tv Bloomberg Markets Americas Bloomberg May 17, 2018 10:00am-11:00am EDT
♪ vonnie: here are the top stories we are covering from bloomberg around the world. president trump will now meet with china's trade at the white house today. looks like both sides were digging in their heels. we are in d.c. with the latest. a big day for retail across -- across the globe. the biggest stories including walmart, jcpenney, and a major deal. we will hear exclusively from the outgoing ecb vice president on his predictions for the future of the central bank and what is next for him. that is all too, the tail end of earnings. courtroom battles are going on.
julie hyman is keep an eye on it. julie: not much as changed in the major averages. a little bit of a downdraft, information technology is the biggest drag on the s&p 500. the dow is doing the worst of the three major averages today. one of the biggest stories continues to be oil prices. breach,he $80 level highest going back to november of 20 -- of 2014. refineries in particular are rising today. particular update -- upgrade ahead of a golden age of refining. rising in today'session on the call. u.s. oil production is here in u.s. oil production is here in white. stockpiles in blue. production is going up and up.
goldman sachs in a notegoldman l fundamentals arkham -- increasingly bullish and they meetnot be able to fully supply if sanctions do resume and meant continue and have an effect here. it could mean more pumping, potentially for the u.s. shale industry, which we have not seen much discipline from one prices go higher. the other thing has to do with watching the realty -- the retail earnings on the earnings front. overall, the numbers look better than estimated according to analysts. it walmart brand u.s. comparable come up with estimates, traffic this year because of cooler spring weather. but people were spending more.
victim of the cooler spring weather as well. it is cutting its full-year core -- forecast, comparable sales up 1%. a full two percentage points worse than analysts anticipated. fargo, followed wells and some employees in the improperlynit alternate information without their knowledge. have let their regulators know about the breach. caroline: it is all about retailers here in europe as well. we'll get to retailers in a moment. are leading the charge in terms of stoxx 600. in the green today. currently trading at the highest since january 31. very few industry groups are in the red. only the banks are really a row want to keep an i on the ftse trading high, but notably, the italian stock market is the
laggard today. the deal has been struck between the two populist parties, the five-star movements have agreed on a program for the coalition government. no prime minister agreed yet and what does it mean for fiscal ?pending much concern about time assets. on the big movers in the stock market in europe at the moment. you know it, it is the u.k. online grocer. it helps other retailers manage and today,tailers, we understand they struck a deal . we know they will be licensing the technology and . we know they will be licensing this is a record move, unsurprisingly when you see such a surge in the
share price. we will dig into the deal much more -- in the show. this isyou know it as the disct line. with theding lower particular company unexpected with the particular company unexpected with $3 million. more than 200 million. what has gone wrong? itit seems as though largely thy are losing market share and they are taking steps to square up profitability. let's see what is heating up in italy. in -- what does it mean for tax reform willeconomic in thea move toward may cap net to do a backstop deal --ide
.> u.s. yields continue . upholding the markets hand. i not sure the markets would say ,- it could yield to yields have a listen. >> it means the market has a different view of the future than what the fed has. >> joining us now is the chief investment officer of wealth management. maybe you could sort it out for us. thinkinghe market question mark is the federal reserve holding its hand? >> i do not think so. that's happened volatile and done whatuite investors expected them to do in terms of great earnings.
in particular in raising rates has created quite a headwind for investors this year. know, 350 will be the peak this year. >> we don't think so. we think if you fast-forward a year from now, 3% will probably look like a good deal for the 10 year treasury. we see growth decelerating as we get more into the latter part of 2018 and into 2019. we continue to see inflation stuck in the narrow trend. we are not the believers in the bond bear market thesis that we are hearing more and more of these days. vonnie: why is that? it does seem i some of the economic data is picking up nicely and we have a lot more sounding optimistic. where are you seeing weakness and the lack of inflation? >> on the growth side, we see
things being front and loaded. we see a lot hilton to expectations that push forward and we think those will dissipate as we get to 2019 and beyond. you arethe fact that right, we are at full employment, we have very strong and we are still very stuck with low-wage inflation and now what do we see? we see companies investing in capital spending. there is a cycle coming to fruition now which will enable them to have the substitution for capital which will keep inflation down. >> we are seeing trading above $18. is that in any way change her opinion if we see the elevated levels? >> certainly are let me backtrack and say we do think there is a possibility for a cyclical uptick at this point in the cycle but it would be short-lived. one reason is we see the pressure on oil but we see some
sources of supply that have yet to be tapped. we heard about the share -- shale producers a few moments ago. we have opec wristers increasing production under the right circumstances. and backt be an issue to wages, i think we could see an uptick in wage inflation index several months but it will be short-lived given what we see on the cap exide. >> what are the plans? what is their primary question? >> everyone is worried about inflation and everyone is worried about the fed to what we are clients is, don't worry. anchored andwell well contained in the fed is a bit constrained now. of quotes a couple from fomc members recently that highlighted that they are looking at the yield curve and it is a very important constraint right now around what the fed will be able to do. the fed is very reluctant to sit prize the market.
is not conducive, it won't be able to. with a yield curve, there is not a lot of room for the fed to raise rates. investors were saying, take advantage of the rate. the 10 year treasury at 3% may look like a good deal. we took a bit of cash off the sidelines in the tactical portfolio and reinvested in bonds. >> what about geopolitical risk and what are you telling investors to do when we are seeing such elevated levels particularly with evaluations round the world, meanwhile, moment, equity markets, geopolitical risks abound in the united states and they try to preempt what the next tweet will say for -- from donald trump. >> we have a history of
geopolitical risk to move -- to look back on and see how it affects equity and risk assets. over the short term, we see the gyrations. in the long-term, unless these into therk their way real economy, they do not have a lasting effect on risk appetite. our clients, and we tell investors to look through short-term issues, and really focus on fundamentals. --nie: can't really called call trade a short-term issue. they confirmed meeting with president donald trump, how does impact assets, not individual stocks necessarily? seen geopolitical risk last year work its way easily to the market and a lot of the same risks we are about today in 2017. stocks didn't really react but this year, they did. trade has a real impact on economies and on stocks. our point of view is we are at
the beginning of the beginning of this. we will hear a lot of back and get a firm grasp on how this will look like at the end of the day. we are not making dramatic moves or suggesting our clients make dramatic changes. do not know how this will play out. >> early days. all right. the chief investment officer of wealth management. do not know how this will play out. >> earlylet's check in on the bg first word news with taylor riggs. taylor: president trump meets the point person on trade today. that is according to the president haughey's chief economic advisor, to try and resolve the dispute that threatens to turn into a trade war. the white house is working out the format of the summit between president trump and north korea's kim jong-un. these sides have not decided how much time leaders will spend one-on-one.
it is a question of whether the countries will be invited to if u.s. and north korea move on to full negotiations on nuclear weapons. in italy, populist parties have reached an agreement on a coalition government. the anti-immigrant league chief agreed on a policy program after days of talks. one provision has been an overhaul of italy's banking system. the parties have not agreed still on a prime minister. 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. caroline: the amazon affect continues. how can they managed to get back some of that share with the commerce? they're trying it and we will discuss that next. this is labor. -- this is bloomberg.
vonnie: jcpenney down more than 10% and it is part of a wider story of u.s. retail. the second largest in the united states announcing a partnership with british online grocer this morning. it will take a stake and become the exclusive user of automated distribution technology. let's look at what it means for retail spacesoth
or jennifer is a bloomberg intelligence senior analyst. deal, is it as much scale as amazon? >> what the deal should do is give a competitive scale. it is not just about where they can reach customers. it is about how quickly and efficiently they can fill orders and get them to people. vonnie: does this mean the he was holding onto, the customer that might order online and pick up in-store, what is the latest push? are finding that they have to be able to offer not just the indoor experience but the experience where you pick up at the store and customers are increasingly interested in having groceries delivered at home. if you do not have the ability to play in all three areas, it eliminates opportunity in the
future. this move really nails down the last part in terms of home delivery. how to make that an efficient part of the business, right now it is the least profitable model out there. efficiency will help them remain competitive from a cost perspective. start inink they can market share? amazon affect with strong yields, a part of the market as well, walmart has managed to grow organically its delivery system. is it just a little late to the party? rapidlyr has been growing out there. they have been very competitive in that respect. they have been testing home delivery with third-party services. with regard to amazon, they could not crack the code on groceries and there is still an opportunity for them to really get in and take the market share
the use ofople into their services. >> it is amazing to see the reaction on the other side of the atlantic. u.k. up more than 60%. talk to us about walmart. we did not just see this big deal p release all walmart come out with earnings. we managed to see that weather. how did it chief that when others haven't? >> for walmart, they had a solid earnings and the good quarter for the first quarter. they have been able to approve what they have been doing. they are making a better experience for customers by investing in associates. it is driving traffic into stores. fresh food is getting better and traffic is boosting -- same-store sales which is keeping them competitive. vonnie: --still to check on tha.
caroline: in boston this week because they are shining the light on the tech scene of the city throughout the week. renowned for its love of sports. it is is based here and taking 3-d technology to a whole new level. who knew you needed so much software. .ake a listen >> the footwear industry is taking a jumpstart in technology. made acing shoes
reality. the future craft introduced 3-d printing with comfort care at reebok's liquid factory is madea reality. the future craft making lightweight designs along with 100% recyclable footwear line of cotton and corn. >> this is our 3-d printing lab. liquid factory is a way of getting away like every other in the market does and drop the bottom of the shoe. 3-d printing but much faster. >> it is an effort to streamline production and keep up with younger consumers. >> the goal is to go from making one million pairs of one shoe and the exact same type and hope everyone likes it and that was the old model. to smaller and smaller batches, 10,000 instead of 100,000. tighter, you get closer and closer to custom. >> how is that a benefit to reebok question mark what are
the benefits for manufacturing? >> you can react more quickly to consumers. >> reebok isn't alone. has alsot company moved into the 3-d printed sneaker game. reebok's liquid factory material is proprietary. they use computer software and robotics to draw shoes in three dimensions. are faster than the old model now. each unit takes a couple of minutes to put together and again, it is all automated. >> adidas but reebok in 2006 for $2.8 billion and began a turnaround to reposition it as a fitness brand by signing a partnership with crossfit. is the one unitbut reebok
that remains unprofitable. is the one unit that remains unprofitable. still, adidas says it is committed to the future of reebok and moved its headquarters to a suburb downtown this year. adidas says it is committed to the future of reebok and moved its headquarters to a suburb downtown this year. >> the spirit of the company changes dramatically. down here and being in the excitement of the district i think has the whole place feeling like a district i think has the whole place feeling like a startup. >> it does feel like a startup, bringing new life into its classic, white leather speaker. bloomberg, boston. vonnie: later today, we will take the relationship between tech and sport to a whole new level. i will sit down with the president of reebok from none other than fenway park. i know it means an awful lot to you americans. for you toexcited get to broadcast and have the conversation. a little bit of advice from one of the gates, it is a good thing to do but you also must wear a
yankees t-shirt while you are doing it. friendship and i think the people would appreciate it. >> i will look into the additions. it is an amazing park. we will speak with thea little t , sam kennedy, the leader of fenway park. that.not wait for still ahead, president trump is set to me china passes point person on trade. what will it mean for high-stakes stocks going forward? this is bloomberg. ♪
joining me from boston is my cohost caroline hyde. with get to the news now to start things off. here is taylor riggs. taylor: theresa may is going to risk a brexit rebellion from skeptics who could force her from office here it is preparing the eu the u.k. inside trade union rules for years after brexit. her inner cabinet agreed on the plan. the intractable issue of the irish border. u.s. trade representative is not atimistic that there will be new nafta deal by the deadline. that is according to people in a meeting with him. reaching a deal by today was the only way he could guarantee a vote on the american trade deal this year. the federal reserve is resisting calls at a capital buffer. the so-called offer is meant to force the banks against the coming storm when economic --ditions are key staffers are not persuaded that adding billions of new
needed.is president trump off his lawyer michael cohen offered his services for $1 million according to the washington post. the post says just after the presidential election, cohen was offering access to and advice about the trump administration. he turned down the offer. 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. thank you. president donald trump set to china's -- at the white house today. that is according to the top economic advisor this week. it threatens to turn into a trade war. we turn now to bloomberg's chief washington correspondent live on capitol hill. we are just learning in the past few minutes that the president will meet with him p are what
does that mean about things and where they are going at this point? >> president trump will meet with the top trader today at the white house. it comes at -- following internal disputes amongst president trump has's top trade negotiators. i can tell you we spoke with two sources close to an economic nationalist of sorts who tells me the fight internally with treasury secretary steven mnuchin has grown not just on policy but also personal. joinedry mnuchin will be by trade representative bob and course,oss, and of peter navarro, as they continue to negotiate with the chinese. willource told me he expect to mainly be dealing with mnuchin because of the equal roles in the respective governments of their nations. there are many sticking points
for the u.s. and china, including steel and aluminum tariff imports which president trump has proposed waging as well mnuchin as market access ad agriculture. the last point being something the chinese feel they have leverage against the united states. trump proposed $150 billion of tariffs against china and the chinese essay they want to raise tariffs on soybeans. senator -- a republican from south dakota and member of the senate finance agriculture and commerce committee about what he is hearing from republican farmers in his state about the president's proposal. look at what he tomie. >> there is a lot of concern and anxiety their planting right now. -- a republican from south dakota and member of the senate finance agriculture and commerceobviously, they ared about the commodity prices and where they are today. negotiationsta which president trump of his political coalition feels is a bad deal, with regard to the china bilateral -- he is
concerned about his policy. vonnie: where is the wiggle room to offer something up? yesterday, meeting the top politicians here on including senator orrin hatch, i can tell you that plays a crucial role in terms of the bargaining chip the administration wants to get china accomplished on. simply look no further than the te. in order for north korea to give up nuclear weapons, they are trying to attract investment from the united states and china . cte is china's is public communication government backed has been doing business in iran and north korea by lifting trade restrictions the u.s. is signaling north koreans might be able to attract that investment from the chinese.
>> this was a fascinating back track that happened by donald trump has been defending his decision to throw a lifeline via twitter today. how is the american reaction to all of this? both sides of the aisle were shocked by his turnaround. >> absolutely. comes at a time in which concerns are really mounting here in congress as far back as 2012. you have to remember the charges that the commerce secretary wilbur ross launched a settlement of $1.19 billion, year as a result of the charges of the tdb -- doing business between 2010 and 2016. i spoke with several top a's and republicans and democrats alike this week. all of them told me there is really no appetite to move legislation in a government funding bill due next week or so to remove the u.s. restrictions
from doing top business, but, president trump can get around that by using wilbur ross to use the power of the executive to lift the restrictions. look at it, it is still very much taking scrutiny in washington but president trump it likely as a bargaining withrunning to my sources regards to north korea. >> what is likely to be achieved by the u.s. and the chinese? one wants to remove the with regards to north korea. tariffs, china wants access to government procurement in the u.s., the u.s. looks to reduce a surplus coming from china. will those deals be done? >> president trump wants to reduce the trade deficit. business community and europeans are saying let's not have a retaliation affect. this president has sent back-and-forth as a result. vonnie: today was supposed be
the final day for nafta. kevin: absolutely. house speaker paul ryan proposing the deadline. the implications of this could , especiallyrm democrats went back and told the house of representatives in the midterms. influencing the policy. the trump administration, this does not necessarily hurt them because president trump off his political base was against nafta to begin with. >> thank you kevin. luby's chief washington correspondent. eyes on italy.r, popular party's average in agreement on the coalition government. still no agreement on a prime minister. and we are live in sofia at the eu summit. leaders taking a stand finally against president -- and, next, a bloomberg exclusive to we're live with the outgoing against president --
feude: the u.s. and china over tariffs and the u.k. trades a way from the european union. africa is moving toward a free trade agreement for the entire, demand. the african continental free trade field by efforts to trade to tariffs on africa, creating a single market to establish the agreement of 2016, the goal is improving by last year. kenya became the first country to sign on.
here is background. eighth-grade communities already exist on the continent trade grd according to regions from companies that belong on more than one block. the project would immediately replace those but eventually, groupings are liquid it just liquidated under a companywide agreement. the agreement would remove tariffs on 90% of goods and pave the way for continental customs union. every nation on the continent will join the product of more than $3 trillion. the target is to establish the free trade area 2020. you can read more on the bloomberg. caroline? nation on the continent will join the product of more hear from theext outgoing vice president of the ecb who has got calls for reform for the eurozone, the european union. have a listen.
vonnie: this is bloomberg markets. i'm vonnie quinn in new york and caroline caroline hyde is in boston. time now for the central bank exclusive. bloomberg's western european central banks editor is standing by with a special guest. >> thank you. beenere with a man who has at the heart of ecb policy making basically since the birth of the euro almost two decades ago. for the last eight years, he has been vice president. the term expires next month. calmto the all too brief between the sessions he has been through, he has been through an unfortunate rate hike since 2011, negative interest rates, rescuing the euro area from deflation or the threat of it at least. counselorsverning
almost but not quite ready to talk about exiting stimulus. very good day. it has been quite in eight years. you are about to go at a critical moment because the economy is slowing. >> just a slight slow down so far. you may recall stock projections were at a critical moment because the economy is slowing. published after the high-growth of last year. , theat is happening still 2%.cast growth of about the outlook has tilted toward 2%. >> likely to join the ecb. he said the downside.
>> they foresee a growth rate 2% and 1.7ar around for 2020. the path of deceleration. growth.asons, potential special, of course, we are at the output cap closes, we reverting to potential growth. reverting to potential growth. >> are you comfortable with market expectations which roughly to the end of qe this in the rate higher middle of 2019, does that sound reasonable? >> it is difficult to say what might happen.
the banks are to a degree dependent we monitor, of course, what is happening. is weat i can tell you generally consider that markets have had a reaction function quite well. presume, being biased, i will say is also because of the way we have communicated. the reaction function has improved over the years and has been approved recently. >> there are a couple of risks out there. italy come we have seen spreads expand. asking you to write off 60 billion years of debt off. yields, bonds bond prices will be falling and the spreads will be widening.
>> we will monitor of course. the change has been happening the product -- the problems are the same. the yield and the spreads have been contained until recently. it depends, as always, on policies that will be actually lamented. mark: so you are watching the euro, another issue. sense it is not a concern.l of
>> we were concerned always for the change rates. for the markets,nedthe volatily usually among the economies, has been more toward what happened with the dollar than anything in the world. that is still the story. appreciating for these reasons because markets are not very good at doing that. rationalizing what markets are doing. a good narrative explaining why the dollar has been down or up and why it has been going up. you're reasonably comfortable with it. this one is slightly tricky of course. the europe -- the euro has to do
with prospects with iran via payments. it will involve the ecb one way or the other. the ecb takes a view on this situation. >> there have been sanctions before. in there listed agreement. whateverexpecting that happens -- in the agreement. very meaningful impact. >> ok. there is a big summit in the market, of course. it is important. what is not agreed with the summit, next month, probably not agreed for some time to come, depending. you have put down some proposals in the way the unit needs to be
proposed. >> not the perspective of my speech. i talked saying what technically it would be -- what would be necessary to really move toward very solid monetary union working smoothly about theng doubt whole project. technicalard some proposals but did not discuss, on purpose, the political saying of what i was from that perspective here at it is for government to make the choice. i think the vested interest of
both countries is to move union. with the monetary else passes job because you will move on. if you had to change one thing, one thing differently, if the ecb had done think death -- things differently, what would it be? .> nothing meaningful we made a speech in the beginning of the month where i talked about the future of monetary policy. i went to results that were not controversial. indeed, decisions were not always perfect and i explained why. i also explained that in both cases, i like in the speech, in both cases, quickly, we corrected those decisions by changing interest rates in the opposite direction. so the overall effect of the
incidents was not very significant. whatever comesr next. thank you for your time today. vonnie: wonderful. thank you for bringing that to us. it is wonderful to be able to say there is enough and you would have done differently. interview.ive all right. from one board to another. let's move to center stage for what could be the finale between cbs and the red zone. he is suing the controlling an attempt to block a proposed merger with viacom. we just learned this several hours ago, yesterday in fact, that the 24 hour reprieve from redstone interference. joining us with the latest is the bloomberg reporter.
very dramatic day yesterday. eventually, the judge said yes, a port meeting ahead today. but for now, i am not making a decision. what were the two sides takes on that? >> the judge was saying i will not make a decision before it goes ahead. this is the meeting at which they will decide to vote down the control that she and her family have over the company. 80% to 17%. to be they think unless they do that, she will force them into a merger they don't want. they wanted a temporary order.ning >> cbs has been under pressure and we're seeing bank of america merrill lynch cut order. saying today the downside is up 40%. how is it we could see those
play out? listen to sherry redstone, it is the control area of both companies. she thinks she has a strong case. out yesterday and changed a bylaw on cbs that would allow her to actually vote the measures down. normally need a simple majority on something like this. she has changed the laws so they need more than 90%. she is on the board with a couple of people on her side on the board. she could potentially, definitely voted down. if that meeting goes ahead. changed, is it effective immediately, as an ia says it is? although they have started on that and think that is not correct. >> she has also tried to throw cold water on the idea. she is saying that is not true.
there are directors there. how many issue -- welisten, she has said, always wanted special committees on the board. these are independent directors to decide whether a merger was in the best interest of shareholders. they are saying if they decided it was not in the best interest, she would not, although, as i said, she is a controlling shareholder. she did it at viacom. we will watch this all today. our cbs story. stay tuned. this is bloomberg. ♪
vonnie: this is the european close on bloomberg markets. vonnie: here are the top stories we're coming from the bloomberg and around the world. italy inches closer to a deal on a new government, but the populist party still has to decide on a candidate for prime minister. then fighting words, europe gets tough on trade, threatening to slap tariffs on u.s. goods. and brent oil hits $80 a barrel in oil as traders brace for the impact over new sanctions on ran. nejra: let's look at all the action in europe. we are about 30 minutes to the close of equity trading, and speaking of equities, you're seeing a fair amount of green here. the stoxx 600 on a headline