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tv   Bloomberg Best  Bloomberg  April 27, 2018 10:00pm-11:00pm EDT

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♪ coming up on "bloomberg best." the stories that shaped the weekend business around the world. earning season or is into high gear with big banks and big management in the spotlight. >> this company in a position no other company has ever been in before. >> injury grows from big deals to corporate mergers to political pacs. >> it struck me how easy these two gentlemen were to be in each other's company. holding pattern with
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its qe. site -- ins the aim themes ofthe top business and finance. >> asset management is the one sector in china that have never been truly developed. >> you have to be diversified and balanced with stocks, bonds and cash. >> all ahead on "bloomberg best." >> ♪ ♪ >> welcome. inocencio andy this is "bloomberg best," the weekly review of the most important business news and analysis from bloomberg television around the world.
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it was a busy week from corporate earnings reports with from airbn report lphabet. atearnings-per-share came in $13 and $.31. capital expenditures for the tech giant more than tripled. >> the big segue for investors was the spending. more than doubled. they spent $2.4 billion on real estate and they mentioned they are investing deeply and cloud and data centers and machine learning technology. they're going to keep spending quite heavily on google. >> the 10 year treasury yield just hit 3% for the first time since 2014. it is quantitative means that matters. now that we have breached this,
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does the selling take up pace? >> we have seen the level hold and then come back down again in yields. this is not some sort of magical number that cannot be crossed. we will probably profit again in the coming days. now we can focus on the yield curve and the other things that will impact the market going forward. boston,being him to the shares of caterpillar one of the biggest drags on the broader market. what happened? >> initially be cfo said one q was the high water mark in terms of profits per share. by the third or fourth question into the call, one of the analysts said, you are saying this is the high water mark so 2q, usually 2q is the
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best profit quarter for the year and they said 1q will be the profit quarter best for this year/ >> caterpillar was not alone in selling off. 500biggest drags on the s&p , microsoft, google and facebook. >> underlying all of this is the lack of upward momentum and underlying core earnings. related this is tech ech not type one -- t related and not top line related. toemmanuel macron came washington with the not so secret gold of selling president trump -- goal of selling president trump on the iran deal. he cautioned president trump
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on tearing up the deal, which he called insane. >> there was an interesting moment where president trump said perhaps president macron might have some sense of idea what exactly president trump will decide on may 12 when he announces whether or not the united states will remain in the deal. >> emmanuel macron just concluded his address to a joint session of congress. >> emmanuel macron greeted warmly by a joint session of congress. he has some interesting things to say about trade and the global economy. at one point he said that he hoped that at one point the united states will rejoin that deal regarding the paris climate accord agreement. >> the critics have said that donald trump with on everything and even managed to convince him on anything
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and he tried to get back to a really, the core of the french vision. multilateralism. in fact, at some point he seemed anti trump. was applauded 43 times and i do not think he was applauded that many times in his presidential campaign. >> facebook shares advancing in light trading as reporting first-quarter earnings. nearing records and users keep flocking. toebook earnings soared $11.9 billion. this as facebook is embroiled in one controversy after another. >> this quarter earnings look strong. our user growth looks strong. there are a lot of positive things that happened in the quarter. we're finding a hard time finding something negative. >> we're going to see
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advertisers having no choice but to use facebook for the most exact targeting they can get anywhere on a global basis. that is a huge asset for the company. on the other hand, this company is in an absolutely unique new position where it is very legitimacy is being questioned by society and governments around the world. we're entering a very new phase for this company which continues to hit on all cylinders financially but it is by no means out of the woods. it is in a position that no company has been in before and it might get back. >> the ecb held a right study giving some indications of softening in the eurozone economy. mario draghi giving his outlook in the process following the announcement. >> it seems our meeting in early march points toward some moderation. while remaining consistent with
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a solid and broad-based expansion of the euro areas economy. >> a balanced draghi today. is that the word to describe it? >> i think you presented both sides of the argument. there was the patience and prudence but still quite upbeat at the same time. he talked about wages being positive and the momentum building. they are confident in the mixed target over time. describe the slow down as transitory. after the growth there had to be a little bit of moderation but that is not mean it will fall off a cliff. >> amazon reporting blockbuster results. shares jumping 6% in late quarter trading. the profit tops analyst estimates. this after a profitable cloud computing division that is looking more and more corporate customers. what are the highlights? >> i have the same feeling i did
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on tuesday with facebook. what is all the noise about? the environment on amazon really captured by president trump's tweets. the post office, none of that day.ers to amazon is growing very quickly. they added a 60% in hiring year-over-year and a $1.2 billion net profit. unheard of at amazon. the very profitable parts of the business like aws is increasing and the north american retail business is going up probably because of the 100 million prime members, which jeff bezos emphasized. >> the bank of japan gave its latest policy decision today. leaving stimulus unchanged. absent from its statement was any chance of leaving it to percent inflation goals. >> the boj maintaining a forecast on when the economy
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will finally have the 2% target. most recently, 2019. bojal year 2019 is what the said they were expecting. there is some speculation they would push that out even further into 2020. the conjectural start is that the bank of japan is being more dovish. now that they do not have that target they can have in less quantitative easing. we have two ardent reflatio nists on the board. one of the new deputy governor. >> kim jong-un has become the first north korean leader to enter south korea. he was greeted by president mifid ii --moon jae-in. of called it a new history peace and prosperity. >> this was a very interesting meeting because i have been to many of these government to
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government type occasion but they are usually stiff and the thing that struck me was how at east these two gentlemen seem to be in each other's company. >> they said they want to finally end the korean war 65 years after it took place. end it formally with a peace treaty. before now it has been an armistice. >> as we approach a potential summit between donald trump and kim jong-un in a matter of weeks is what moon and kim will be a complete the nuclear station of the korean peninsula --the new collateralization -- de nuclearization of the korean peninsula. >> everyone in the national security world i've spoken to says communication with north korea is a positive step forward.
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that said, it should be greeted with caution. ♪ >> still ahead, as reviewed the week on bloomberg best, exclusive interviews including a frank discussion with the ceo of charles schwab on how clients are coping with jitters in the bond and equity market. and on the eve of an election, malaysia's prime minister must but the one in g-v scandal to rest. he tells bloomberg he is not a thief. of next, a focus on earnings reports with a focus on results from european banks. this is bloomberg. ♪
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♪ >> this is "bloomberg best." i'm ramy inocencio. let's begin our global report
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with a look to europe where some of the biggest banks reported quarterly earnings, starting monday with ubs. >> a strong first-quarter performance from ubs's investment bank offset by weaker results from its global asset investment unit. will it right and what went wrong? >> the investment bank has done fantastically. equity trading is up. the unit head can feel vindicated in his strategy, that is the strategy of not using too much of the balance sheet and being capital light. banking is a smaller part of management is bigger. and wealth management, people are shaking their heads wondering what has gone wrong. suisse is reaping the
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rewards of its ticket to wealth management. the swiss bank attracting new management in the first quarter. why do credit suisse investors, why do they have a smile on their face today? >> is not just the investors. tidjane thiam has gotten two things right. could bring, he cost out of the business massively. and he has a saying to focus on wealth management and he has been delivering. that is notable because it is an industry filled with the top -- they seem to do differently than the rest of the markets. >> they are reported a first-quarter loss but they are showing momentum. the investment bank tracked
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through the revenue. >> we have had a rough time but is momentum turning? definitely. >> i think after the whistleblowing incident, you have a ceo that is firmly behind growing the investment bank and the capital missed this quarter is because risk in the investment bank is growing. were up b of a, they less than 40 in terms of dollar concerns. did great on trading in terms of costs. >> deutsche bank abandoning its ambition to be a global security firm. it will scale back u.s. rates sales and trading and reduce its corporate finance business in the united states and asia. isn't that significant a shift in terms of strategy for the company. we need to be a corporate led d inal investment bank base
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europe with global reach. there is a rescaling of our ambitions internationally and if you like --and a lack of discipline --and if you like a discipline and focus. making sure we realign with that european core. >> deutsche bank cutting more than 10%. >> these layoffs will focus on equities, corporate finance, they also said they are looking at u.s. rates. --go of more g than 10% of the workforce and we may find out it is even bigger at a later point. lessey said they generated income than expected, making it a challenge for them andy landers to live up. >> we have delivered on what we credit, 4 c;s, costs, capital and compliance, which
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are the basis for driving a bank for. i am noting that the top line is softer but i am confident we can on the net profit line, we will ofit and net pr increase momentum. we are well-positioned to deliver. >> the bakery american automakers reporting earnings. gmz meeting analyst estimates while chrysler falls short. >> the big news was ford and their decision to discontinue their sedan business in their home market in north america. the big picture, these are still really profitable companies. they are doing very well and yet the pressure coming from the tech industry and from the changes going on is forcing them to make dramatic changes like getting out of cars like the way
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gm has gotten out of markets like russia and india. >> investors not singing. shares down after the company beat estimates but warned revenue growth could slow. >> it gives us a chance to go back in the areas where we have been investing as far as the health of the platform, the revenue process and sales. we set up a call that we would 10% to 15%.count >> profit beat estimates on booming exports of its memory chips but it sounded a warning on global profitability. >> they have to be conservative. definitely first quarter was a very strong feat. seasonally speaking, first quarter is usually weak and in ande of sluggish demand
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weak quarter for this elec tronics, still it managed to beat estimates. veryprofit slowing is reasonable that the focus is on the memory chip division. the second quarter should have stronger demand and this segment is good enough to overcome all segments.ss in other >> a big day for big oil. beatsmisses and chevron across the board. >> exxon felt short of estimates and that is because of a production this. they had their lowest fourth-quarter production figure in 19 years. you had chevron beat by every estimates that was out there and
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had pennex reporting the best profits in a decade. bp reports next week. and we have a series of shale companies reporting next week and they will give us some sense of whether or not they will go hog wild with the spending or if they can show more discipline. oil is above $70. ♪
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>> welcome back to "bloomberg best." u.s. 10 year treasury yields breakthrough that 3% mark for the first time in four years. something this could be a turning point for the bond market. eric spoke exclusively with the
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charles schwab ceo and asked him how investor behavior might change if bonds turned bearish. >> it is a big issue. it is a concern. we try to do a lot of education with investors and what it can mean in a rising rate environment. this is what will not work. what will not work is the thought of i will get out before it happens. unfortunately that is the thought we'll hear from some investors. that is not a strategy for success. >> you think we will see a stampede of a fixed income? >> it all depends on the pace at which rates go up and how far they go up. if you see rates jump 2 or 300 basis points in the course of 90 days, you're going to have a bit of panic among some investors. >> what about the inevitable correction or perhaps bear
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market inequities, it is going to happen, we don't know when, maybe you do. >> i do not know. >> how do you expect investors to behave then? >> as we all recognize, you have to be diversified. if you are not diversified, you're basically playing the game. where the stock market is, you're basically picking up nichols in front of a steamroller. -- nickels in front of a steamroller. you have to be diversified and balanced with your stocks and bonds and cash. you have to have your portfolio to withstand it. >> what is your view on the suitability as costs of alternatives for individual investors? >> the track record of most alternatives without taking on any individual firm is not great. there are firms, just like the
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active estimation space that are very focused, generally have a lot of experience but there are few and far between. in general, they have to categorize alternative investments is probably not a great deal for most investors. if you get lined up with one of the exceptional firms, you have a fighting chance to get outperformance. >> still to come on bloomberg best, working week's top news stories. bidding wars seem to be heating up in inundate -- m and a. and wells fargo takes heat at a contentious investor meeting. >> wells fargo is not improving its practices. they defend the culture as being appropriate. >> and the head of china's largest investment firm explains how trade tensions are shaping his plans. >> at the end of the day, capitals and goals, it is
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welcome. this is bloomberg. ♪
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>> you are watching bloomberg best. there were many major financial institutions in europe that posted results this week in a quarter that saw volatility suddenly come back to global markets. the perspective from top-level executives was particularly interesting. >> with the geopolitical tensions rising, you see this with concerns over trade globally. how much of a threat is that? if you look at the economic
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dynamics, they are still very constructive across the board. there is still signs of synchronized growth and momentum. on the other hand, when you look at the geopolitical picture, the picture gets a little bit more foggy. clients are feeling that's. if you look at the first quarter of client activity, there is a exuberance beyond what you would call seasonal factors, and followed by much more muted client activity levels in february and march, which is similar to what we saw in 2017. very difficult to say anything other than we are prepared. we have a good momentum in our businesses. businesses allows us
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to navigate almost any market conditions. it is absolutely perfect for china. economy is being driven by a range of amazingly successful entrepreneurs. manage,lity we have to to help them raise capital, to help them grow their business, to help them invest abroad in any sector is unique. obviously, an organization has to be structured based on client needs. we have one client. we don't have a private banking client, and in asia it is the same person. interact in aly coordinated way. manage cases where we able.
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ways.ks both >> the competition must be heating up, right? that is why i am not smiling too broadly. i keep people focused. look forward, the past does not matter. >> what happens if there is a 20% correction on trade equities? disruptive,be quite but the reality in management is we have a long-term relationship with clients and it is a continuous dialogue. that gives us opportunities to think about how to reallocate assets. what we said last quarter -- we also said now we have to get the main contact and litigation issues behind us.
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everybody knew the main issue we had was the department of justice around securities that were sold in 2005 and 2007. those were settled for 1.4 billion pounds, roughly in line with how the u.s. bank settled. now that the department of justice is behind us, and we took a reserve for pbi -- pppi, we can consider returning capital to shareholders. >> do you think you will be at stock buyback by the end of the year? >> we are not going to give a date to that. tests withse stress the bank of england to go through and there are things we want to do with our balance sheets. and things we want to do with our legacy issues that carry a
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very high interest rate that we are able to call. some balance sheet issues we att to do, but we will look returning capital to our shareholders through buybacks. we aren't putting any timeframe on that. to asia, where investors are trying to keep their footing as the ground of global trade policy seems to shift. the head of china's investment capital sat down with us in that exclusive conversation, they talked about how uncertainty is affecting business. confirms that. on one hand, there are solutions to the trade issues. but launching trade war is not the solution. if anything, it will make things worse. >> do you expect a slowdown in
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chinese advancement in the u.s.. >> this year, for sure it will be slower. slowerar was already 30% . i suspect 2018 might be even lower. we are looking for deals in europe and doing a lot in japan. day, capital the can go wherever it is welcome. >> are you investing in areas that are in the made in china strategy for 2020? >> of course. it,he government supports there are things behind it and you need to look into it. for example, information technology and medical equipment. these are sectors
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that are seeing a lot of demand. reasons to look into that -- them. but we do not blindly follow government guidelines. in terms of relationships with financial institutions in china, for many it sounds positive, but the reality is that operating in the broker or banking space will prove very difficult to compete domestically. the most interesting sector, in my view, is asset management. that is one sector that has never been truly developed. but given how much savings there are in china, you can bet it is just a matter of time. >> malaysian voters go to the in a shadow of
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one of the world's biggest financial scandals. in his first international media interview in three years, they sat down with bloomberg to give his perspective. essentially a business issue became a political issue. because my opponent wanted to change a government between election cycles. that is why they created this as a big issue. in the meantime, our program is working well. anddebt level has gone down we have enough assets to cover our debts. about people feel
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who say you have acted dishonestly? >> there is no evidence of that. you cannot just accuse somebody of being a thief unless there is evidence. we have to act on evidence. they could not find any evidence of wrongdoing. so that is a politically motivated statement. admitted thate the funds and ended up in your account, even though it was a donation. >> it has been cleared. there is no wrongdoing. i stand by it. the saudi government has come out with a statement saying it is an official donation. the facts speak for themselves. but it has become a political issue.
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>> this is bloomberg best. let's keep moving with our roundup of the week's top business headlines. newest development in a strategic face-off between media heavyweights. >> reach for the sky, comcast starts a bidding war with disney and fox. it's $30 billion in all caps offer. are we in a bidding war? >> the expectation is that yes, we are. and fox is likely to come back with a higher offer. they have been tried for all this time to buy sky, and it is likely they will up their offer. both parties really wanted. it is a valuable tech platform and has millions of subscribers
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across europe. you had skies your portfolio, it makes you a more powerful media player. >> japanese drugmaker tech data takeda tumbling. both companies confirmed there was a revised proposal. the revised offer slightly ups -- cash fortune -- porch and portion. additionally, the deadline was set for today, but the two have decided to extend it to make a. -- may 8th. >> a record plunge. it has been quite a roller coaster for russo.
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why is the statement so important? weeks, theck two u.s. place what look like punitive sanctions on rusal. because everybody to wonder where the mess would come from. suddenly, we get a clarification of the position of the u.s. government and have extended the amount of time companies can still deal. finally, they said that if the billionaire who has been synonymous with the russian aluminum industry, if he exits the company then that might be a way out. a russian billionaire attempting to keep control of rusal in the face of sanctions.
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he wants to stay. >> exactly right. in aluminium market has been release since monday when the u.s. treasury said if he relinquishes control they will lift sanctions. there have been a lot of assumptions going on amongst traders that therefore that would probably happen and the sanctions would be lifted. that heeporting today has no intention of going. norway's state control company said first-quarter profits increased 32% amidst rising petroleum prices and higher output. i wanted to start with your expectations for the oil price. do you think it comes down from here? >> i think the price will continue to be volatile. there is a lot of technicality and volatility and what you see.
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days, storage levels have come down to normal levels and they will see a oil price that is even more sensitive to geopolitical events, which impacts oil price. >> the shakeup continues at deutsche bank, the company naming a new coo. the bank isthat considering extensive cuts to its cash equities business in the united states, part of its wider restructuring. let's talk about this change. looking at it briefly, it looks the new coo is an admin done. what is surprising is he has been with the company for 32 years. he has been with it even longer than the new coo. they are both basically lifers and are both german.
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so, now he is replacing kim hammond, who is american. towardsitely a turn germany, i would say. wells fargo investors have had a big day, and so have the company's critics, one notable critic calling for changes is california as treasurer, who once wells fargo ceo to step down. they are not improving their practices and defend their culture as being appropriate but that dog doesn't hunt. year, weed to last have a lot of people wanting to stand up and hear from him on different issues, both from consumer banks but also on things like foreclosures and medical costs. could be of issues
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presented to her at her first meeting representing wells fargo as chairwoman. electric shareholder meeting taking pressure as they come under pressure to fire their auditor. just as it seemed like the shares were on the mend, they get hit by another peace of bad beingith their outlook graded at negative. there were protests outside the shareholder meeting as well. just how at the tate are the investors -- agitated are the investors? people are upset that their shares were walked back in that it has been eating into their shareholder savings. that is what we have heard from the shareholders. you brought up credit rating, that is a big deal. because they rely on commercial paper for their day-to-day operations, any kind of rating cut is going to have ramifications.
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the percentage was about 65% of participating shareholders, and blaster it was 95%. -- last year it was 95%. --china has raised their cap capital outflows. >> this is a move that has been broadly welcomed. what it means is that institutional investors in china will be able to buy more security abroad. the government sets a quota, and they have relaxed that quota and increase the amount of securities you're allowed to buy to 98 billionn u.s. dollars as of april the 24th. it does give investors more options, and it seems to be another step towards this gradual move to open up the financial markets here in china
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and to see investors be more integrated with the global system. thatould be seen in context, but yes it has been welcomed and is seen as significant. one of the leaders in the ellicott signature business has become the latest company to go public. shares are soaring out of the gate. >> when we think about the opportunity, we think the total opportunity is large. when you think about the opportunity to lance new customers, and we serve small businesses to the larger enterprises. now we have an international footprint as well. a big opportunity for international expansion, and i don't want to miss one of the most opportunities for our growth is expanding with our existing customers. many of our customers only have a few use cases with us and we see the opportunity for hundreds.
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german chancellor angela merkel is meeting with president trump at the white house. the frenchys after counterpart held meetings with president trump where he tried to make progress on difficult issues like trade and the iran nuclear deal. unlike macron, she will only have two hours to do it. what will they get done? much, but the number one on the agenda is making permanent those aluminum and steel trade exemption tariffs that president macron was hoping to do the same. number two, getting president trump to reconsider withdrawing from the iran deal. >> they will not be doing nuclear weapons, that i can tell you. you can bank on it.
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we did see currencies drop last week, but the turkish lira and the ruble actually outperformed last week. we have a great function for this. it doesn't just show you performance, this is showing emerging markets and puts to call. that over theg next month, traders are the most bearish on the russian ruble and the turkish lira. there are about 30,000 functions on the bloomberg and we always enjoy showing you our favorites. maybe they will become your favorites to. findunction you will
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particularly useful is to uic here is one quick take you will want to see from this week. we have all seen terminator two, where artificial intelligence is trying to destroy humanity. that has not come true yet, but ai is here. past decade, artificial intelligence has found real-world application. far from destroying all of its problems, experts question how much farther it can go from here. artificial intelligence is software that solves problems. you could think of it as a giant excel spreadsheet where you are running statistics to try and find the best guess. it is -- is this an apple?
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it runs all kinds of cap relations to see if it is an apple. >> become be making the most out of ai are companies like google, facebook, and amazon. >> it is basic stuff like recognizing your face, translating a menu, using computer vision to see where other cars are. some of the first attempts to create artificial intelligence was in the 1950's with the arrival of neural net, software that can process networks with some of the pattern recognition techniques that take place in our bring -- brains. the internet finally supplied the kind of data that these networks needed for sustenance, huge volumes of images and text. that is what a lot of these algorithms to take off. >> today's systems can be humans at things like beating stocks or playing board games.
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they are in driverless cars and help identify tumors. but today's ai still needs humans to tell it yes you are doing the right thing. >> the end goal of all of this is to create something called an ag ai, and artificial general artificial intelligence, which doesn't need a human to tell it what to do. >> there are even skeptics like elon musk or bill gates, who worry it could automate so many tasks that humans would end up without jobs. >> with ai, we are summoning the demon. >> that was just one of the many quick takes you can find on the bloomberg. you can also find them on bloomberg.com along with the latest news and analysis. that is all for us this week. thank you for watching, this is
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bloomberg.
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>> i am alisa parenti. here is a check of your first word news. president trump welcome german chancellor angela merkel to the white house today amidst concerns that president trump is threatening to withdraw from the iranian nuclear deal. a new extension from new u.s. tariffs is also set to expire soon. the epa's internal watchdog is opening an investigation into administrator scott pruitt's russell of a capitol hill condo. the inspector general has concerned the probe, and the government's top ethics officer also ps

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