry. you have to give them a pound of flesh and say we're changing what we are doing. francine: the response was very much lacking and there was not having knowledge meant of what the company and management had federal to address these shortfalls in facebook operating. >> clearly they are trying. i will have to look more at the details. it looks like a lot of work on the part of the consumer and not much work on the part of facebook. why do i need to log on and change these privacy settings --
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>> i went on facebook this week and deleted a lot of sharing tools --it was not easy. >> this is so critical. i was looking through this and i said, there's nothing changes. it is about clarity and allowing people to do these things without losing the will to live in the process. >> deal saying, when you have two children, you never know who did it, but if you are an only child, and mark zuckerberg is, you know who did it. the question is will it make a in-profound change facebook users? >> it will limit their targeting ad campaigns. without that data, they will not inw what to send you or i
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terms of the things that might be of interest to us. it is a bad business policy. julia: the point i always make is the two big advertising draws are google and facebook. point.back on that let's talk about tesla. shocking images coming from investigations into a crash that happened at the end of march. the issues for tesla keep compounding. >> they had another crash in 2015 that was based on this autopilot system. they made changes and broke off with one of their suppliers. the question of investors now is you need to roll out more updates? are there other changes that needs to make.
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>> i understand they had to close down five lanes of the highway for several hours because they were not sure of the safety of recovering the wreckage because of the lithium battery. >> it is supposed to have a nice controlled burn to people have the opportunity to exit a vehicle but you have seen examples of laptops exploding when people are walking. it is a scare. moody's downgrade of their credit rating. >> you cannot get them anyway. that is why moody downgraded. thence, former trader and bloomberg news correspondent,
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thank you so much. up, more on those tumbling stock. we will dig into the plunge next with jpmorgan asset management global strategist. let's look at the headlines from facebook. premarket, facebook higher by 1 percent. facebook updating tools it to allow users to delete data. updating the terms of policy in their data service to allow users to review what has been shared. they include the tool to annload your data na delete -- d delete it. this is bloomberg. ♪
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julia: -- >> this is bloomberg daybreak. has said it has approved an approach for shire. will provide it with treatments that are approaching the market. shire moved in market value. theanghai court has accused former insurance chairman wu of constructing a billion-dollar fraud. which offered an unprecedented glimpse into anbang's innerworkings, alleged
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wrongdoing going back to 2007. wu said he did not understand the law and did not know his behavior amounted to crime. softbank has announced a plan to create the world's largest solar project in saudi arabia. ÷ will contribute an initial $1 billion. the ceo says a total of 200 gigawatts of power will be available by 2030. that is your bloomberg business flash. ♪ julia: thank you for that. traders digesting yesterday's late plunge in the market. bank stocks suffering the worst day in 2 years -- 3 years. sell off.a late day are investors hitting the panic button and will be an excuse to move away from the investments we have seen. we have our correspondence --
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our experts here with us. excuse orloff an reason? >> i think there is more noise of an signal. thinking from the protective of a best perspective and criminal passive investor, you have to think about where we are --thinking from the perspective area investment, we are still looking at above trend growth for 2018. move but it ishe still supported. you look at the volatility, you see it is more about how big you are leaning into risk and not the direction. julia: as far as sectors are
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concerned, this is where you want to look if you want to see the earnings growth further out? you see a pairing of risk. the financials agreed to extend for the biggest losses. >> bank of america has said that the big mega-caps is one of the biggest losses out there. we do not know if value is going to take over and other consumer stocks or sectors are going to shine. the mega-caps have been the market darling since the election last year. where will the money go if it is not about? >> look at this chart which shows value versus growth. --is iteeing a change
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possible that value will become more valuable more generally in the cycle? >> we have been saying that for a while. -- perfectly sensible. you can make that argument. we see a lot of volatility, especially in the idiosyncrasies of the sector level. it makes it difficult to make big value our growth tilts in the portfolio. 2017 was the story that you lean into risk broadly, 2018 is the one that is more selective. are tech heavy but markets like europe, markets
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like japan, which were darlings last year, that is no longer the case. when you talk about growth decelerating at the global level, it is not in the u.s. we think em is relatively supported by a weakening u.s. dollar and other factors. em, which is your call on global growth, you have your u.s. market where you like to take risks, and your confidence is coming down in places like europe where the currency is working against it. >> why hasn't the european trading worked? yett has not really worked and looking at the past data points out of europe, we have not seen european growth and the
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european markets have been underperforming the u.s. market for quite some time. we are waiting to see it pick up for economic growth. if it picks up in a few days, that will convince us. julia: we have seen some greater degree of potential growth outside of europe and we're seeing it exploding down from stronger levels and the pmi last week was a real turning point as far as sentiment is concerned. when i am in the united states, people tell me how bearish it is in europe. and when i am in europe, they say they think the u.s. is a basket case. --europe is the macro out performer.
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julia: talking about this corrective phase. you wrote a great article talking about if we in the correction at this point, it will be shallow and -- end the correction at this point, it will be shallow and short. >> investments, we were not too concerned yesterday but there is some element of panic. we look at the last five corrections during this bull market and it took the stock 200 days to recover. the selloff we are seeing now may not be over. what will drive the start market -- stock market up. the earnings season. but it is two weeks away. until then, we will be trading sideways and the volatility may be picking up. julia: we'll come back to it.
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david: thank you for being with us. jpmorgan is going to be staying with us. coming up, facebook has updated its terms of service and data policy. this is a look or the terms of service are trading. this is bloomberg. ♪
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david: facebook shares trading higher in the premarket this morning. the company has announced a told that allows you to delete data as well. alex, explain to us what specifically facebook is going to do? --access your data, see what kind of data facebook has o n you --this is turning the tables a little bit. facebook has a certain openess with what they can see about you
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and now you can know what that is. --they will not tell you who they shared it with but you have the option of saying which part of your data is shared with advertisers. one can make the argument that they are shutting the door without -- julia: what about legacy issues? we hear that mark zuckerberg will testify before congress. i wonder if saying something -- not think something about it at him stayt will help out of hot water. >> it took about a week for mark zuckerberg or sheryl sandberg to come out with a statement. from h mutations perspective, they hoped it would all or--
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from a communications perspective, they hoped it would all boil over. --what we are seeing is tor data was actively used inform decisions they were data tonstead of using target users. julia: coming up, as political tensions heat up around the world, consumer expectations for the stock market are cooling down. more on geopolitics and market volatility is weighing on sentiment. this is bloomberg. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. julia: welcome back to bloomberg daybreak: americas you let me show you how the markets have performed over in europe. the stoxx europe 600 lower by .3%, so an improvement in the
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last 30 minutes, bouncing obsession lows. obviously taking a cue in terms of the rent we can see from the united dates session we saw yesterday. we talked through text, the epicenter of some of the weakness we have seen but a whole load of issues going on, tech stories, we have month, quarter, and broader volatility. right now -- and i will caveat myself -- the s&p is higher by .3%. now.0-year yield higher 2.77. we have broken below the 50-day moving average so not just what's going on in equities but also shifts that we see in the rates market, too. dollar-yen trading at the 1.06 level. that meeting between she's in pain, the president of china and kim jong-un, leader of north korea.
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we will talk about that in a few moments time. know why he is laughing. smart money versus dumb money. let's get back to that. and that see what is happening outside the business world. kailey leinz has first word news. kailey: the u.s. is said to be considering a crackdown on chinese investments and technologies that america views since it is by invoking a law for national emergencies. officials are working to identify areas in which chinese companies would be banned from investing such as semiconductors and 5g communication. it would be the latest up in doldrums land to punish china for what he sees as violation of intellectual property rights. saysaly, silvio berlusconi to be opening up his party to a possible coalition with the center-right alliance. according to a senior lawmaker from the party, burlesque only wants the five-star leader to
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stop demanding the premiership. investors have been betting that establishment parties could stop the agendas of a more populist politician. china has announced an official will make a trip to south korea starting tomorrow. this comes hours after kim jong-un that the chinese president on a surprise visit to china. willing to give up his nuclear weapons and hold a summit with the u.s.. it was his first visit outside of his country since taking power in 2011. 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. julia: thank you. this is quite fascinating. the timing, as they say, is everything. david: either this is masterful multipart its policy, or kim jong-un woke up the belle of the ball finding himself being
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courted by she jinping and president trump. hada: at a time when we trade ball more is being thrown, president xi is pretty moderate in terms of his response. and then into the breach goes kim jong-un, let's utilize the moment. david: not to be ignored, president trump tweets about this. received the message that his meeting with kim jong-un went very well and that kim looks forward to his meeting with me. in the meantime, maximum sanctions and pressure must be kept at all cost. to his credit, this was the president's strategy. julia: we have talked before about whether this was a necessity given the sanctions on north korea, or whether he considers himself a nuclear country right now and now is the perfect time to talk. as far as that photo opportunity is concerned, i'm sure the
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president would have wanted to be involved. david: probably not as much red behind the president. joining us now is vincent cigna rolla. ben mandel of jpmorgan asset management is also still with us. we have talked about the difficulty of market is in geopolitical risk. are they being forced to do it given how much is floating around? >> are you arguing markets are doing a better job? i think there is more jew political risk. it is not just north korea. trade tensions in european politics, you name it. we have had a lot to see her. what's important to note is all of that is pretty consistent with the volatility moving higher in the late phase of a cycle. so what we see is cyclical volatility pushing up. weekend look back to the late
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90's where they pushed up and stayed high for many years at a time before the bear market that was to follow. i don't think this is giving us a lot of signals about the ending near which people are inclined to think. julia: you made an interesting note, that this is the worst then it gets regarding trade concern. that is a bold call given how measure the chinese have been. think we may have reached a high water mark in terms of trade tensions. two big topics are stealing china. both of those hot buttons are now in the rearing era. the economic consequences of those are limited. in terms of steel, they carved out everyone who minors in terms of volume except japan. then we will exclude everyone except japan. you mentioned, had a measured response. the final thing is to say, in the meantime, all of these headlines made noise, they are
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crowding out all the positive news on true that we have had on that deck, bilateral trade talks, and that i think are offsetting the bad news. david: i wonder if the market participants may be more comfortable because it is turning into let's make a deal. turning nuclear weapons into what is your negotiating position? wilbur ross punctuated the point yesterday, the markets need to understand tariffs are a way to make good trade deals. essentially, the art of the deal of trump's story. he is playing with a big stick to get countries to capitulate to where he wants to be at the end which is better trade deals with the u.s., which plays well with his constituents. a deal with south korea underscores that point neatly. i feel we have to say for now as the chinese are concerned, consolidation of power from xi jinping. i will be your leader for the next however many years.
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trumpckling the president on a more forceful basis on this stage takes some managing, i think. i wanted to get your views on the chart that was pointed out to me yesterday, the consumer confidence data, which was interesting. that, looking at investor perceptions, -- sorry, consumer views of where stocks will be in one year's time. you can see it has fallen off a cliff. the blue line, meanwhile, is financial conditions. at the point where we see consumers going, i have a concern here about stocks, perceptions, where the stock market is going to be, then i can tie it in some way to the real economy. how concerned are we buy that? question we have to ask ourselves is is that a positive or negative signal for future equity returns? if you took the headline series from the confidence board and
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plotted that against 12 months forward equity returns, you would see in normal times not much of a relationship. in extremes, there is an inverse relationship. when people get overly confident, stocks tend to underperform the future. that is really overly confident. when they are depressed, stocks tend to do well. it is an inverse signal not a positive. julia: overexcited by a pullback from an extreme high. david: that the same time if you look at the u.s. treasury market, remarkable, dipped below the 2.08 level. the blue line is the 50-day moving average, just over 2.8, now dipped below that. is this sending a risk off signal to the markets? i don't think so. if you see how fast rates have come up since december, if you took all the noise out of the markets, you would say this is a
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normal trading pullback, some profit taking off from where we approached the 3% high. we have all of this backdrop which makes it look like a haven flow but i think it is just overdramatic. ben: there have been some growing pains in terms of real yields coming out. a headwind to equities, catalyst for volatility. we have seen this before. go up, seen real yields volatility increase. in 2013, 2014, we tested that real yields a level. there is an argument to be made, in this instance, we put the love that. that, thoseabove growing pains may subside. julia: you have talked about in times when we are looking at higher volatility, look or the relative value trade. that, those growing pains may subside. stay invested but look for the opportunities. start with emerging markets here and the relative resilience we have seen. ben: how do you hedge against
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all of this market volatility we are seeing? one way is to take slightly .maller positions not leaning into risk quite as much. another aspect is you are not getting as much protection in a multi-asset portfolio from holding duration. stocks and bonds are not as negatively correlated in this market. if you want to take an equity position, you can offset that risk by holding a big fixed income position. those have come in a little bit. in equities, we are leaning into e.m. and u.s., away from other markets. want to go way back to when we talk about the fed. 40 minutes into the show and we have not even mentioned the fed. do they look at the geopolitical risk of equity markets generally? doesn't make it less or more likely that they will do the three or four hikes this year? vince: what you need to keep in mind is this is a fed -- and all
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whyral banks -- think about a central banker would be worried with no inflation. they are worried that the economies may fall back in the future and don't have an opportunity to lower rates to get there. they are in a rush to get to a point where there is a neutral rate equal to where the economy will grow. if and when the economy pulls back in the future, they will have a tool to adjust for it. i don't think this will slow them down as much as people think. ben: there is an alignment in terms of political economy on the fomc. you have the show me inflation does who are seeing some inflation and our allotting with the we are behind the curve hawks. that will set of three or four hikes this year and it will take a big shock to throw them off of that. julia: we like some optimism in the morning. mandel, vince cignarella, great to have both
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of you with us. coming up, the silence that speaks volumes. the lack of public comments by deutsche bank on john cryan's future. you can turn on the radio and listen to our colleagues tom keene and jonathan ferro. lisa abramowicz joins them at 10:00. beomberg surveillance can heard across the united states on sirius xm radio. live from new york, this is bloomberg. ♪
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kailey: this is bloomberg daybreak. up in the next hour, jim
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farley, ford president of global markets, live, new york auto show. and now to your bloomberg business flash. facebook has unveiled new tools to make it easier for users to see and access the data it holds on them. social networks as it has redesigned the settings menu on mobile devices so all different sections on the in a single place. the move comes amid the backlash over user privacy following the cambridge analytica controversy. cicada has confirmed it is considering an approach for shire that would boost its vision for drugs in cancer and never system ailments. the drugmakers as an acquisition would increase its capabilities in key areas. shire gained 26% in london after the announcement, giving it a market value of nearly 35 billion pounds. a shanghai court has accused a
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former insurance group of masterminding a $10.4 billion fraud using unauthorized sales of investment type policies to prop up the company's capital. the charges offered an unprecedented look into an bangs innerworkings going back to 2007. wu disputed the charges and said that he did not know that his actions amounted to crimes. david: we are turning now to wall street beat. covering three things that wall street is buzzing about this morning. first, a renaissance man. robert mercer steps out of the spotlight it into the role of police officer. from deutschece bank speaks to the lender's internal drama. finally, chief executive excess. british bank ceos are way overpaid compared to the european peers. julia: three very diverse stories.
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kelly, us now is jason executive editor for global television. let's start with robert mercer. jason: this is the must-read story of the week. julia: some incredible work. a unique alternative career for one of the most influential men in finance and politics. this is a pulitzer prize-winning journalist here at bloomberg, has done some phenomenal work, and he has really started to unpack the that tooknomenon, and him, most recently, to new mexico. david: not just new mexico but lake arthur, new mexico. how he got there was quite a story. a tiny town. robert mercer became a law enforcement official. whatgh the reporting, exact discovered, he essentially became a deputy, went on patrol. david: why would he do that? jason: so that he could carry a
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gun. not just be on patrol and carry a gun, but there is a law on the books that allows you to him if you are a police officer, to carry a gun anywhere if you are off duty. robert mercer, in addition to all the things he has done, is a hard-core gun enthusiast. julia: maybe he wants to be a community service -- david: the police chief says it is helpful. we have lots of voluntary police officers but they don't carry weapons. david: this is different. the story does brought it away a little bit into who robert mercer is, of course, renaissance technologies. david: which is tough, because he is very secretive. i have spent some time with him and he does not want to deal with press. he does not think it is anyone's business, but he did help to
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build breitbart news, cambridge analytica. he is libertarian, does not believe in government regulation. and has had this kind of existence in finance over the past couple of years. julia: resourceful, let's call him that. david: successful and very smart. now to john cryan. we talked about it yesterday. it is the dominant did not bark. there were reports that he was about to be replaced, candidates talked about. you would expect some response. total silence. you and i know, within an organization, when there are stories about the leader, everyone is speculating, are you going to be there tomorrow? jason: and what are the follow-on effects if you are not here, who is staying? it made me think about other headlines, the silence we heard from facebook in a very
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different context. this whole notion of when you say something, not say something. stories,en there are when your guy is not on the way out, you say that he is not on the way out. that is easy to say. total confidence, he will be here. how many times do we see companies say absolutely we stand by them and then six months later they are gone? julia: we have reported on the tension between the chairman and the board. david: if they are looking at other candidates, what does this mean for other candidates, do i want to get involved in this? julia: not just about the business and the supertanker, but the management. for a ceo, have to feel sympathy for him. david: when he walked into every room, he knows that every person in the room is looking at him thinking i'm not sure if you are going to be here. it is hard to lead any
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organization in those circumstances. they are looking at you and potentially measuring the drapes. david: while trying to do a fundamental turnaround at the same time. julia: the fourth turnaround. should not joke. there is a link between that and our next story. bill winters, standard chartered, is our top gainer in terms of pay among european ceos. jason: this is a nice bloomberg intelligence story. the math, when you get into --ression in market values david: of course, calculus. jason: it is nice that there was a chart to help me understand. what this essentially means is, the top ceos in british banks are overpaid, more highly paid, relative to their european counterparts. i would turn it back to you. what does this tell us --
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julia: i am morally outraged, clearly. returns that are not so much in terms of u.k. ceos. jason: it was interesting that it matched so closely to market cap. julia: slightly less outraged, but still outraged. david: and shareholders care about -- earnings. ceos don't care about market cap. jason: it is one of the things we talked about with hedge fund and private equity. that is what people care about. actual cash being returned to shareholders. it is an old-fashioned idea. julia: hsbc is the exception among the large banks. the ceo. thosevely low based on standards. the chinese influence. jason kelly, great to have you. challenges on the road ahead.
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nvidia stock tumbled as the company suspended self driving tests on the roads. if you have a bloomberg terminal, check out tv . check out our charts and graphics and interact with us directly. from new york, this is bloomberg. ♪. if
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david: this is what i'm watching, nvidia. they announced yesterday that they are going to suspend using their chips, systems and on times vehicles after that fatal crash from uber. to thewhat happened stock as a result. there are lots of questions about autonomous vehicles in general. one of the questions i have is what the regulators will do in response. we have a chart showing the number of states along the experimentation of autonomous vehicles. we have almost 20 states now
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permitting it. california now says not so fast, we are going to come back. julia: all of that excitement about artificial intelligence, a couple of issues like this, teething problems, and now uber says that they will allow the california license to expire. david: this is one of the things i will be talking with jim farley about, the ford president of global markets. we will be talking about things, including autonomous vehicles. julia: quick look at the futures as we head into a brick. positive in europe. this is bloomberg. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. david: s&p futures perk up
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despite the plunge yesterday in fang stocks. investors are wondering what is coming next. no truce yet. the president says all of the happy with trade talks but his and ministration may use in its care law to stop chinese tech investments in its track. the facebook firestorm. the company releases new security settings in responsiveness privacy concerns. welcome to "bloomberg daybreak: americas." i'm david westin. quite a day. julia: you say things are perking up. let me give you a look at what is happening now. despite the losses we saw in yesterday's ascension, the epicenter, the nasdaq, 3% losses . we are seeing green on the board in the futures. s&p higher by .25%. the nasdaq a little bit more tentative at .1%. plenty of time to go for the market opens. significant weakness at the back end of the session, so i'm
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counting myself. even with the declines we saw yesterday, not knocking out the gains that we saw earlier this week in the nasdaq. just some really choppy price action. now the 10-year, 2.77. once again below the 50-day moving average. oil under some impression. rises in some american stockpiles. david: time now for the morning brief. we will get a third reading of u.s. gdp for the fourth quarter and wholesale inventory data with a month of february. at 10:00, february pending home sales numbers. and in some time today, a list of products included in the president's 301 terror initiative. let's get headlines on what's happening around the rest of the world. kailey: president trump says there is a good chance that
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north korean leader in kim jong-un will do right what is for his people and humidity and make moves toward peace. trump said that chinese president xi jinping told him that a meeting that he had with him this week went well. the president said, according to xi, the north korean leader looks forward to meeting the american president. flags flew at half staff across russia today as the country mourned the victims of a shopping mall fire in siberia. investigators identified a short circuit as a possible cause and said the emergency exits were locked shut, hampering an evacuation. irish officials have reportedly been told to expect new plans from the u.k. on how it plans to .void a post-brexit hard border officials have been promised concrete details of what alternative plans theresa may's government has beyond the so-called backstop plan. global news 24 hours a day powered by more than 2700 journalists and analysts in more
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than 120 countries. i'm kailey leinz. this is bloomberg. we have some breaking news right now on the bloomberg related to brexit. on bank of england has come with some guidelines about brexit and the transition period. it says it is reasonable to plan during the implementation period but you can assume business as usual during that period. by the way, that has not been agreed to get by europe. confirms an approach to supervision of international banks, considering reasonable caring of passporting, which i don't know what that means. carrying on by passporting? julia: i feel sorry for the bank of england here. we have that transition deal but it is not ultimately agreed until the entire deal is agreed. the bank of england saying carry on, i wish we could. david: in fairness, they have a difficult role.
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they are the regulator of the banks but there are a lot of concerns -- you know better than i -- about jobs in business leaving london after brexit. that it will not be quite the financial center it was, so they want to assure people there is a limit on how far they can go. a real challenge on both sides. to your point about passporting, access to europe when you are within the u.k. versus when you are not, if you are a bank, perhaps moved to frankfurt or dublin. as far as preparations are concerned, as the bank of england is trying to give some greater insight, it is a challenge until the whole thing is agreed. david: forget passporting if you are not a part of the common market. bank of england saying that they will try to stay in as much as they can. bloomberg will be sorting through this and will be reporting all day. julia: nothing agreed until everything is agreed. we want to bring it back
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to the u.s. yesterday we saw another day of market turmoil with the s&p down .3% and the yield on the 10-year treasury falling back below 2.8%. futures today are looking green again. for a read on where the market stands today -- good luck on giving us that read -- and why, we have john bellow, and burns mckinney from allianz. let's talk about equities, burns. we saw the futures numbers, but where are they? thet seems day-to-day over past several weeks, you had a rotation between various bogeyman that have been scaring the market. you had the tech names. the concern is the tech leaders would have been leaving the market are part over the past couple of years. the new set of facebook, this is something that could bleed into all of the tech companies, fang
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stocks that rely on the aggregation of user data and likewise trust in their privacy for their business models. prior to that you had the concern of tariffs. last year was the year of tax cuts. 2018 appears to be the year of tariffs and trade wars. rt to that you had the federal reserve meeting where you had some of the governor sounding more hawkish. potentiallyrates start to creep upward, one team you should expect would be an increased level of volatility in the markets as things tighten up. julia: we most definitely are getting that. we did see, not just about the moves in equities, but the shift lower that we saw in the 10-year yield load 50 day moving average. do you think it is equities leading the rates markets versus broader risk sentiment? first of all, thanks for having me. we have seen an impressive week
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in the bond market from the day before the fomc meeting. treasury yields are almost 20 points lower. yields have been the opposite, lower. there are a few things behind that. first, i think the fed was fairly measured, jerome powell did a good job being optimistic, which is not the same as being hawkish. maybend market has gotten a little bit ahead of the data. the data has been softer in this fear of rising rates, not supported by the actual data. we have seen a bit of volatility in the equity market and bonds have responded. bonds remain the best diversifying asset in portfolios. when you have a drawdown in the s&p, you would expect those to rally. you put those together and you see moves in the 10-year treasury. david: there was a rise at three or above. do you believe that now? jason: we did not believe it
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then and i do not now. we have been standing out, frankly, among bond managers. our thinking is, that inexorable rise was already reflected. if you looked at what the markets were pressing in for the fed, it was already pricing and a lot of this optimism. we had the sense that you would have more opportunity on the bull side rather than the bare side. the data just has not been supportive of it. it's been fairly steady, gdp number four q4 in 20 minutes. but q1 is tracking below 20%. q4, 2.5%. not the numbers are stuff of bond bear markets. that is steady yields. we have been sticking out on this, have been more optimistic in terms of yields being studied to lower. we have been position for the last week. part of that is everyone else was in the inexorable rise
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can't. burns: we may look at it differently. a lot of the government policy environment really should lead, we believe, over the coming year, to greater inflation, ultimately. likewise, leading to higher interest rates. a lot of what we are seeing is a grand experiment in double-barreled fiscal stimulus at a time when you have pretty much closed the output get. this is the kind of stood with that you would see on an economy with 10% unemployment not 4%. ultimately, that should be to wage growth. at the same time, other factors that are inflationary would be limits on immigration. and tariffs, to the extent we have those. .eally, they are stagflationary when you increase the inflation premium -- maybe not in the next six months but over the next two or three years should drive up bond yields. at the same time, other factors
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would be the latest stimulus is not revenue neutral. in the long run, may drive up term premiums. david: you have real contrasting views. john: we don't see tariffs as being inflationary. they raise the price level once. raising the price level once does not generate inflation going forward. to the contrary, if you raise prices once and don't raise wages, you will depress demand and it will end up being deflationary. moreover, disruptive for supply chains, businesses. we have seen equity responses. we would be of the view, if we and toningful tariffs -- be clear, what we have seen so far is fairly mild. but every some more of that, it would depress demand. a third choice between inflation and deflation, stagflation. increased prices but not increased growth.
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i think that is closer to what will happen. a one-time increase in prices that suppresses growth. when you are pricing in when you price in bond yields, that is inflation over the next 3, 4 years. if all we do is raise persisted day, that does not create future inflation and depresses growth. that is a challenging situation for equities. nod, burns. you have to argue. [laughter] is probablylation the key concern. it is that perfect storm of lower economic growth and higher inflation. the one catch is, if you enact one tariff, that is probably something that consumers adjust to. what the markets have been concerned about is not necessarily, 60 million terrorists, we are done. the greater concern is what this leads to his an ongoing
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tit-for-tat, increasing competitive environment for tariffs around the world. that said, it could be a one-time move. this could be the art of the deal, whereby president trump make this threat, brings the chinese to the negotiating table, and works on great. at the same time, it's a big risk. like playing a giant game of jenga with the economy. you can pull up one block, it may not lead to something further, but it certainly is a risk. this is beautiful because this is what makes markets. john bellows, burns mckinney, both are staying with us. we will talk about making this tradable. from new york, this is bloomberg. ♪
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julia: as the market turbulence continues and rising political risk, volatility returning with a vengeance this year. where are the opportunities? still with us to discuss, john bellows and burns mckinney. who goes first? how do we make this treatable? short seems interesting, but how to really get longer risk? the tightening of monetary policy is a little bit like taking a trampoline, the springs are sagging, no bounce to it. but if you tighten the strings, there will be more bounce. it is fun for a six-year-old kid but not so much for investors. one thing we have been telling our clients as a way to mute that is to focus on dividend paying stocks. companies for whom they get a greater percentage of the returns from the cash return rather than from capital gains which can be positive or
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negative. i should clarify when i say dividend payers, i don't mean the bond proxy, telecoms and in which have gotten expensive as of late. dividend paying cyclicals in places like energy, technology, financials, i think are interesting place. julia: suffered in the last year. david: what about on the debt side? you say you are relatively bullish but what specific assets are attractive now? burns: i go back to portfolios. john: we have diversifying positions. the exciting thing is i think there are opportunities today. one thing that has been striking is the front end of the corporate curve. we have had a number of special factors there, foreign holders that were selling repatriation to do tax reforms. the consequence is today you are seeing the front end of the , 4250on the corporate wider in spread terms while 10-year spreads are unchanged.
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that means you can buy today high-quality investment-grade two to three-year -- yearsid not exist of two ago. from the light perspective, there are opportunities like that today. on the other side, we believe strongly in diversification. we have the value positions, we think those will generate returns over time. but you have to have something offsetting that provides a negative correlation. for us that continues to be u.s. treasury interest-rate risk. when you are wrong on the valley and you hit some volatility, that interest rate risk reduces the volatility of your total portfolio. the construction of our portfolio, we have those value opportunities, and we include those with interest-rate risk. sayingwhat our clients when they call you, how concerned are they, what questions are they asking you? .urns: we are value investors
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the questions that we get, because we have been in this long growth cycle -- probably the longest cycle of growth stocks outperforming value stocks that we have had since the dot-com bubble and perhaps longer. strategy,in value their patients may eventually run thin but what is going to be the catalyst to see this perversion of the mean that should work in favor of value equities? david: are you rebalancing some within that strategy? burns: we believe firmly in sticking to your knitting, having a disciplined adherence. david: so not rebalancing? burns: a lot of what we are doing is rotating into value. the key phrase that my colleagues suggested is diversification. that is crucial in these volatile markets. within diversified portfolio, look for the higher-yielding names. askingwe have been whether what we're seeing right now in the epicenter of tech, the justification it takes to get that value in growth, to get
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it going. what are your clients saying? john: all year we have been getting the same questions. it is obvious bond yields are going higher. we welcome that conversation. i do think we stand out there. we also had questions, perhaps less sweet, but where is the value? at the beginning of the year, people are of the view that everything was expensive. that was probably the most common question. our answer that is the same as today. you have the value positions. the emerging markets would be another belly position, and you diversify. they are a little bit boring but that is where we are. david: burns mckinney, thank you for being here. john bellows will be staying with us. next, we are talking with jim farley live from the new york auto show. this is bloomberg. ♪
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david: it is springtime which means it is time for the new york auto show. ford is debuting a new entry in the upscale in syria market, the aviator. here to explain the overall strategy is jim farley, president of global markets. he comes to us from the auto show. great to have you on bloomberg. explain to us the aviator. that must be it behind you. how does this fit into your overall suv strategy and therefore, vehicle strategy? jim: we just launched the navigator and the aviator goes just allow it. it is a crossover, a big deal for us. we stew have the aviator in the lineup but now we are reintroducing this. this one is different, it has plug-in, three wheel drive, new technologies, and we think it will be a really good product for us. it strikes me, it almost
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should not be called the auto show anymore but the suv and truck show because there has been such an emphasis. ford is right in the forefront of the. as much as 86% of your vehicles will be suvs and crossovers. what does that mean for something like the continental, does not exist five years from now? jim: good question and we just launched continental and it is doing well. unfortunately, the sedan business in the u.s. is tough, but in china the sedan business is robust for us. for usntal is up 90% this year in china. it depends on the market but yes, americans have moved over to crossovers. that does not mean the explorer products like they did in the past. we have sporty ones now that come in all flavors. people really like the roominess , functionality, as well as sitting up above traffic.
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ford as a whole is going to these products. we do these well, navigator, three-row, the top suvs in the u.s. for seven years now. we know how to do these vehicles very well. out a when you bring vehicle like the aviator, how much is targeted on china? do you expect to sell as many or more in china as in north america? jim: good question. china is now the largest not only automobile market in the world but premium market in the world. for a brand like lincoln, we started from scratch. we now have 100 dealerships. our sales there are growing exponentially. sales were up 70% in china. it's a very important market for us. the chinese customers like a lot of the same products that americans do. you can sell the same product in both markets but you have to
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tune it a little more for china. one thing that is different about china is a electrification. a quarter of the sales in china we think poor sales will be electric. that is why we are launching this plug-in electric with twin turbocharged technology here in the u.s. and eventually china. say, china has become an important market to you, for in general, specifically to lincoln. but you're also playing catch-up. recently getting into the market by doing well. what does that say about possible conflicts over trade with china? suppose there is a ramp-up in tariffs, as has been promised by the president. does that affect your business, or are you making over there, so it doesn't matter? deal.t is a big we export a lot of products from the u.s. to china. everything from raptors to lincoln's, edges.
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this is an important trade relationship for a company like ford. we are really hoping that the governments can work through and maintain a really strong trade relationship. it's very important for companies like ford. david: one of the things that has gone forward are steel and aluminum tariffs. the input costs of steel and aluminum. how much are those tariffs going to affect your price situation and therefore margin? jim: again, a really good question. commodity prices like steel and aluminum have the going up in general, but the trade agreements that we are seeing now are going to add extra cost to our business. our steelst all of and aluminum, more than 95%, comes from the u.s. we are not that exposed but any kind of tariff will add cost. the reason is some of the steel and aluminum we use is specialty.
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that specialty material only comes from overseas mills. so we will experience some incremental cost on top of the backdrop of higher commodity headwinds. david: one of the things the president has said, you can apply for a waiver, if you cannot get the steel and aluminum in the u.s. is for applying for those now in washington? jim: we will do everything we can to make sure the company is competitive. not only are we looking to any possibility of working with the u.s. government, but we are also making sure that we are fit as a company, and that means redesigning our processes, cutting cost, waste. customers don't pay for waste. we are doing everything we can to offset those headwinds. david: we have to talk about autonomous vehicles given that fatal crash in tempe, arizona. nothing to do with ford, but
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where are you right now with autonomous vehicles? jaguar did a deal with waymo. do you wish you did a deal? ford is one of the top companies. we have invested in argo in pittsburgh, who are developing our robots. four isdifferent about we are developing inclusive products based on hybrid technology so we can run 20 hours a day or plus. that will be unique for automated use. we are also betting on not only moving people but also moving goods. we are working with partners like host mates, dominoes, lyft to develop those business models. we are in miami right now not only mapping the city but running the business model with drivers in the car, not automated cars, actually operating those services. the drivers are simulating the av experience, and we are learning a lot in miami. david: do you anticipate more
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regulatory oversight, safety of these av vehicles? jim: the accident is really unfortunate. the reality is, ford is a 160-year-old company. nothing is more important to us than safety and the brand itself. we have tw a safety drivers in and everyone of our argo vehicles. this is a new technology and we do have to test on public roads, in difficult situations. we are learning a lot and we are taking every precaution we can to protect not only our customers but also pedestrians. david: jim, thank you for taking some time with us today. julia: thank you so much, great interview. we are approaching 8:30 eastern time, awaiting some economic data including that final take of gdp fourth quarter.
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let me give you a look at what is happening with futures. right now, s&p futures higher by .3%. we dipped into the red for nasdaq futures, only .1%, but i will note it after the we percent decline we saw yesterday. the epicenter of some of the broader tensions that we saw yesterday. the drivers of sentiment today. we have the data now. gdp annualized for the fourth quarter, final take coming in better-than-expected at 2.9%. i'm interested in the revision. we did see the strongest figure 42 years for the third quarter. .hat is better personal consumption coming in at 4%. service expectations, 3.8%. that was better-than-expected once again. the price index for gdp in line with 2.3%. core pce coming in line, too,
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1.9. we also have some other data. wholesale data month on month, expectations, half a percent. we came in at 1.1%. a bit higher in terms of inventory data. back to the annualized figure for gdp, the final take, stronger than expected, coming in at 2.9%. we have had two revisions already. a touch better-than-expected. let's get a quick look at the instant take of the markets as we look at the numbers. a little bit higher for the dollar index. not much of a reaction. remember, this is the final take of the gdp number. let's get some reaction down to that data. we have the evercore managing director for senior research and
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john bellows is still with us. john, your take on that snapshot of data? john: a touch stronger. the real thing is this is q4 data. q1 is really more interesting. you mentioned pce. in the first quarter, tracking 1.5%. that is a notable step down. disappointing retail sales reports, no acceleration in sales. i think the burden is on the optimist show is where the growth acceleration will come from. we are not seeing it in consumption, housing, trade deficits are wider. we continue to be of the view that a lot of that optimism that you are hearing from people in the markets is much more in the forecast than in the data. we want to see it in the data before we are convinced it is a real thing. david: stephen, how much of this is seasonal? a year ago we were having this discussion, the fourth quarter was looking week.
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for some reason, first quarter's are coming in on the weak side. some weathere are factors as well as some seasonal adjustments that are large in the winter because your overall data set is small in terms of sample size. underlyinghe strength in housing is stronger than what you have seen in some of the data. december, theince vast majority, 80% of the data points on housing we track, coming in worse than expected him but that is not matching what we see on the ground. it is also not matching what evercore isi survey of home builders is showing. in general, i believe housing demand is relatively strong and will rebound. julia: where is the mismatch coming in? stephen: you have seasonal adjustment factors, some pretty gnarly weather in the winter months. julia: your data is not showing that, so what is your age here beyond the seasonal? stephen: some of the data that you see that is housing, often times interpreted as a measure of demand, it is actually a
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measure of supply. housing permits, starts. what we monitor is demand on the sometimesders, which proceed even a permit or start, where somebody says i'm interested in buying this home. that tends to be the most important indicator, and that's when we look at. housingooking at specifically, honing in on the back end of the yield curve, as far as the 30-year rate is concerned, we are still below significant levels. higher interest rate will not help the housing market. let me be more clear. i don't think we are negative on housing or the consumer. we just don't see the acceleration. if things evolve as they have been, you will not get that real pop in gdp forecasts and of which the market trades are currently predicated on. it is not that we are negative but we don't see the reason for
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that optimism. julia: it kind of ties into your positioning as far as stocks are concerned. evaluation concern rather than the underlying strength. stephen: i believe the underlying strength in terms of units is actually fairly good. at interest rates rising puts crimp on the ability of home to afford a higher price. we fundamentally believe the valuations of home builders earlier this year was too high, not likely to be seen again this cycle. we think that while fundamentals may continue to improve and probably bounce back in the short-term from some unsustainably low data in the last couple of months, we don't believe homebuilder stocks are where you should be putting your incremental investment dollars. david: they are increasing the mortgage rates. they are not high by historical norms. at the same time, housing prices are rising in a lot of different parts of the country. what is that not cause more homebuilders to build more, make
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more money? mosten: one of the peculiar assets is the rebounding in housing first occurred at the higher price points. we had some tight credit at the beginning of the cycle preventing the entry-level buyers who normally kick up your housing cycle, from coming in. now what is happening, nine years into this housing recovery, you are starting to see the builders go after that entry-level buyer. that averages down your overall price. we don't think you'll see very strong housing price data for the builders over the next year or two. julia: does the consumer concern you hear? you have touched on the retail consumer, weakening since last year. admittedly, yesterday, we saw a softening in the consumer, but the data has remained strong. john: we think we are kind of in this sweet spot. i would say the consumer balance sheet is fairly healthy. the fundamentals remain intact.
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we don't see the reason for the optimism. the argument for why you would see a big step up. i think it's a pretty good environment where corporate bonds can do well, frankly, to take it back to one of our trades. you don't have a lot of pessimism but neither do you have an environment of rapid acceleration that would cause the fed to react. we continue to be neither too pessimistic, nor the opposite. enough bad and good to keep us in the goldilocks scenario, as far as you are concerned. as a: how big is housing driver in the u.s. economy? stephen: extremely important. substantially outweighs the groups market cap. housing starts in particular are the big driver. single-family housing starts at that, which are quite depressed. we are running easily 30% below normalized levels for single-family housing starts. this is an area where we continue to see growth this year
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appeared over the course of the year, 10% year on year. overall, those homes may become homebuyersyou see not being able to afford quite as much footage, and maybe less fancy inside as well. john: it is true that housing is a significant part, but much less significant precrisis. precrisis, housing really drew the cycle. it is a much smaller share of the economy and will contribute much less volatility to gdp. julia: when we do see a brief spike higher, i should point out. stop the press. i will talk about that little spike that we saw as a result of what we sawback to for the gdp annualized for the fourth quarter, 2.9 versus expectations of 2.7%. david: many thanks to john
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bellows and stephen kim of evercore isi. now let's get an update from outside the business world. kailey: a united nations official in syria says aid groups need $150 million to provide urgent relief to a quarter million people who have been displaced by the recent violence. as on ofuterus thousands have fled from the eastern suburbs to escape the fighting, thousands remain in shelter, many needing medical care. catalonia's parliament has passed a symbolic motion affirming the right of their former leader to be reelected to his old job, even though he is in jail and facing a possible trial. pro-independent parties use their majority to approve the motion today and continue their defiance of the spanish government who says the northeastern region cannot proceed. italy, silvio broyles coney
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is said to be open to his party joining a possible coalition formed by the country's center-right alliance and the antiestablishment. senior leader says berlusconi wants the five-star leader to stop demanding the premiership. 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. break,as we head to the there is news. shares of shire surging the most on record today, 21 at one point, to report that there may be a takeover from takeda. that ite has announced was not approached by takeda. we are talking about $50 billion here. a big deal potentially. divot confirmed it is considering an approach about no approach yet. it is a dating game. learning. -- flirting.
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david: as you drive in today, you can listen to tom keene and jonathan ferro on the radio. you can hear them all across the united states on sirius xm radio. live from new york, this is bloomberg. ♪
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kailey: this is bloomberg daybreak. audi of america president, live from the new york auto show. david: might warren buffett be considering a stake in ge? that is the rumor that sent shares surging by the most in two months but there is still
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zero indication that speculation is anything beyond that. for more we are joined by brooks on it and, who has been covering general electric. i understand more and was asked a couple of moments ago -- months ago that he said at the right price. investxperience, he will in just about anything at the right price. brooke: there is no reason to think that he will get involved. he was asked in the context of buying businesses from ge. he was asked, would you be interested in buying some of these division that ge is looking to sell? to me that is a more plausible scenario. julia: give me one reason why he would invest in ge, having divested already. david: there has been talk about selling off some of the more valuable parts. what parts would warren buffett be involved in? i don't think it would be in medical science. brooke: they have this health venture that they are starting with jamie dimon, which jeff
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has said that he would not be ingested in the health unit as part of the venture. i don't know if ge would want to get rid of all of its health care business, given it is such a strong cash flow generator. the businesses that they have marked for them register -- divestiture, locomotives,. . that is something that maybe could be interesting. then you get into, are there antitrust issues, problems with customers? if you have burlington owning a maker of railroad engines, are you all going to be able to sell them to others? to go back to the other pickerchrister -- question, the skeletons in the closet, the big review we saw, the announcement with the insurance concerns, who knows
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what they do in terms of asset sales. people say 20 billion is not enough. you have been through this many times with us. lie at this stain do you trust buying the broader business? brooke: i don't know that i do, and that is why it makes me skeptical that any investor couldn't come comfortable with the liabilities here. there is so much unknown. when we saw with that charge to ge capital was this is still such a black box. so many years after the financial crisis, after so much has been sold off, there are still the massive liabilities and nobody has a clear handle on. like thatren does not complicated accounting, and how do you know what you are buying? general electric does not seem to know and they are running the company. how do you ever have confidence that you know what you are getting? brooke: the company has said there are multiple government investigations going on. the doj is looking into the subprime business.
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all of that is still early stages, still unknown what kind of charges we may see, if anything. thea: do we mentioned energy asset sales as well? bring it back to the price action in light of the selloff we saw everywhere else. seen so much of this in ge. david: not so clear it is a bargain anymore. when was the last time he saw warren buffett by after a rumor drove the stock price up? brooke: which is what made me question it. there was so much selling in ge shares last week not necessarily new information. there was talk about the black box of ge capital, analyst downgrade, but all of these cash flow challenges, earnings woes are out there. your context is always excellent. thank you so much for that.
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coming up, futures are in the green, but is a time to shrug off the recent tech rout? more on what i'm watching next. and if you have tv , you can check us out online, rewatch interviews that you like. questionlso send us a through twitter. we will be back. from new york, this is bloomberg. ♪
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julia: welcome back to "bloomberg daybreak: americas." final check on the markets as we prepare for the trading day ahead. dwyer, us now is tony canaccord genuity chief market strategist. you think we are near bottoming. when is my question? >> i think we're in the process of it. it is amazing, thinking back to late to mid january, ridiculous
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optimism with the 7.5% gain to start the year. now you are retesting the low from that shock drop that happened in early february. yields are back down to 2.75. what we have really been talking about at canaccord is this is human nature, typical moves of human nature funneling extreme enthusiasm to stocks rather than a fundamental development. down 10% with earnings growth at 20% this year. we find it a much better entry point. david: are there fundamentals that may be shifting on us? let's talk about globalized synchronize growth. we are hearing some indication that that is slowing down a bit. do you agree, and if so, what would that do to the stock market? a half ago, and nobody was talking about global synchronized recovery, they were talking about the need of quantitative easing because the growth picture was so poor. now after you have this urge in rates, people talking about the
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globalized sigrid as recovery. if you look at the surprise it indices, you can see in europe, the surprise index has been tanking the last two months. the expectation that you would have this continuation of global sigrid wised recovery, even though interest rates around the world on the short and long and have been going up, honestly was inappropriate. that the 10%ct drop we are getting is to some degree probably discounting that slower growth picture globally. price action, if we bring into the short-term, has been incredibly volatile. up 2.5% one day, down 3%. we have been showing the futures in the nasdaq, now tilting further to the downside, off by .6%. excuse,a cause or an the tensions we are seeing in the tech sector, the most crowded trades out there, for the price action currently? tony: it is really an excuse.
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i remember being on the show and at one point we said, when it was up a quarter of 8% every day, volatility at the lowest in history, we were saying, member this moment because this, too, shall pass. that is what's happening. it is kind of a move back to the normal. i would caution listeners to think about this. it is not that the correction started because you had an uptick in labor that was later revised out. if it was labor inflation, we should be at new highs today. then it was about steel and aluminum tariffs. then it is about the trade wars. that it is about libor. now it is global growth. then it is fang and tech stock regulations. it is not about any of that. those are excuses for working on some of the most extreme overbought conditions we have had in the history of the marketplace. while that sounds bearish, it is
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not. it is what we should've expected you however, it is not whether you can get a correction but when you can do with it. when earnings are growing, you want to be buying down 10%. david: earnings you expect to continue to grow into next year, what are your expectations? tony: we have not put on a number but we typically use nominal growth, which would be about 3% plus inflation. something around 5% earnings growth next year. looking for 155, 20% earnings growth this year. you don't have to go to next year to worry about it. even this year, the market has become a lot cheaper than it was. given us ahave confluence of factors and tied in the fundamentals, earnings drivers. term, it has been short and shallow by historic standards. what are we looking at for further corrections, if you are talking about being near the bottom? it would bed say
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short and subpart to historical corrections if you look at the early february 2016 move. retesting below a couple of times now, and a lot of the drama is being oversold. ison't think a 10% drop subpar relative to historical corrections. i think what we do is get wrapped up in the media game of what is the exact high point. it is not a buy point but buy time. when you have a solid the fundamental backdrop, which we do, even though slower than last year, and is vacant downturn in equity prices. unless you expect a recession, buying down 10% -- let's say it goes down 15%, you eventually make it up quickly in a non-recession environment. david: if there is a dip here, opportunity to buy, what do you buy? tony: our view has been the
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productivity trade. ,f you are fearful of inflation the only way a company can combat inflation is through increased productivity. give you moneyls to invest in capital spending to do that. industrial's implement at capital spending. technology is behind it. our three sectors are financial, infotech, industrials. thank you so much. coming up, peter navarro, trade assistant to the president. bloomberg markets, the open is next. at the futures, tilting lower in the nasdaq. from new york, this is bloomberg. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. jon: from new york city, i'm jonathan ferro. this is the countdown to the open.
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coming up, investors struggle to adapt to high volatility. treasuries finally finding a bid. tech stocks taking a beating. fang delivering their worst day in three years. responds, allowing users to delete data. 30 minutes away from the opening bell. the story across assets looks like this. we are down by four points. the dollar still strong against the euro. 1.2383. yields lower by another two basis points on the u.s. 10 year. we have breaking news in frankfurt, germany. taylor: breaking news on deutsche bank. they are conducting a fresh review of their investment bank which could lead to deeper cuts across the trading buses


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