tv Bloomberg Markets Americas Bloomberg May 7, 2018 10:00am-11:00am EDT
vonnie: here are top stories we are covering from the bloomberg and around the world. u.s. oil prices break $70 for the first time in more than three years. this before president trump's decision on iran. we will discuss the geopolitics of iran and more with germany's ambassador to the united nations in our next hour. withmusk battled it out analyst. one retail investor was able to ask over a dozen questions. we will speak with him. that and a lot more in the next two hours. 30 minutes into the trading session and there have been deals. julie: a lot of deals and also the oil trade is playing into what is going on today. the second straight session
we've had a rally in the s&p 500. two days in almost a month if you look at them together for the s&p specifically. energy stocks are a big part of the rally. best performing group in the s&p 500 as we see oil break above 70 ahead of the may 12 deadline for the u.s. to decide whether it is going to stay in or out of the iran agreement or get some kind of softening or change. the oil stocks are rising along with oil prices today. that has not always consistently been the case. we've seen this recent push up in oil prices. .e got oil versus energy stocks oil in yellow, energy stocks in the s&p 500 in white. oil has been outperforming. some traders and analysts are betting on the gap being closed in terms of percentage performance but has not yet materialized. we do have a lot of deals today.
let's talk about some of them or proposed deals. elliott management has a bid to acquire a sena health. $160 per share is the price on this. .lliott is led by paul singer and all takeover offer. there are some questions about whether this is some sort of gambit in order to get strategic bidders in here on the part of elliott. gramercy property trust becomes it in aond warehouse re week to be acquired. this time by blackstone. as we've seen online shopping become more popular some of eits haveustrial r become more attractive. an israeli flavoring company,
$7.1 billion including debt. the largest sale yet in the food flavoring industry. mark: 19 minutes until the end of the monday session. a bank holiday in london. is a wonderful step. ignore the price. that is the ftse on friday. european stocks are rising for a second day after gaining for six week last week best winning run since march 2015. a lot of of ocean on the bloomberg telling us that volumes are 15%. the 100 day average. the stock 600 is at its highest level since february, led by technology, led by oil and gas aboveies as oil trades $70 a barrel for the first time since 2014. air france, these are one-day
percentage moves. you can see the 9.9% is special. the chief executive throwing in the towel late friday, resigning from the pose he held for two years after failing to win backing from employees for paid coastal's. analysts saying the result is the worst possible outcome of the ballot leaving the company with no chief executive, no and likelyact emboldened unions, which will be less likely to concede on their demands. finance minister warning excessive salary demands and strikes by unions could sink europe's biggest airline. earlier were down by 14%. biggest decline since 2002. among the mn day, nestle shares, a one-year chart rising. nestle and starbucks joining forces to rejuvenate their
coffee empires. nestle will pay starbucks $7.15 billion up front in cash for the rights to sell starbucks coffee food serviceetail, channels. it will use the starbucks brand in capsule systems this year. shares almost to the highest level this year. sterling, falling earlier for the ninth consecutive day. if it falls for nine days it will be the worst run since september 2015. traders will scrutinize the boe rate decision on thursday. a lot of bad news has been factored in so says toronto dominion. it's as we could see a relatively hawkish hold from the boe. if we get a split vote, if we get some downplay of the recent week data maybe that puts the floor underneath sterling. maybe the bank of england will push for an august hike.
those are the scenarios painted by toronto dominion. shares are rising for the first day in nine. vonnie: so much going on this week. now we are looking for president donald trump to decide on iran. yes to choose whether to scrap or keep the nuclear deal. if he decides to withdraw which he is threatened to do, sanctions on oil in iran are likely to return. davis, us now is tina managing editor for energy and commodities. sign theides to not deal again what will happen to supply? aboutwe are talking 500,000 barrels of oil a day coming off the market by the end of the year and when you combine that with what we've seen from
opec that is a substantial amount of oil. we are at a market where it is closer to supply demand balance. anytime you have geopolitical tension we are seeing that .eflected vonnie: seems like they may not have a choice very soon. that could be taken out of their hands. how quickly would they be able to react? tina: in saudi arabia's case you have a lot of spare capacity they had been curving for the past year and a half. you could see something happen quickly. president from has been tweeting about the high oil price. if he decides not to renew waivers on the sanctions he will see immediate effect in the oil price. mark: i guess that means me if there is a gap.
saudi arabia clearly wants $80. it seems iran wants $65. which side are they leaning towards? tina: when you talk about opec you talk mostly about what saudi arabia wants. in a lot of ways sort of driving the agenda. point people behind the agreement with the non-opec producers. when you're talking about the rest of opec you are seeing a group guided largely by what the saudi's want and everyone else falling along in line. mark: when it comes to saudi arabia, the energy minister said bringing global inventory back to their five-year average is not the target. clearly its goal of stabilizing the markets has not been reached. what is the goal? tina: one of the things they have complained about, the
five-year average has been skewed by the glut we have seen in the past few years. they have a point that the five-year average is not a normal five-year average if you are looking across a longer time period. they want market stability they want supply demand equilibrium. a much less focused target. you can play with exactly what you think the price outcome should be. less regimented in terms of what you're trying to achieve with cuts. vonnie: you said something interesting earlier when you mentioned the president had noted the price of oil. is there a chance the oil market could lead the president here? thehe oil market pushes price too high the president will not withdraw from the agreement. tina: the president seems to be trying to find someone to blame already. he has chosen opec for the target. those convert into higher gasoline prices for americans at the pump. the average price of regular gasoline go up by a dollar a
gallon the past two years. of what he can do and what the market is looking for, we have seen macron, merkel, we do have boris johnson in town, trying to keep this agreement. i think we are hearing people talk about the idea that the trump administration may do the same thing they did with steel and aluminum tariffs, punt on a decision and let this thing go while they continued to see the market effect. vonnie: pump prices are headed towards three dollars a gallon on average now. thanks to tina davis. mark: 10 minutes past 3:00 in europe. stocksfollowing european , less than one hour 20 minutes until the end of the session.
were people ever dependent on the so-called reliability of the vicks? karen: it is distinct from realized volatility. popularity.grown in certainly a lot of specular and he the recent spike at the beginning of february was tied to some of those products. we think it is also tied to market sentiment and concerns over trade. syria and the news that was sort of in the backdrop but not bubbling forward into the market. what have clients been asking you? institutional solutions, you must have had institutional clients. below forat 10 maybe so long and then a spike. where they asking what to do about this? karen: they absolutely were.
before we saw the spike in february it hit down to nine images what we saw in 2007. there was a lot of concern about what this means. how could it stay low for so long? when the vicks was sustained low over several pintos, maybe three years at a time. 2005 and we also saw 2004 to 2007. there was a lot of concern about it. mark: you done some wonderful research about the performance in different asset classes either before, during, or after the so-called volatility spikes. looking at post peak event's as well. what have you uncovered? karen: a lot of investors wanted to know, and this is before we saw the recent spikes, what's going to happen if we see volatility spike again and
should i be shifting what i do. what we found is during a spike, in the middle of a spike you see risk assets suffering a negative return. . negative return on average high-yield s&p or rebound fairly quickly. a major finding, for institutional investors who are thinking volatility is coming or it pops, do i need to do something different, we found generally you don't unless you are able to get out of the way immediately before you feel that , it makes more sense to stay the course. mark: you think inflation will top out at 2%. lots of forces at play to make this happen. why 2%? why won't it go above 2%? karen: there's concern in the market.
it could drift a little above 2%. , oilof those concerns today and you see other courses in the market possibly lifting inflation higher. we think that is counterbalanced . a lot of excess capacity. a lot of competition in various markets. are hugedemographics trend for the foreseeable future. technology is a force to keep inflation low. we have a fed that is very much on top of it. constant communication. vonnie: is there an optimum liquid versus illiquid asset allocation? karen: when you think about volatility, it may pass but volatility hurts in the middle when you are experiencing volatility. if you're a large institution who has to make payments they will be concerned. back have to think about what
they need indity their portfolio. what is going to be steady for me? we work a lot with investors to help them understand if you have -- privatesets equity, you really need to be careful about how you will mix that with liquid. we help investors to understand what is an appropriate mix. vonnie: what kind of illiquid assets do you advise are safer than others? karen: it's not so much what is safer than others. there is oh is a risk with return trade-off. they tend to look like real longercash flows and term regeneration. more recently private debt has been a popular asset class. we see a wide range of what that means. spectrum.bt is a wide
it is important for investors to identify what is appropriate for them. what's going to give them income and the liquidity that they can tolerate overtime. vonnie: thanks to karen mcquiston. up next, getting answers from elon musk. we will speak to one retail investor who asks the ceo of dozen questions on earnings goals.
health arescene searching. elliott management has offered to buy the company. an online platform doctors use to manage practices. elliott took a 9% stake a year ago. to cater pharmaceutical is on the verge of its biggest acquisition yet. according to people familiar, to buyr pass near agreement to shir wanted an increasee in the cash component of the deal. vonnie: shares of tesla are starting a week higher. call.onventional earnings elon musk -- gave youtube or galileo rustled his 23 minutes of fame.
more products the technology focused questions. he joins us now. tell us what most of your time is spent on. >> i am the founder of hyper change tv. a financial noose start up. -- financial news start up. vonnie: he got elon musk's attention. up --l: i set representing over 20 million worth of shares to get a voice for retail investors on a conference call. bunchd sourced the of questions from viewers and subscribers. they let me on the call. mark: do you think the model is being disrupted by what you achieved? 23 minutes, that is a lot of time. he was quite dismissive of many of the traditional wall street analyst questions. those questions were valid talking about gross margins,
does it need to raise more money . do you think this is a pivotal moment in the analyst call epoch? russell: i think the questions before me were reiterating -- the perfect storm of elon getting frustrated. i had 10 to 12 questions prepared from all of the shareholders who i solicited feedback from. i decided to keep asking questions. mark: i've got so much to ask you. you've got this youtube channel. the channel is not making money and i gather you have sold some of your bit coin investment to fund the channel. much a bit coin you owned, what price you bought, what price you sold, the you have any other crypto currencies?
russell: i got into bit coin around 500 or 600 and liquidated with an average of about 12,000. i've been using those profits to fund hyper change while we rank revenue. i do own one other crypto asset maker maker, the token behind the stable coin. vonnie: fascinating. i'm wondering why you theicularly wanted on earnings call. if you're talking about half of shareholders couldn't you have waited for a shareholder day or an annual meeting which is where shareholders voices are heard? russell: i think of myself as sort of an analyst as well. although shareholders get the chance to ask questions at the shareholder meeting the quarterly conference calls are for updates on the business in the 12 to 18 month timeframe. i will say i could have dived more into the financials. the trajectory of operating expenses.
i do think there is a place were the more should teach it questions on the conference call. analysts were not addressing them. feedback from the huge energy storage project in australia which elon musk referenced they are working on a gigawatt hour scale project. vonnie: do you feel at all used in the sense he was able to give you 25 minutes to spend to take away time that analysts could have been asking questions? russell: i think it was a win-win. i think there has been a ton of news you are singing coming out about the tesla network, tesla energy that is really evolving a long-term story out of those questions. vonnie: galileo rustled, you ,ertainly -- galileo russell you certainly moved things around.
let's check in with bloomberg's first white view. threeotiators from the nations try again this week in washington to come up with a revised trade deal. after eight months, a number of contentious issues remain. the u.s. is threatening to oppose tariffs on steel and aluminum. the european union says it will begin investigating crimes committed against ethnic serbs during the war for independence. the country agreed this -- to set up a special prosecutor's office. kosovo's war for independence with a campaign in june of 1999. the court has yet to hear of any cases. in italy, the head of -- has act -- asked to try a new form of government. can come upent he with a majority in parliament. italy held elections two months ago.
the result was a hung parliament. the volcano in hawaii has now destroyed more than two dozen homes. 1700 people have been forced to evacuate. it is one of the world's biggest, most active volcanoes. it has been erupting since 1983. ,lobal news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. let's get back to nasa talks. bloomberg'sd by national -- he is live in washington. it looks like there has been not much change in the u.s. stance when it comes to the nafta countries. what do you imagine should have -- should happen this week? lot progress so far. he has called it the worst trade deal in history. the centerpiece of his campaign
in 2016. the endgame remains unclear. the president's main interest has been bilateral trade deficits. get from there to an end game where the united states domestic industry is satisfied with the markets they have. american customers are not paying massive prices in the event of a trade war, remains unclear. the president has suggested he likes the uncertainty. he knows there are a few deadlines. a june a deadline, for which he has delayed tariffs. and mexico has a presidential election coming up on july 1. before which it may be difficult to get much progress. >> we can see the mexican peso is weakening. has been inst it quite some time. the canadian dollar at 128. not make much progress in china either. what are people saying is the outlook for trade with the u.s.? >> this is where the president
faces real division within his own party. how far to go. the issue that he is most interested in is reducing the trade deficit that the united states has with canada. that is not the number that affects most americans in their daily lives. it is not the number that matters to americans when they go to the store and buy products. american farmers and agricultural businesses want the assets to foreign markets for their products. the trade deficit for them does not really matter. it is not clear what the endgame is. the president suggests he likes the unpredictable at a. he has said himself that there is no rush. we will see how this goes. they want to get something done by the end of the year. they don't want it to drag on pass the midterm elections. that creates a level of uncertainty for the united states. we have the foreign secretary
from the u.k. as well. all that is going on in washington, d.c., the president a lot ofm making headlines, how much thought is being put into the trade deals? like the trade deal with china, some kind of opening with britain. >> one upshot of all these trade president'sand the desire to renegotiate is that mexico and canada are pursuing closer economic ties with european countries and with china. that thea scenario united states could end up being a loser in this. you are absolutely right. as far as the political conversation goes, nafta is nowhere near the top of the list . rudy giuliani made a lot of waves. he started a lot of fires. the rest of the administration
had to put out the fires later in the week regarding the russia investigation. that is a big topic of conversation this week. >> thank you for all of that. >> volkswagen cheap executive -- chief executive says the -- -- toreement allows travel the world freely without fear of being arrested in connection with some of the diesel reading program. in berlin, how important is this for the new chief executive? this rare safe passage deal. >> i think it is fair to say that it is really important for the new ceo. -- is running a behemoth with 12 brands, more than 120 factories. imagine if he had taken over as volkswagen ceo. he would have been able to travel around.
to representu have the company. you go to car shows. having been confined to germany, that would have crippled him. he only took over as ceo last month. allows him to step in and hit the ground running in his new role running this huge company. >> does this mean he will not be charged in the case? it certainly suggests the lawyers are telling us that it certainly suggests that at least for now he is in the clear and has been given assurances that he will be informed if it changes. it is good to remember that he is under investigation here in germany for a potential market manipulation. are under former ceo
investigation. that investigation continues. this is certainly a good sign for him. how this will all play out, we will have to wait and see. he won't enjoy the same freedom that -- enjoys. in march asted well. what is his future looking like? >> you're right. this is certainly the final mail in the coffin for his fall from grace. here was a man who was once a highest-paid executive in germany. someone who traveled the world and was really heralded for turning around. i can. now, he cannot leave the country. he won't be extradited to the u.s.. german citizens are not extradited to any locations outside the european union.
-- spoke with the country's central bank governor in an exclusive interview. gross has been 1.5%. which means they are running at 6%. which is, for us, a positive element. as the gross is sufficient to fund the public and the private sector. the european market, which has seen higher relief in the secondary market, is, in fact, undervalued today. and the government does not intend to make new issues to the market. they made an issue for the central bank. our intention is not to sell more than $2 billion of bonds in
the next 12 months. >> what that means for -- location, are you diversifying more into gold? is it a more turbulent time both in global markets and in regional politics? >> lebanon, as you know, is the second holder of gold in the middle east. >> you can never have enough. >> we have been more than one floatinge, playing the .reat notes and our investments we have also a local market that provides us with revenues that keep the central bank profitable. and not to have to take a large -- large risks abroad. >> that is a note to more gold? will not buy more gold.
we will not sell the stocks that we have. that was an exclusive interview with lebanon's sank -- central bank governor. we will keep you up-to-date with elections as we hear more turnout. vladimir putin has sworn into his fourth term as president of russia. he is doing everything for russia -- he says doing everything for russia is his life's work. the russian president was reelected to his 60th -- six year term in march. he talked about an economic breakthrough. how much appetite within the kremlin is there for real change? we have been getting is not much appetite at all. vladimir putin is feeling that things are going ok, despite the pressure from the west and deep tensions with the u.s. and europe.
to desire to shake things up make economic change, the growth back in high gear, that is not something we have seen much evidence of we are still seeing how the cabinet appointment going to shake out this week. it looks like the same team that we have seen before. >> medvedev will be prime minister if he is checked by pollock -- parliament. there is a new post. , at least in name, have ideas to overhaul the economy. is that just a gesture? >> we will see. drin has been very important to investors, thanks to his record. -- he has been out of government
since 2011. the market has been watching closely for the possibility of his return. he has been advising vladimir putin for advice on the economic term. -- play a greater role in making policy. we have not heard anything official. we don't see where there is a role yet for him. there might be something for him that we will know later this week. russia/u.s. relations, how important is it for vladimir putin, economically, socially, and otherwise, to be on good terms with president donald trump? clearly, it is a fracture us relationship right now. >> it is a very tough relationship. the last week of sanctions, that was struck a number of major russian companies, it hurt the economies, ruble into a
tailspin. it has been another shock for the kremlin here. i think there is going to be another area where they would like to see relations improve, but it is not clear that there is anything ready to do to make that happen yet. >> thanks a lot. still scum, we will be discussing the geopolitics surrounding iran. much more with germany's ambassador to the united nations. he joined in our next hour. this is bloomberg. ♪
-- she is still in omaha, she is on the phone with us now. you cannot get out of there. what is -- what stood out most? weekend, he talked about a lot of things. they talked about the skill making environment. this sort of said that before. some of the more interesting ones, they really ragged on --, both of them. even calling it similar to trading terms. we also had them pushback on elon musk over a challenge about a competitive landscape. >> what about any political landmines? did buffett managed to escape any social political debates that spilled over into the corporate world? he definitely got a lot of questions about it. both of them were asked about their position on guns. stuck to theiry
views that they should not influence how managers think about the business of people who support guns. they also asked about trade policy. they are pretty optimistic about the relationship between china, the u.s.. they were able to carefully navigate some touchy topics. >> i don't want to say he was an apologist for wells fargo, but he was certainly descending the bank at one point. >> he was a of management, he -- his backing to he said that he thinks that because of these incidents, wells fargo is going to be much better in long-term. they're getting all these extensions, issues that they praise, and get it ready. thanks. check out her stories on bloomberg.com. it is time for stock of the
hour. soaring.e they made $6.46 billion takeover bid. abigail doolittle joins us now with all of the details. all, it is not the most well-known name. internet-based service. they serve more than 100,000 practices, health care practices. willing, he records, health records, management for patients in terms of appointment notification. they even had workflow around data along with drugs. lots of information. they have collected more than $31 billion in drugs. profits more than 61 million claims. they knew that elliott management is seeking the $160 per share all-cash. what happened is using their own function, we will look at some of the top shareholders. we will see the top shareholder
at 12.6% at the margin. elliott is all the way down at a less than 1% stake. with options, they have an 8.9% stake. >> while they want to buy it? >> they are an active investor. january, no talks. they failed to correct a host of operational issues. what they would like to see is improvement for merges. we will take a look at the margins. we have an 8% margin for the end of the fiscal year. up to 12%, 14%. it said they would like to be closer to 15%. perhaps they would like to be able to grow the industry's overall slow growth. maybe they would enter new business. it is interesting that there is an 8% shortage. some investors are not so happy today considering that these shares really are spiking higher.
they are going to consider all options. and figure out what is the best course for the company and shareholders. >> all right. he has been on the show in the past. a character to say the least. >> he is known for being very promotional. >> thank you. more on the deal now. bloomberg opinion. in health active care, one of the areas that they pride themselves in being good at. why? >> i think it is a company that is seen as undervalued. it took a stake, it has a good position. there are one of two things. the business will do better under new leadership and ownership. obviously, it has made some efforts in driving changes that have apparently, -- or, it could be attempting to drive out another bidder. the question is if it will succeed in that it on one hand, it is a big deal for health care. you don't generally see
transactions of this size. the more interesting proposition is an insurer or someone like cbs help, might step in and attempt to emulate united health care which is the nation's largest insurer and has a significant analytics component that has helped it be more competitive in the market. >> tell us what they are doing extraordinarily well. >> i think they are making the pitch that we will be a more tech driven and innovative alternative to some of the incumbents in the sector. just attempt to use data analytics more aggressively in terms of cost management, in terms of helping. mostly smaller dr. practices. be more profitable. the issue they run into is an attempt to jump into the larger hospital and enterprise market, which are duck -- dominated by the incumbents. >> elliott has been active prior
to now. even managed to get athena to slim down its work force some other changes in the executive. >> it has convinced them to split the chairman and ceo role which are both previously occupied. now -- is the chairman. who has a loteone of experience in the health care and technology sectors. it is a question of whether they want to change leadership more aggressively. they also promised to hire a president, a roll off his -- also held by -- that has not happened yet. that is one of several examples you can find of change taking longer that they would like. >> it is a fascinating choice. what will elliott move on to next? how does it play into the elliott portfolio? how long will he hold onto it? lookst is the thing that interesting. -- would be by a significant margin, the biggest ever completed by the company.
but a technology company last year for 1.8 billion. this could be really scaling up the equity arms. this would really make it a bigger player on that scene as opposed to just activism. a big entry into actively managing companies. >> we will bring you a response that we get. thanks to max of bloomberg opinion. up, g we will be speaking with the speaker of glenview national management. this is bloomberg. ♪ retail.
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vonnie quinn. this is the european close on "bloomberg markets." mark: here are the top stories we are covering from the bloomberg and around the world. wake up call for nestle. the european giant bedding $7 billion on starbucks after struggling with products like nespresso. the politics of disobedience. the former greek finance minister has a new political party, aiming to the -- aiming to be the next prime minister of greece. could it be europe's next headache? and we will sit down with germany's ambassador to the united nations. his take on relations and what is coming up with the iranian deal. no trading today