tv Bloomberg Markets Americas Bloomberg May 3, 2018 1:30pm-2:01pm EDT
shery ahn: live from bloomberg world headquarters in new york. >> welcome to liberate markets. we are joined by bloomberg audiences and here are the top stories we're following around the world. rapid recovery. slowly but stocks is surely being recouped as an investors have earnings with the u.s. jobs report on deck next. the tesla ceo dismisses questions about cash earning after blazing through another $1 billion last quarter. and amazon's next move. the retail threat to payment services such as paypal and if it is something to worry about. let's kick things off with a check of major averages. of thosecouping some
losses. the dow is down one quarter of 1% at the lowest level in a month. careinancials and health are leading the decline and a few sectors are in green. >> investors are continued to read the tea leaves on that statement, and it has been up 11 of the last 13 sections. the canadian dollar is weaker. trade numbers on both sides of the border today. again, we have a small surplus, canada with the u.s. as you can see, the surplus narrowed slightly and we saw a massive jump in the numbers away from the u.s. nervousk was blunt with shareholders during a highly charged earnings call. he cut off analyst and got
defensive about the finances. >> next, next. next. sorry. these questions are so to what -- so dry that they are killing me. do not buy if volatility is scary, there you go. >> joining us for more is tony, senior research analyst at orenstein. actually got a bit of an earful from elon musk p was this unlike any other call you experienced in terms of ceo? >> this was unusual, certainly. ceo's is can be disappointed or or do notquestions appreciate multipart questions but i think the level of
outright dismissiveness was unusual. undermineis affect or investor confidence in the outlook? >> i think the investor feedback i have gotten today, there is incremental concern when, on analyst financial quarterly call, the ceo does not appear to want to talk about important financial metrics. is thedthrough potentially the ceo does not care or is not focused in the financial metrics or ultimately, the numbers do not tell a good story. either interpretation is not particularly comforting. >> this is a company that really needs support from investors not to antagonize but to reassure.
think about all the years jeff asus persuade you to keep money in despite no profits. do you think there is an endgame or just a man who lost a temper? look, elon musk is a brilliant visionary and has extraordinaire strength. times, he cant become frustrated with monday and and he can be temperamental and that is what we saw today. last night. excuse me. investors who know him, they are probably not entirely surprised. as i mentioned, to discuss financial metrics in a form created for financial metrics can be incrementally worrisome. >> let's discuss. how do those compared to your expectations? >> the quarter itself was really in line.
i think for me where the incremental disappointment was was the company has been stating it believes it could get its 25%l three gross margins to once it got to a volume of 5000 cars per week or shortly thereafter. the implication was that might happen in the air or fourth quarter of the year. last night, they said no, they did not think gross margins would get to 25% until mid-two night in and they would most likely going to get to 20 -- two it by the end of the year. the trajectory is weaker than the company thought three months ago and that is important because the margins are an important driver of whether a company can make money and making money has been elusive
for tesla. that being pushed and that is it because the margins out six or nine months was an incremental negative in our eyes. >> cash flow is important. they are reiterating it could become positive for the third or .ourth quarter is that possible? >> it takes a set of assumptions. by our calculations, they have to scale back on growth and research development and selling and marketing expenses. we think in order for tesla to beat profitable and cash flow might onlyxpenses grow 15% whereas revenues might grow 70. it is a big disconnect. so we think getting to cash flow positive, while not impossible, will be difficult to do and in doing so, it may have unintended consequences in terms of starting spending in other areas . >> saying this is not a week for
you, you got yelled that at a conference call and put a bearish note at apple. to did you get apple wrong that extent? how did apple managed to surprise that way? look, we did get apple wrong going into the quarter. there were a lot of supply chain data points that were negative. i think our interpretation as well as some investors who were surprised as well, which is why yesterday,as up for theeasonal cycle cycle. was clearly a surprise for us and more broadly for the market based.
we have had a view on apple for a couple of years that the stock is not a core long-term holding. we worry that the iphone is such a part of apple and over time, ae iphone itself is relatively mature business and we don't think it has much growth. over time, replacement cycles for iphones will problem extend. we really struggled to see whether there will be iphone growth going forward. business, 65%pal of profits helping to drive services, another 20%, if you do not have a clear path for growth, we find it hard to say that should be a core holding in your portfolio. the stock has made people a lot of money in the past couple of years buying at the right time and selling at the right time. ado think it is more of
trading stock. mean no the next three or four years, that is the same in my mind. >> let's now get to the first word news with mark crumpton. mark: three americans in britain and north korea will be released today according to rudy giuliani who recently joined president trump us his legal team. he made the announcement after the president mentioned the u.s. prisoners in a tweet. the three are reportedly receiving medical treatment. last year, he was returned to his family in a coma. the us military launched an investigation into wednesday's crash for a cargo plane that killed nine puerto rican airmen after takeoff in georgia.
in -- they call routine maintenance in arizona. to belgium as -- approaches. what a nice british citizens work in the eu, some of whom have lived in elgin for years and have pension plans and fear for their future after britain leaves next march. more than 100 people are dead and another 300 injured after a powerful rainstorm swept through parts of northern and western india wednesday night. ton trees and caused housing collapse. the monsoon season is still more than six weeks away. global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg.
digesting better than estimated earnings in a slew of economic data below estimates. and and labor costs nonmanufacturing data fell short of expectations. focus from investors jobs tomorrow. great to have you with us. we are getting a mixed picture with economic data. softer for the start of the quarter. how or when will we know when the economic cycle is over? >> we will know when it is over, which is not yet. a good four quarters left of the up cycle. do not get too excited. >> these are the elements you are looking at to decide to pinpoint when it would come. >> the things that would cause things to rollover would be when
andntry's get too high thrust to be discouraged by high >> it hastreasuries been good data. manufacturing still in this territory though disappointing. a fairly healthy economy. >> they draw conclusions fact of the matter is, the economy is on a full scare -- full-scale straight over not stopping anytime soon. >> we saw jobless claim numbers today. the consensus is that is still expansionary. as we look ahead tomorrow, what are you expecting? are you looking to see full
employment? >> under quarter to quarter basis for over a year now, i would expect that would continue to be the number. 140 million is the number. for the course. it does not mean it will come to 200 with such a large margin of era in the data. >> with the latest fed decision means when it comes to rate hikes. subscribers are showing you what invested -- investors are pricing in with three or four rate hikes here. saw the markets are shaving a bit off for hikes and adding a touch more.
given that you think we are making too much of the economic data, would you side more with those this year? >> yes. in other words, three more years to come. expect one inld june, and september, basically. the rates will still be the fed funds rate and will still be marginally below or marginally above but very close to the rate of inflation when that is all over. stimulus talking about nor any type of tightening. you have to actually start off being tight. it is loose. the fed funds rate is 1.5%. we have a late cycle economy and fallingt and a mildly dollar taking in the view. >> and metals higher, will that play into expectations and
change the calculation year? >> of trade comes through in ands of the continuing permanent inhibition of imports in the united states, the justification for the market having topped out at the end of january will be perfectly ok. more likely to happen, a deal in late summer, in which mr. trump gets his win because of kim jong-un and all of that stuff, maybe there is a little bit of gift on the basis,y front, on that being reduced, i would think the market is going substantially higher. >> we're looking forward to that . thank you for coming in today, chief economist. a look at some of the biggest business stories in the news now. what could be the world's
biggest ipo since 2014. the china's test chinese smartphone company says revenue soared last year. it is expected to raise $10 billion and value it at $100 billion. the ceo of adidas says the company does not support kanye west's controversial remarks suggesting slavery was a choice. west is a designer for the sports shoe company. bloomberg was told adidas has discussed -- dropping him. >> it is clear to us we are a sports company and we want to change people's lives through sport which is very important. i do want to focus on the core of what the company is about, delivering the best sporting goods products in the world. meanwhile, adidas has run into quarterly headwinds and it rode -- sales rose 1.79%.
that is your business flash update. it is interesting to see the overshadowing of the kanye west controversially -- controversy. it would not be easy for them to separate from him. he has single-handedly revive the love of shoes for young people. >> that is true. social media and celebrities in order to get to the marketing strategy but keeping in mind that reputation has been tarnished earlier this year. into payments,on there is a lot for them to consider now. dropg up, amazon causing a of 4%. this is bloomberg. ♪
>> paypal recoiled yesterday falling as much as 4% when bloomberg reported amazon is set to be offering discounts to they use then if online payment service, amazon pay. the senior executive editor here in the studio, new york. great to have you. now, more than 1%. was this just a knee-jerk move when we hear anything about amazon doing something new, people just panic? >> it is true. the idea that a company like painn might inflict some on little old paypal with $13 realon in sales, that is and amazon seems willing to sacrifice some profit to move into new areas. amazon pay has been doing it for about 10 years. a nascent ever but paypal is the market leader, over 250 million,
--onymous a modest one on the realization that paypal is the leader here and it will take amazon a lot for differentiation. doing something differently in terms of online payments and smaller websites to eat in the lead. you know the company well. place the long game. one thing it seems to be doing is sacrificing profit to grow share. i wondered actually whether that would be seen as anticompetitive by regulators, whether at well. place the long game. one thing it seems some point given its size, people would raise their hands and say that is not actually how you can be have. -- behave. >> amazon is under the microscope by the trump administration but it is really a non-entity what comes to this kind of online payment, being if it took -- facilitator for other websites. they have to show some success or traction to get a lot of that negative attention.
amazon, you saw it in jeff bezos's letter. they do not want to just be an online retailer. they want to be a platform. more units were sold from third parties in amazon's history that amazon itself. that platform has to be a neutral arbiter for all different kinds of sellers, and that includes extending the payment platform to off-line stores and other off-line merchants. a platform, it needs to succeed. a paypal user but as an amazon member, it is an obvious at edition. how hard would it be for amazon to get the users to migrate over, which would be there only way to be competitive here. give you ancient amazon history. i think it was about eight or nine years ago, they introduced
phrase, acalled pay way to substitute a username or password with just a freeze. they wanted to make it easier to pay. it went nowhere and that is the challenge. paymente a lot of choices and paypal is in the lead and amazon is to figure out how to do things a little differently. >> all right. brad stone, bloomberg technology senior executive editor, thank you for being with us. i sit down with the campus finance minister to talk nafta, trade, and trump, and we will bring you that at 1:30 p.m. eastern. this is bloomberg. ♪ mr. elliot, what's your wifi password?
-- markets. ♪ scarlet: we are live and bloomberg world headquarters over the next hour. you're the top stories. the confusion, top wall street strategist lays out the latest red herring. ceo elon musk on a bazaar conference call. building people and not prison s. we will shed light on a nonprofit that benefits the formerly incarcerated for it -- incarcerated. julie hyman, we have come back quite a bit. julie: we have. it has not been unusual with what we have seen over the past couple of months. when looking,