tv Bloomberg Markets Americas Bloomberg May 10, 2018 10:00am-11:00am EDT
welcome to bloomberg markets. ♪ vonnie: a quick look at u.s. as they stand right now almost 30 minutes into the u.s. session. indexes are higher by about .3%. .4% for the dow and s&p 500. as they stand right now almost 30 minutes into the u.s. session. indexes are higher byand we havp .4%. volume is a little bit light. we want to bring you some news coming out of washington dc we have ads that have been released by democratic members of the house committee. thousands of russia backed facebook ads. lawmakers claim the materials show russia's main goal was to prideaux -- provoked discontent in the united states, leading to
an continuing beyond donald trump us election in 2016. and from sanll, francisco. ads is a whole trove of new . what are we learning about the motives? >> they were really trying to pick on issues like racial tensions and muslims in america and trying to inflame passions in both sides of the issue. to develop a strategy and you can see how they tried to point different issues in the news at the time. those kind of highlighted the electionding up to the
and following donald trump's election. vonnie: some of them are counterintuitive. it wouldn't be quite obviously facebook's -- >> i think what is important to note here is this is the financial side of russia's global politics, and politics in particular they have already had to go and talk about it. if they are vetting elections run the world, it is positive how they view their responsibility. and how governments you facebook network but al
force in society that foreign governments can use to manipulate what they think and what they network but a force in do. these ads are incredible. towould be russia sent money get on facebook and go to rallies and they would spend money to go to anti-trump rallies. they really just wanted to make sure people in the u.s. were fighting. that it happened on facebook, today's stock will not show it, it is something already incredibly, you know, it has been incredibly impactful for the company. >> return to anna now because on react toill, as they the true that we see published [laughter] -- published, has -- to theink this will add calls we have already seen with mark zuckerberg. it is a different way that republicans and democrats in the
cell -- second house have reacted. it has been a bipartisan effort to what went wrong and try to address that so it doesn't happen in future elections especially with midterms in november. on the house side, republicans already came out and said there is no evidence of collusion and these ads do not show evidence of collusion. they do not show any from the trump campaign. scaringshow a lot of voters toward president trump and away from hillary clinton. it was democrats on the house intelligence committee that led the effort. republicans and democrats receive these ads but it is that led to the process every debt to them and making sure they were made public so other organizations outside of congress could go through the 3519 ads posted today.
>> as fascinating as we know, facebook has been working to make the ads public and they have been cooperating with legislatures to make sure this doesn't happen again. they're looking to make more transparency to the political advertising on facebook. canore to ensure that they encounter the criticism? >> you are right. try to get people who have expertise and elections, they toe focused on elections figure out what has gone wrong there. by the summer, we should be able to see the new ad transparency initiative in the u.s. where we could see all the different ads running and have those labeled as political ads from verified political advertisers on facebook. there are many steps but this
will be a problem continuing. they know that this is not going away. it is a told to manipulate society. they will have to deal with this as it comes up, the way they deal with hacking and fraud is. this will be a problem that keeps coming back. >> is a phenomenally sophisticated strategy to target u.s. voters. it is not even obvious at first glance that it was the votes they were targeting. these were emotional issues. so what are the outcomes for midterms? people will not walk away from just issues and debates because we know there were 3.5 thousand ads out there designed .o hit those points
those issues have not gone away. >> it is not like russia was creating a problem in the united states of america appeared it is exacerbating problems that existed and disagreements we had in the society. this is a problem that will not be solved and a problem that facebook will have to manage not just in the united states but other countries as well. congress try to work with the company, not just facebook but twitter as well, to manage the problem and make sure people are better consumers of things they see not just in the news but on social media. collect thank you. --vonnie: thank you. facebook is maintaining its positive momentum. 30 minutes into the trading day in the u.s. and for a broader look at the market, let's look at julie hyman.
julie: we are in stocks once again today, and rises continuing within many technology shares. stocks have been rebounding. as i glance here, it is wrought base with some groups beat up over the past couple of sessions like the telecoms and the utilities appear to be coming back to some degree in the session. i talk about momentum and technology, look at the nasdaq in the past five days. it has risen for five straight sessions. its best five-day performance in two months with a gain of about were percent in that time. one definite and one potential this morning. agreeing to buy for about $1.6 billion in cash, this is a therapy provider and developer that eli lilly is acquiring. in company went public
january $17 per share. it is soaring for $50 per share. and there has been a lot of talk about acquisition of this company. kkr is preparing a bid that could top $11 billion. those shares trading lower. retail focus is a group of not doing as well after some calls as well asalysts comparable sales for april, the forecast of the company saying it will be at the lower end of the prior forecast. finally watching the yield as well. we have got the yield trading lower, the 10 year yield down by 3% afters points under we had consumer prices rising less than estimated.
this is also a thing causing rebound in utilities today. caroline: 19 minutes from the close of trading in europe. check out what is happening in italy. we have a rise of geopolitical threats hitting sentiment here. we have got concerned that italy and iran, and election in malaysia but we have got the upset of italy. will we see the two parties coming together and forming -- give the stoxx 600 at the winning streak and italy is significantly selling off her the blue line is the key supporter. that may be a deal could be performed between the league and a five-star movement. keep an eye on what is happening with italian assets and what is
happening to telecom assets today. a look at one particular telecom stock in -- bt. this has happened on the day. 1.9 percentage points, fall in the year for this particular stock. falling for outlooks this year. they say the cash flow will be on the negative. we see earnings on the negative. even though they announced they told be removing 13,000 jobs get a handle on costs, the market is still not concerned about the future outlook and down goes the stock race. let's look on a key riser and it is an american focused story. rbs. the royal bank of scotland. i tracked it to really show you the jump higher today in the market. about two percentage points theer because we understand
settlement is getting close. if they can get the deal done and put it in the past, rbs becomes that much more than attractive by. is getting close. 17% stake in off a rbs. we are currently up on the stock rice. a last look at one particular asset class, the british pound. of course i have to show you the pound. we see a fall off and how it treats with the u.s. dollar. the reason we are off by about .5% is is falling faster than anyone anticipated. it looks as though many see this as a dovish statement and they are just whining that any
saying it will be right after the g7. all according to the south korean news agency. >> it is a dovish hole. england voted to keep interest rates unchanged. investors expected a hike up until a few weeks ago when they unveiled slower than expected inflation. the bank still expects to deliver modest tech -- modest tightening. >> we're not trigger-happy on interest rates. in 2013.y started we will not instantly raise interest rates. we will wait to see progress before even think about it. >> turning us over the phone is danny, who himself
was a member of the monetary policy committee a few years back. a college professor of economics now and a bloomberg contributing editor. wonderful to have you with us. you say perhaps they should take the foot off the pedal yuan though they are not trigger-happy. clearly, this is the unreliable boyfriend. a month ago when everyone thought rates would rise, the market had it priced in. i said was there any data that sustained it? since, the data has worsened. basically they said it was all --ut when you go and look, the ins said it is not really the weather at all. it is a real puzzle for everyone
and it was complacent again. it appears there is a great deal of weakness in the economy. i think probably would have voted for a cut. i am looking at data. you are saying where is the data supporting any of this year and i'm looking at a chart that shows we have seen inflation go downwards. we are seeing wage growth have started to keep above inflation but you have been looking at wage growth and a lack thereof and you are saying perhaps they should not look at the date of unemployment now and instead should be looking at unemployment. >> we should certainly look at underemployment. pre-makes --o prerecession levels. if youlook at the data, it has started to decline. the number you have from the
, 513, 513, 513, it does not seem like a pickup at all. the argument the bank has made is they still continue to do it, they keep saying but it is a relatively low level now. it is about to pick up, but 20 forecasts in a row, the credibility is diminished. the market i think has taken that view. a lot of what i saw today was really ugly. how two people could possibly vote for a rate rise waist on week data and potential the economy would get into a likesion, it looks to me it is unbelievably foolish. i think it was probably clear but there are arguments.
>> what you make of the market reaction? at the front end of the curve, we saw the yield down at 75 basis points on the two-year. also weakened quite substantially. will the bank of england move beyond this? >> the market really called it wrong. the probability of a rate rise had gone down to about 10. talk of a hawkish change. how anyone could think there would be a hawkish no change, it would be very weak falling. plus, europe has 1.2% inflation rate.
where is there anything of the data that actually tells should be hawkish? i think the market is wrong and they realize from the report that there and nothing there. >> we continue to track market reactions throughout the show. he says he would have voted for a rate cut. vonnie: more on the breaking story now. reporting june 10 will be the day for the upcoming summit with north korea's kim jong-un. .f course, president trump we're joined now by the u.s. managing director and former treasury department assistant and secretary kim. have a date now. at the same time it is coming right on the heels of the u.s. pulling out of the iran accord. how will those signals be interpreted?
>> the economic retraction. released from sanctions, worry about related issues afterwards. that the u.s. will get a lot tougher on one nuclear what does it mean for when the u.s. requests with north korea? >> it is hard to know. it sets up a tough dynamic. international affairs at large. is very boldation very open-ended international affairs agenda with a lot of moving parts. they have more than likely if -- upset more allies. risks of policy mistakes
compound as you juggle more. the president and the mystery shargh juggling a lot of balls at once. >> talk about where we're seeing europe folk stuck the moment. we are seeing perhaps a sacrifice of relations, associating the french president walking away from the deal with the russians, the chinese, the u.k., the germans. how does that relationship be suited going forward? >> it will be difficult to achieve largely because on geostrategic issues and trade issues, the administration is comfortable isolating itself from europe. it is a bit ironic given the length of the strength of -- and the strength of it, in berlin, even in paris, they recognize they can count on washington a lot less than they accustomed to
in the last century or so. >> i'm looking at geopolitical risk. the increase is about 20 of the moment. great way to measure where the risk is tracking higher. you're talking to businesses as to how to react and work throughout geopolitical stability in the moment. what are you telling them? >> i am learning a lot more for what they are telling me. they had no way of pricing this risk because it is emanating from four or five continents. the risk, and so traders are focused on themes. they will take that into account and digested. is based ont geopolitical risk. >> three people came home from north korea.
to north korean regime president trump and is likely to domestically be able to do that. does that give him any leverage ?r at home does it give the north korean leader any leverage with president trump? how does that change the negotiating field? u.s., my sense is the president is getting high marks in the polls for his handling of international affairs. the deal last night will not hurt that. more importantly down the road, in the next 6-12 months, americans will judge based on the results. --ed on expectations built going into the election, economic issues are likely to drive much more than international issues. the backdrop will not capture
voter attention unless something goes horribly wrong. vonnie: thank you for joining today. your u.s. managing director. still ahead, we are live at the goldman sachs leverage finance the west coast. we will speak with john, the company's cohead of investment banking. we will see if he still thinks it is a robust market. to check in on facebook after the release of more than 3200 new russia backed ads to stock up .6%. .ou could see the major average this is bloomberg. ♪ this is bloomberg. ♪ is bloomberg. ♪
now let's check on the bloomberg first word news. >> there is a report that the summit between president trump will be held on june 10 according to a south korean news agency. earlier, a trump administration president is the leaning toward singapore for the site of meeting. there is no sign that inflation in the u.s. will be running significantly above the fed's targets in the next few months. u.s. roserices in the less than expected in april. up .2% after falling in march. used car prices drop the most since 2009. the american labor market is still ties to fewer people than expected. jobless claims remain unchanged at 200 11,000. that is near a low that has not been seen since 1973. stunning election
result has -- back in power. , a shockingon defeat. froms the prime minister 1981-2003. he defected from the party years ago. 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 taylor riggs. this is bloomberg. vonnie: thank you. the goldman sachs finance conference is underway. the deals reporter is on the west coast now. we can see the ocean in the background. >> that is right. thank you. i'm here with the cohead of the investment bank. thank you for having us out here. it is stunning. you set in almost at this exact
same spot last year and said it was a great market to sell to it is that the same today? >> i would say the market continues to be attractive. historically and below investment grade financement, this is a good time to access the marketplace in the market is vibrant. -- performance seems to be good and inflows are strong. this year, we see more volatility. someone with a broader market involve -- environment. for this yearugh and not quite as singularly good . we have seen more discerning behavior on the side of an bester's who are more focused on seasoned credit, credits they understand and know well unless desirous of riskier and often run story credits. >> we have seen risks taken on m&a. that,al downgraded on walmart will potentially be downgraded on that. we are talking about at&t, taking a $160 billion in debt.
credit ratings taken a backseat to m&a opportunities in the market? observe that we are in an extraordinary time for strategic activity. there is disruption in these industries and some are more pronounced than others. really have to react and deal strategically with what is going on in their businesses and looking to expand in other areas. strategic behaviors really taking precedent over anything else in their arsenal. it is not that the companies want to reduce the credit profile, but the strategic imperative is taking precedence. >> that mean companies are taking more risk than they should be? >> i would argue that is not the case. i would argue it is a great time to leverage the balance sheet right now. it is extraordinarily attractive by any measure. upsou can still financial -- finance at such attractive rates, and it is creative in
terms of value creation if you believe in your strategy and business plan, it is a great time. >> is conversation is about lending. government moved up that quite a lot. you have to take more -- more risk, what are you comfortable with? >> our franchise over a long time has been marked more by equity and m&a orientation. werecognized a long time ago needed a bigger debt business and bigger franchise. it in thatbout context. it in that context. it is jointly owned by the securities division and investment banking. we view the business as a platform where you must have origination capability on the banking side coupled by a capability where you can distribute that product and that you do not run into anything, you will not be successful. did they ability is important to take on whatever risk at that time. we are proud of what we built.
and here top franchise we are talking more below investment grade p are we are strong in the business and we continue to be focused on it. it is very strategic for us to use the m&a franchise. were we to not be a big player in the debt business, we would not be as important in the franchise or we view that as strategic. >> always very strong and m&a. the other way around? >> we always think about building trusted advisory relationships. boardt the cfo and the advisor, we want them to think of us as a holistic advisor across all things important to them. it starts with strategic advice on what is going on with the industry in the company and how you are trying to create value and compete over time. we try to bring other capabilities, debt financing being an important one, hedging, market perspectives, and so forth, as a holistic solution.
>> you have a new entrant coming into this market. as more regulated, how do you compete? >> we still think we have the best platform of anybody to understand what is going on with companies in the world globally across the whole sets of industry that compete around the world. we like our position in terms of understanding how to originate products, if you will, for debt investors. there will be other people who want to buy the product, but they do not have the ability we have to understand what the still,nd ambitions are it is a unique skill that no one else had the better capability than we do. push goldman to take more risk just because you have more competition? >> i don't think we have to take more risk. at every situation micro and we look at the broader portfolio.
there may be times when we have a transaction that we think prudent risk in the context of what is going on in the market and other times, we are not as prone to take the risk. have asked him million bitcoin questions to goldman really when there was no issue. and now there is an issue. i can ask a nonspeculative question. you announced that you will start trading contracts related to bitcoin as an institution. why now? >> we have got a number of clients that are important constituents to us who continue to ask and demand and desire to have the ability to play in that market and irina. towould be difficult continue to avoid and ignore that and say we are not interested in providing the service with you. we think it is time to find ways to get involved and have exposure in that way. >> you think other banks across the street will?
>> i do not have a speculation on what other banks will do. and you seem to love bitcoin. >> it is an obsession with media. year of anthe sixth m&a cycle, you have been around longer than me and you have seen these come and go. in this cycle?w >> we try not to observe what year or whatever analogy you want to bring. i would say, i think the conditions are about as good as i have seen at any point in my ofeer in terms of the depth participants in the m&a market. we have global growth that is quite coordinated which leads to a lot of economic activity. the ceo confidence i would say is rising and not declining in the united states. the tax package created more confidence and positive sentiment, and a lot of cash
increasingly accumulated on balance sheets, which will need to be invested in some way, shape, or form. we stand a lot of time taking about the excess cash and what to do about it. return that will go to of capital to shareholders, and some of it will be used and has been used for strategic and this is an m&a. there is all of that positive momentum from that standpoint. and a tremendous amount of disruption from many industries. if you're sitting there with a is a niceh, it cocktail for strategic activity in the third point i would make is not only is their offense is behavior about trying to find ways to employer cash, but increasing pressure from shareholders, be it activism or on fit and focus. certain industries, there is a real demand to skinny down and be less of a conglomerate type company and be more focused on the areas where you bring leading expertise and where investors can have a play. you have offenses and defenses
it leads to an extraordinary environment. it feels quite good. of activityton right now in media, comcast and .isney, you're very familiar we have at&t and time warner. what is driving so much consolidation in that space? to these deals stay relevant in the face of google and facebook and amazon coming into the space or are these things things that make sense because it makes sense to get bigger? >> i think you are seeing a desire for scale. i think the rise of technology players, whether it is apple or amazon or google, as you mentioned, and a norma's amount of liquidity and capital and cash they have to deploy, and the impact in disrupting the way people consume information and media and data, etc., it is definitely having a real impact
on legacy players in the media business and the broadband as well as it i think that is driving a lot of activity and the desire for scale is part and parcel of being able to compete in an increasingly competitive environment with more need for for theand more need ability to compete for programming and broadband in the dollars at stake are much bigger. >> thank you very much. i will toss it back to you in the studio. vonnie: fantastic interview come out there on the west coast. thank you. we will be back with you shortly. breaking news from the president's twitter account. this is a confirmation there will be a meeting with kim jong-un in june. the highly anticipated meeting between kim jong-un and myself will take place in singapore on june 12. it all both try to make special moment for world peace.
that is just coming from the president's twitter account just a couple of minutes ago. june 12 is indeed a tuesday. earlier reports that the meeting would be june 10 but now we have the president's twitter account that it is june 12 in singapore. news.ne: more breaking we understand scotland reached a settlement with the department of justice at it will pay $5 billion almost to settle the reselling of mortgage-backed securities. now we understand that potentially there was an intensified search for a new ceo. were looking to make sure rbs no longer remain state-owned. now we get a deal with u.s. authorities and we can start seeing an unwinding of that ownership by the u.k. government and stop statement in dividends and sweet start to see a search for a new ceo. said -- instead, the two favorites. currently the cfo, and alison
>> it is understood that maybe we have seen -- the new ceo can be as soon as next year after finding the sentiment next year over the selling of mortgage-backed securities. let's bring in -- breaking these key stories today. surprising. you can be entering as soon as next year? all those assets are feeling
-- in the career, they have many settlingin terms of with the doj. would like to leave as soon as the bank's back to pay dividends. now of course with the news today, it is really a step forward for the bank so they can really look at what is next to >> remind us of what the settlement means. $4.9 billion is what we understand. and with that, start extricating themselves in repaying dividends after a decade. >> exactly. the settlement will probably come next week. basically, they do not expect numbers to change. we can be sure they will pay and this would make it easier for
the u.k. government to sell the share because of investors keen to get dividends. and under the leadership, profits last year. so of course, there is more of a way for them to pay dividends. has said they will start selling first chunk of shares by march but we understand this could happen sooner because of the doj settlement. >> remind us, rbs currently trading, is this coming at a loss? >> most likely, it will be a loss. it is reflecting the change r.b.i.. ago,hit the bank 10 years it was a huge international bank. now it is a small bank, probably more u.k. banks.
about who could be replacing the man we see on our screens now? inhave potentially the cfo favor as well as the female who leads the marshall and private banking. >> yes. these are the two names being reported. we have seen this more likely an internal replacement because the bank does need some change in the strategy and it will bring a we have seencandidate -- bringin external candidate would be pointless at this point. is coming from new zealand, so ,hey have been working together and it would be the first few about after a discussion women in finance so they would probably welcome an appointment. >> let's return to the $5 billion deal thereabouts for the settlement.
to that come in line with what everyone was expecting the amount they would have to be paying? >> it was actually lower. they were forecast for -- a fine of 10 billion or $11 billion. do everything in terms of extricating himself from the government or great story. thank you very much. stephane you breaking it all down for us in terms of the rbs news. lonnie: breaking news on this side of the atlantic. lonnie: breaking news on this
side of the atlantic. a date for president trump's meeting with kim jong-un. the president weeding out just a little while ago ago that it wie june 12. the highly anticipated meeting ago that it will be june 12. the highly anticipated meeting will take place in singapore on june 12, a tuesday. we will both try to make it a special moment for world peace. let's bring in marty. anticipated after the scenes that unfolded at the air force base overnight. >> yes. it is clearly something donald trump was anxious to get out. theas been teasing that date and place hearted been decided for days but he refused to say when. in his well followed twitter account, he announced it will be in singapore just a few minutes ago. the heels of on the president pulling out of the iran deal and really widespread reaction to that. a lot of tremors in washington, d.c. and elsewhere. with of schisms breaking allies. how does that color the meeting with the north korean leader? onit puts a lot of premium positive results out of that meeting. return of the three hostages from north korea yesterday along with the iteduling of the meeting,
sets up high expectations for what comes out of the meeting with kim on june 12. it is high risk for donald trump in a certain way. he needs to get out of the meeting exactly what he said his theis, 2-d nuclear eyes peninsula and it is something he has set up, the high expectations himself by putting so much personal prestige in making this happen. exactly. obviously, blowing up all sorts of deals, pulling out and saying he will renegotiate them, and yet we have not seen any get negotiated so far. perhaps for that fair in the process of negotiating. is this something that would get done quite quickly? it is not like there can be continued meetings with the north korean leader. >> it is an interesting point.
the original deal that obama struck on iran took something like 10 years. issue is korea similarly, -- complicated to allow for verification of any denuclearization program by north korea, it is not something you can just write down on a piece of paper after just a half hour. so they may agree in principle, but it is the devil in the details. it could take not just weeks. it could take months or even longer. the key thing for him is to get -- to agree to been abandon all nuclear program effectively to a weapon and give up whatever he has that allows them to explode a nuclear bomb, which they have done a number of times. marty. our thanks to june 12 will be a bad day for the u.s. north korea summit.
>> time now for a stock of the hour at bloomberg markets. let's bring in rebecca now. talk to us about what shook the market and concern. the response draft is significant. >> this is a chance to answer a lot of uncertainties that have weight on the stock. a surprise slowdown for revenue, earnings, and cash flow. analysts predicted growth next year. also said they would keep dividends flat. there had been forecasts for potential cuts that could be released. shareholders have long held on because it paid us that dividend.
they would have been disappointed on the news. job cutsdo we expect to come swiftly? 13,000 people to go is a lot. >> it is. middle management, back office. keep in mind they said they would be hiring 6000 workers. they are swapping out back office middle management for frontline workers needed to do things like build another five. >> thank you. that was our stock of the hour. it remains trading lower by 8% today and the stoxx 600 off a little bit today. this is bloomberg. ♪
on bloomberg markets. mark: here are the top stories we are covering from the bloomberg and around the world. mark carney says the bank of england intends to deliver modest tightening, but stays on hold for now as inflation calls. house democrats release a robe up -- trobe of facebook as that show russia's strategy for trying to influence the election for 2016. hatzius -- take a look at what is happening from european equities. italy's