tv Bloomberg Markets Americas Bloomberg April 9, 2018 2:00pm-3:30pm EDT
tax we're live in bloomberg world headquarters over the next hour. here are the stories we are covering to -- covering. battered,sets getting is a new wave of sanctions leaves the kremlin scrambling to contain damage. ceo takes the reins as a push mount over biggest investment banks. -- breaking news on monsanto. let's bring in julie hyman. julie: the department of justice has given the stamp of approval $66 billions
acquisition of a german company. this is a deal that is a couple years in the making. dealnto would close on the by june, even as the question of approval was still hanging in the air. it looks like we have potentially more clarity on that point, as we see shares surging here. will create an agricultural powerhouse. we continue to monitor that and will let you know if there are more developments. at the broaderok averages, we are definitely seeing a rally as well, one gaining steam even as volume is still running below average. you have the three movers all rising. the nasdaq is outpacing the others today. i want to highlight the banks. they may begin there were reports from the earnings season this friday. we will hear from jpmorgan then.
that index is up by 3%. there is a lot of optimism being priced into stocks right now when it comes to earning season, though perhaps not as much, even as the earnings themselves will bear out. the forward, 12 month price to earnings ratio in blue. there is a lot of optimism. you see that climate and climate combat the estimate for how much earnings are going to grow. we will start to find out this friday if the real numbers are going to support that. we will continue to talk about the effects of the tariffs, but also the sanctions on russia. a lot of ripple effects still we have the big aluminum producer based in russia that accounts for 17% of the global supply, is saying it will not -- it's may default on
its debt as a result. because of that potential crippling of supply, aluminum prices are going up and so are u.s. aluminum producers. let's take a look at aluminum and u.s. metal pricing generally . aluminum futures are up 6%. getting a big lift on the potential effect of sanctions on supply from russia. we have been watching this russian etf down today over concerns as to what this could mean for the russia economy. effect.e gulf ripple this little-known software sponsored patrick reed, who won this year's masters. the logo was on his various bags and gear. pick theour did not winner this time around, jordan speith. they are going in opposite
directions today. scarlet: thank you so much. breaking news. its latestt released projections of the u.s. budget deficit. let's bring in michael mckee. the headline here, the budget deficit will balloon $20 trillion by the year 2020. michael: wall street has been expecting this. forecasters have been saying this because of the president's tax reform bill. has confirmed it. they put out their forecast for the coming years. in the impacts of the budget deficits, a look at revenues and outlays have come up with a trillion dollar deficit in 2020. in 2019, you get $981 billion. let's go to the chart. this is laid out here.
a quick error -- arrow as to where we are going to be. we are right here. 2017 ended at $665 billion. we kept that trillion dollar mark in 2020 and keep going, until you get almost 21 $.5 $1.5ion by 2028 -- to trillion by 2028. julia: as far as 2018 is concerned, growth is significantly higher in their projections. has been the wall street forecast. we get the post because of the fiscal stimulus for a few years, which will pay up -- help pick up the budget deficit. that the budget deficit was higher in march that it was a year ago by about $27 billion. it remains to be seen whether we get that impact. if we do, it will be towards the end of the year. this chart is the budget deficit
as a percentage of gdp. as it gets worse, it eats up a bigger part of our gdp, and gets to 5.1% in 2028. we haven't seen that since the recession in the early reading when he regan years, cut taxes a lot. julia: thank you so much for that, michael mckee. threes ache bank decade federman of the industry. ceo talksthe new about the challenge ahead. is our guest.is this
the right candidate to lead the bank? >> it is hard to say. they haven't articulated with the strategy is. this is a london-based transactional bank, then more of a conventional german-based institution. i think it is hard to really say what they are going to deal. so much of the bank was focused on the global transactional business. to say they are going to do some thing else begs the question, what exactly is that? that we have been reporting over the last couple of weeks has been a scramble to find an alternative candidate. this name was not really in the mix. outsidemeone from deutsche bank would have been
preferable. maybe they could make some of freeingdecisions like up some of the balance sheet and focusing more on the european banking business, which is perhaps worth they should be -- worse -- where they should be focusing on this moment. less: personalities matter than the overall strategy. germany is a very well-managed country. if you deal with german havenies, they tend to really big boards that are not particularly focused on the business. think that has been the problem at deutsche bank for a wild. when the money was flowing, they didn't care. and overrs of crisis 10 years on from the financial crisis, they are still barely cleaning that up. analyst, i ask what is the business going forward? different stakeholders,
different interests. chris: maybe we should them together. there is not that much there. give up that global investment banking and trading operation, what do we have left? scarlet: you say personalities matter less than the strategy going forward. a former chairman of the board has been criticized for taking too long, rather than going forward. does he need to be replaced? is: the board has to make a decision about how this organization is going to survive going forward. if they are going to do something different that may have done in the past, they are going to need to articulate that to shareholders pretty quickly. institutional investors don't have a lot of patients for this. we have been going for years
now, without a really clear strategy coming from the top at deutsche bank. ultimately, is this organization going to be in only europe? are you going to give up on the united states? they have a significant is this and i don't think that is an option for them -- business, entitled think that is an option for them. where you going to be putting your capital and what risks are you going to take and how is that different than what you have done in the past? the share price has gone from 40 euros to turn into 11.48, . let's get to the first word news. mark zuckerberg it is in washington ahead of his much
anticipated testimony tomorrow before the senate congress committee. lawmakers want answers about it data privacy scandal. he met today's with the committee's top democrat, bill nelson of a florida. -- he said to me, we were lied to and we should have caught that. i believe that, but that is naive in today's world. remarks,prepared zuckerberg will tell lawmakers, i started facebook, i brundage, and i am responsible for what happens here. surging lavrov med with russian diplomats who had been expelled from various countries over the poisoning of a former spy and his daughter in britain. said russia will always do everything it can to protect the security and dignity of its citizens. n observes national
nuclear day, the president criticized the united states, saying washington has failed to destroy the landmark 2015 deal iran's nuclearon enrichment program. president trump has said the united states would not recertify the next deadline comes up in may arian -- in may. global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. scarlet: coming up, a rebound. stocks rising. with the morgan stanley chief u.s. equity strategist on the outlook for the tech shares. this is bloomberg. ♪
markets." scarlet: u.s. stocks bouncing back from a late week selloff as investors pour into larger cap tech shares. the morganed by stanley chief u.s. equity strategist. state your belief i the markets have gotten more attractively priced. -- why the markets of gotten more attractively priced. the markets have sold off significantly, so we have had a pretty significant to reevaluation this year. we've had a pretty good reevaluation. a tropical be interest rates as well over the timeframe, 25% rerate, already priced bad news, including trade tensions tightening. those are three things the market is worried about the most. equities it should also
be impacted at this point. you get previous revisions as well as earnings season is concerned. the market has received a little bit of buyback the last month. are stopped going into earnings season. earnings season next week may with moreonjunction stable news, which has been consistently negative every day. it will be to a rally. at 2600, you should be buying this market. technology is underperformance and -- underperforming since the nasdaq peaked in mid-march. weird you want to be here within technology? the semiconductor stocks, internet shares, they were the powerhouses. maybe it is time to rethink
that. mike: you have the internet leaders, the fast-growing software companies, the secular growers, your components companies, beneficiaries, that people are generally excited about. technologies should do quite well in a late-cycle economy. some of the secular growers will come back. they are not all doomed. i actually think tomorrow's shares should be able to come back. and defend these late-cycle beneficiaries, these software companies and hardware companies people forgot about are pretty good investments. what can we learn about how microsoft is dealt with its
issues in the government in the past, compared to facebook's? there is a risk of government regulation. mike: there was a lawsuit against microsoft, devastating than for their valuations. doing isbook is following a script. apologize, promise to do better, have better transparency. tomorrow's testimony is a real test. a weekrs would have said ago, we don't think the testimony will go well, that mr. zuckerberg medieval not show well. and people sold the stock. but today, we are seeing a rally. we will see how it goes. this event is a buying opportunity. you want to learning -- learn anything tomorrow that hasn't
been feared by the market. scarlet: not a worst case. mike: the earnings in the following weeks will be a positive event for most of these companies that have been affected by the negative , along witho google, from the regulatory side. sentimentk about the in the market. describe what you are talking about in that regard, the direction of the market. fast it is remarkable how things have changed. last august, we were nervous about volatility spiking. tax reliefo hope for or anything but happening on the policy side, but that changed. we measured this in quantitative ways through sentiment indicators, positioning data, retail flows, it is pretty extreme on the other side. has changed from being
something that is not the worst we have ever seen, but pretty pessimistic. julia: we have a chart. it is quite fascinating, if you look at the sentiment chart in the s&p 500 and the andback we see in yellow, you see the white line, the risk indicator. that has pulled way back. mike: it has done a better job on the lows of identifying buying opportunities. this is part and parcel with the idea that tops are rounding long-drawnout affairs. scarlet: you have to move quickly. mike: our call for this year is that we are in a rounding top now. the first shot was in january. in march.ther one but it takes time for that talk to happen. whatever you get out of this
markets." julia: we are back with morgan stanley chief u.s. equity strategist, mike wilson. one of the things we are looking at is the federal reserve trying to ratchet up interest rates. you are looking at the difference between what we see in the two-year part of the curve between what the fed is trying to do on the front end. talk to me about what that difference means. mike: everyone has been focused on the attempt to spread, which has been a flattening a while and gives us a sign the recession is coming.
this is the bond market interpretation of whether the fed has gone too far. if it raises rates and the two-year note doesn't go up, the bond market is saying, this will go too far. whatever the fed raises, it always drops like that. if things are good, it will climb back up. the latest hike in march is not climbing. scarlet: it is stepping out. mike: the market has been very worried about trade, these tech stocks having individual troubles. but the market is worrying about something? i am not going to worry about it. the market is not worried about this. policy andn fed financial conditions. i am focused on this to tell me when the market is getting nervous. it is ok for now, what if this does not recover into the
summer, this may be a sign that perhaps we have a bad second half. scarlet: what if we stall? mike: not a problem. scarlet: just if it goes down. when this thing comes down, you can see last year, with the pro-growth agenda you for you in march. 2s-ffs fundden, the started to collapse. i think this is a good indicator that folks can keep tabs on what the market thinks about the fed actions. we have economics a price indexes. scarlet: it is not reverting. do you think, is the fed getting ahead of itself?
but it is also the hike of the data. mike: the economics of price index is mean reverting, it will go up and down and self correct. you're going mean straight into a recession. but from an economic standpoint, we are seeing a rate of change. will this turn into something more ominous next year? that is where this comes into play. mike wilson, we need to keep watch on the spread between the two year yield and the fed fund. thank you. from new york, this is bloomberg. ♪ retail.
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 near or far covered. leaving every competitor, threat and challenge outmaneuvered.
is not ruling out airstrikes against syria in response to the governments use against civilians -- of gas against civilians. mattis said the trump administration is consulting with allies in europe, middle east and elsewhere. >> the first thing we have to look at is why our chemical weapons being used at all. working with our allies and qatar, werom nato to need to address this issue. mark: president trump said he would be making some major decisions over the next 48 hours. he made the announcement at a
closed-door meeting at the all progressives party. he has been urged not to run by some guys of health problems and economic challenges that have brought down his regime. 2000 french police forces fired tear gas at squatters today as they evacuated a test camp the frenchdecade ago government abandoned plans for the airport after 15 years of debate. of railway workers demonstrated in paris, protesting microns plans to change their benefits. they're angry a proposal to reject a special status that allows jobs for life.
today is day four of three months of strikes. they insist they will not back down. tammy duckworth has become the first senator to give birth in office page she delivered her second daughter today. her legs inst both the iraq war. lawmakerse of 10 who have given birth while in congress. i mark crumpton. this is bloomberg. scarlet: thank you. good to be back. let's move to the news that has been breaking. investors watching carefully as china's president will be delivering a landmark speech. the proposalis as
to open china's best china's financial sector. let me start with you. as you look at the market and how theyare pretty -- are moving, what might she say? >> he will announce opening up financial markets and take a as they look at this protection issue. agreements bilateral . he may use this to back fill. to take a shot at the president suggesting that is the path they would like to go. next to be the globalist. which is fascinating. what do you expect? therething can happen but
will be a firm reminder not going to back down. china is in the drivers seat. >> the president would argue on a number by number response china does not have the goods to , increasinglfway the number of potential tariffs. think the main difference is china doesn't have any political strengths. the u.s. is going to election season. republicans are very vulnerable. ride this out. >> i don't think china is going to roll over. >> he has been saying trade spats are impossible to ignore
but different -- difficult to quantify. who is a bigger wildcard questionnaire mark china or the u.s.? which response should investors be more fearful over? >> china. there is a good chance china does make a statement. he will not come off the top rope. he will respond. this is they are davos. there and bend weak in front of his nation. he has to show a strong phase. made a perfect point. they can ride it out more than we can. julia: we have been reporting the chinese are looking at investigating the prospect of yuan currency as a tool. do you think there is a tool for the chinese to hit back without
hurting themselves equally if not more. response, the currency devaluation and selling this has been bandied about. the moves have collateral damage. nuclear options off the table. agree with what has taken markets aback. a mechanism meant to address these conflicts. the ad -- the u.s. is trying to do an end around. mr. trump was already complaining last friday. there is a lot of uncertainty.
volatility is back. with global trade at risk we don't know. >> let's shift gears. theinctions against -- sanctions against russia has been talked about and discussed. there have been sanctions in the past couple of weeks. it to a couple of days to react. why has there been this reaction? or is this new round just more damaging? >> all of the above. , they have been rolling out a variety of sanctions. mr. trump has been accused of taking it easier on russia. expecting this.
assets are frozen. warsaw has talked about potential default. it is a serious matter. a lot of state owned companies involved. trouble,tart to have finding themselves, we have to step in. that is a dicey situation. surprise,got taken by finally being the word being used. see the pullback on a relative basis. .ou can see the significance we have seen weakness and etf's. ruble.'t really see the
suddenly you have this catch-up affect -- effect. >> we're seeing a similar thing in russian bonds. it is an dollar-denominated bonds. as the country weakens it makes it more difficult to finance their operations inputs pressure , limits their ability to crush the crisis. that is one of the factors putin is going to have to deal with. julia: thank you for joining us. a global head of emerging markets. coming up, precision medicine. what does it mean for the future of cancer care? when we speak to the
scarlet: this is bloomberg markets. time for the stock of the hour. it is in gic investment. it is headed for its biggest .oss since 2012 joining us to discuss is dave wilson. a pretty steep decline. >> absolutely. the stock has taken a hit. it has never recovered from the housing market collapse a decade ago. now you have this issue with the premiums. last year, a company like a lot from the theefited
federal government. now they are cutting premiums. it is starting in june. they are giving away the savings that they had in terms of the tax cut. a much higher profit margin than their fourth quarter last year. you look at that number to come down. saying a radian group, and all these declines today. julia: tough sector getting tougher. time for a bloomberg exclusive. our next guest is life or death.
-- our next guests initiative is life or death. brett is a cancer survivor. great to have you with us. thank you. you described an inflection point. in english, what does it mean? >> we are finally starting to understand the relationship between cancer and our immune system. our immune system is one of the most powerful forces in the universe. it keeps us healthy. as problem is cancer starts eu. it is not an infection. treatments they train the immune system to realize that is no longer you. bad and cell has gone the immune system can attack it radiation which weakens
your immune system. it hurts your healthy cells. it is expensive. how do we bring the cost down? data sharing? connecting individual work? >> when i was the executive director of the cancer moonshot task force we addressed these issues about how can we share data better because we are driving with the break on. we can make progress faster. ,e started a number of things in the moonshot we continue forward today. we are working around the world to share data. we are also learning we have a medical system that has out run the financial system. payhe old days they had to
for lipitor. it made you better. now drug companies that have drugs that cure you, you take it once. they are worried about how do they make their money. insurance companies are worried about how to be paid. patients are caught in the middle. patients andotect let the insurance companies and pharmaceutical companies figure out how to pay for this over time because it continues to work overtime. let people finance it the way we do a house. it is unfair to ask people to pay $30,000 for treatment because many people choose bankruptcy, hospice over bankruptcy. cancer is big, broad and scary predinner is confusion about which cancers are treatable versus those that have an uneven treatment rate.
what determines which are treatable and beatable? or is that a financial decision? >> i'm a leukemia survivor. if i had mine 10 years earlier it would have been different. everything went perfectly well. some things like brain cancer are hard because your brain is a protected organ. theeverything can get into brain. it is called the blood brain barrier. we don't want you messing with your brain with any drug you put into your body. progress on breast cancer and prostate cancer. we are starting to be able to treat melanoma. some cancers because of the nature of the organ make it difficult to treat. we are getting there by realizing it is not where the cancer starts, it is the molecular oh level.
scarlet: back to that precision medical. julia: absolutely. this is personal for you. you lost to friends. you understand better than many the differences in treatment and how critical this is. a lot of people would choose hospice over bankruptcy. that gives me better -- goosebumps. you can pay for this treatment over life rather than having that cost having to make that unknown a critical decision? dayou talk to people every in the markets. they have a futures market for oil. a cash flow.is
it will cost $300,000 instead of $50,000. if you are a drug company you worry how will i get the benefit of this when i have worked on it for 20 years that everyone takes it once? if we can get the insurance together,o work more to fund the high risk research, and pharma companies can spread out over years, then we have a solution. >> is there any country or organization that does that that can serve as a role model? , we haveoblem we have to have their insurances. you can't have one without the other. we are trying to fix the system we have here. >> we see them trying to cut
out the middleman. , are we getting ofser to that as a result the consolidation trying to strip out the unknown costs between the farmers to produce them in the farmer that uses them? >> yes. the head of the fda pointed out if the rebate between the form a company and a benefit manager doesn't go to the patient it is not a rebate. it is just a payment. if you get a is rebate it goes to the patient to lower their cost. julia: that is part of your ultimate solution. progress. great to have you with us. the president of the biden cancer initiative. scarlet: coming up, another bloomberg exclusive. you will hear from anthony noto.
scarlet: after a change in manus management so fly's ceo sat down with us for an interview. student loan refinancing, mortgages, we need to build out. the real opportunity is to add financial services products including a moderate take on a bank account. much of 2018 will be building those products. making sure our core products perform well. what is it you want to do differently? >> build a culture we are proud we have towelcoming
have -- welcoming. we have to have a diverse base. in order to serve them well we have to reflect society and have a diverse employee base. >> you mentioned culture. the cfo, half a dozen employees have step down as a result of chaos. when you walk into a company what is your first order of business knowing the culture has been toxic for a long time? are alignedre we with our top priorities, then critically important to your question, to lay out what core values do we want as a company? i have worked with the leadership teams to find the
core values that will build the foundation of the culture we are trying to build. the behaviors we expect, and cultureg those that are carriers. we will have no tolerance for employees that can't do that. people are saying that goldman is increasingly your competitor. a way to take on the financial world? like snow. it is about hiring the best leaders. michelle is a phenomenal leader, financial expert and coulter builder. that set her apart from the rest of the candidates. we are pleased we will hire michelle. i did not know her prior to this process.
we are alive in bloomberg world headquarters in new york. here are the stories we are covering around the world. facebook is facing the music. mark zuckerberg is on capitol hill. the delete facebook cage -- , and the bloomberg exclusive you will hear from the ceo of home deco. how the trade spat with china could affect his company. one hour from the close of trading. >> the rebound holding steady for the three major averages. as you can see the outperformance is large-cap tech that is contributing to the rally.
it is a pretty broad-based rally with 10 or 11 of the sectors rising. this does continue this with salt we have seen in the market. the calm red line that denotes a 1% gain or 1% loss. this year on 28 separate occasions including today we have had a 1% move up or down. this is another way of looking at the return of volatility and the swing we have seen once again. best performing stocks on the percentage bases. lucadia changing his name to jeffries. it is divesting assets that had
nothing to do with banking. things like meatpacking, auto dealerships. analysts are saying this will help them understand the business and make it more attractive for investors. it is going to rename itself as jeffries financial. estimates are defending the stock saying it is attractive. , the department of for thatas arrived takeover over -- and mark rising keytrudatrial of its drug met its main goal. drug forignificant
merck and will make it even more significant. large-cap tech is part of this. i want to take a look at how they are doing. the new red iphone eight, microsoft, amazon also gaining. missing is the facebook. if you look at facebook shares, leading up to that testimony we can see it has been bouncing around the lows. the stock is better than 1% but that one month performance continues to be negative. we will see if zuckerberg can turn it around this week. scarlet: a lot of eyes on that. thank you. let's get to first word news. opening a cabinet meeting with a condemnation of the suspected poisoning gas attack, president trump provided
more information about his upcoming meeting with north korea's kim jong-un. , we have been in touch with them, we will be meeting with them sometime in may or early june. i think there'll be great respect paid by both parties and we will be be able to make a deal. mark: south korea's claim was confirmed that kim is willing to talk to president trump about getting rid of weapons. rating forapproval shinzo abe's cabinet rose to 58.4%. the first time in six months the level of support fell lower than the disapproval rate. hishas apologized for second scandal.
the prime minister and his wife were accused of involvement in providing a discount to eight school operated -- operator. paul ryan his joint fundraising millione has raised $11 this year and had of november's midterm elections. $54committee has raised million in the 2017-18 election cycle, something they called unprecedented. republicans are trying to fight off a trend in which the party that holds the white house almost always loses seats in the midterms. several investigations underway into scott pruitt's conduct. the inspector general is conducting at least five investigative audits related to
prewitt including a look into alleged spending and timesheet abuse by his security detail. the associated press reported the team providing day and night protection have racked up expenses approaching $3 million in his first year on the job. global news powered by 2700 journalists and analysts in 120 countries. scarlet: this is bloomberg. let's get back to the story julia was mentioning. facebook. mark zuckerberg will testify tomorrow and wednesday as he confronts the worst privacy crisis in the company's history. he will be facing tough questions. >> the question ought to be what should congress do in response to this? our laws already il -- are the adequate?dy
what needs to be done to prevent this in the future? scarlet: our next guest is also looking for answers and has deleted his facebook. joining us from the new energy finance summit, thank you for taking the time to speak with us. they are looking for information on what facebook is doing following that scandal but you have made this decision to remove your personal account on facebook. talk to us about the link. what is the connection? >> they are separate permit. -- separate. i don't want to share my information. this generation that uses facebook heavily my they have been very open. i am not sure that they violated privacy rules. facebook hardly has any rules. they are willing to put everyone's information out there
for their gain. it has been a challenge. we own the stock because it is in the index. so, my decision has nothing to do with the decision. account amy myspace decade ago and nobody seemed to care. facebook topace and totally different entities. i wonder to what extent you have heard about concerns over teacher privacy on facebook. >> there is a growing momentum of people using the delete facebook #but it is sending a signal that they have got to be aware when they put themselves on the web there is no privacy. they are exposing their personal information to lots of people and facebook uses that for-profit. there is some governance. we're unhappy with the governance of facebook but the
stock is what it is. we will have to hear how that individual dies -- individual does with their testimony. it's going to be an interesting challenge. julie: are you suggesting someone else could do a better job? >> looking at it from the outside, we are not inside the company but clearly very late to respond, little concern for the actual customer and they rely on their namebrand. it is about brand reputation. there is little barrier to entry for someone to come into this we joke about myspace. you guys have commented facebook is facing a challenge. the younger generation is going on. what is the future for the company? how are they going to manage
this issue where they get duped by a pretend professor that uses data for other purposes? it doesn't help to just have a .isclosure or a warning people have to understand they are exposing themselves, and to what extent do they want to be exposed, and whether the company is using that. >> you have taken this choice into your own hands. there has to be responsibility to say what am i ok with. few people overall compared to the scale of users out there have joined this delete facebook campaign. is there anything mark zuckerberg could say that would convince you to get back on facebook? >> in my case i don't think so. there are people -- people that
like sharing personal data out there in the world or are private and say i'm not going to share my information. i wasn't a heavy user at all. i wanted to do it to present my professional appearance similar to linkedin. from may it was not important. i would rather use twitter to communicate. are the people we want to talk to. teachers use that. we are going to use all things to communicate with our constituents. is there anything the government could do with regard to facebook and how it overseas or starts to oversee facebook's operation that would make you more comfortable with how facebook is proceeding? >> in our case it is about the governance. the governance of having one sole owner, no voting rights in
the stock, that is a different side of government regulations. an ngo.the sec and people ought to pay attention and realize it's not effective to have one person as king of the company and run it as is -- as his own place. we are shareholders. we want to vote in a board of director. we want to vote in a board of directors that will hold management accountable for how they operate. now built a brand image and they are doing a good job of and destroyingin that brand image by how slowly they are moving. i don't know what the government could do in terms of broad regulation. julia: until investors put their money where their mouth is on that and demand changes and say we are not comfortable with one
ceo and we're not going to invest the little will change. >> in this case you are right. it is a slow process. we are still engaging the company. i appreciate they are talking back. it is different than a company where we can elect a different board of directors, we can demand changes, even put in a proxy statement to bring change. in this case it is a closed system. that is why we are trying to break silicon valley of trying to use that system. quality bute star it is not effective for governance. one person lacks accountability and can make mistakes. -- joiningjoining a us from the summit, it is buzzing behind you. what message are you taking to
that conference? what do you want people to know? >> your boss is behind me talking, michael bloomberg is on now. i have been coming here for a number of years. i'm the only chief investment officer that does. i learned so much. it is not just about energy demand into the future, but the types of energy that we need and the flexibility we need. in the middle of the day with wind and solar the price of electricity goes near zero. when we get home and plug-in computers, we turn on facebook in the evening that is an energy demand spike. there are going to be huge investment opportunities in terms of the grid, how you distribute energy, how people consume it. the technology. this is a big learning
experience about what the future is going to hold and the trends that we have long-term that we can take advantage of. julia: brilliant to have you with us. the chief investment officer. scarlet. scarlet: coming up, another bloomberg exclusive. the current business environment. coming up, this is bloomberg.
headwinds facing the economy. >> we used gdp as a foundation base for growth. that is projected to pay 2.7%. thatok at housing and add on. that has been worth a couple of points of growth. we see that continuing. formation, household appreciation those are positive aspects that are drivers for our business. we feel good overall. >> in terms of markets what we worried about his trade. i know you don't have an international business but what is your sense of the headwinds from d.c. that could stop the growth? when you think about the trade situation, we obviously, 20% of goods come from offshore somewhere in the world. most trade is local in terms of
live goods, mulch, lumber. a lot of that is domestic u.s. product. rise, whichtinue to they will, we will have to find offsets to drive value for our customer. you always worry about a cost environment that could be increasing. that can affect consumer spending confidence. >> part of home depot's success has been careful cost control. tell us about the things that worry you. trade dispute? where are you most challenged? >> from a wage standpoint we manage that on an ongoing basis market by market. we always worry about the first cost of goods going up because that can slow down unit productivity and that is not a good thing.
>> what about wages? you got the tax cut. are you going to be raising wages this year? >> we have been raising wages. it is across the board. we do it by market. we look at every market as an individual component to make sure we are weighing a competitive wage in conjunction with our strategy. >> the benefit, how much is that reinvested in the business and where does that go? reinvestedll of the in the business. prior to the tax reform we committed to double the investment in our business. we will $11.1 billion in two home depot over the next three years. that is enough to keep pace with the changing retail environment. our is going to go into
stores. half will go into stores for two elements monday physical experience that needs to be great when a customer comes in the store and interconnected experience. it will also going to our associates, wage, benefits and technology to help them do their job, and to supply chain. more on the markets just ahead. from the market, this is bloomberg.
volume is 21 million. near the low end of the range. my guess would be earnings. it was slow. bad earnings. we will get an earnings ramp with the financials and talk about that more but i would expect volume to pick up towards that average year to date into this week and next week. >> financials kickoff friday. there are pretty lofty expectations. what are you thinking? 500 expectedor s&p to increase 17% in this quarter year-over-year and the next consensusters months, , this market has come in 10% at the lowes around this eight and
9% down firmly january. there is going to be a lot of complexity here. growth.et is 70% -- 17% growth. we think financials are leading off, we want to belong on them. julie: how do you get long on them? >> for a broad trade in financials, the financial spider, we would go out and put on risk reversals in june. you are selling at 25, buying at 29. this is something we like at the sector level. takess nice exposure that advantage that skew is elevated. >> super quickly, you are also looking at citigroup. wouldy is the one we
meeting. he warned syria would pay a price for it the poison gas attack on a rebel stronghold. jim mattis says he would not rule anything out when he was asked about retaliation. the u.n. human rights office is warning of the dangers of an impotent international response to the use of chemical weapons in syria. states around the world ratified the chemical weapons convention which prohibits the use of chemical weapons. >> we are seeing dozens of attacks. the impotent response, all of them are involved in syria, it is simply paralyzed. >> the concern is that chemical attacks appeared to be becoming normalized in syria.