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tv   Bloomberg Markets Americas  Bloomberg  May 25, 2018 1:30pm-3:30pm EDT

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talks with north korea after he calls, "it's nice statement." north korea still is open to a meeting. authorities in suburban itianapolis has taken on man -- a student into custody after a shot another student and a teacher this morning. the shooting happening at the nobleville west middle school. on the, the death tolls passenger plane crash of -- have risen to 112. there is a 19-year-old cuban woman as the sole survivor. the cause remains under investigation. brand new $12.9 billion aircraft carrier is heading back to virginia shipyard after problems were discovered. says it already needs
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upgrades and fixes. the ship is scheduled to arrive in newport news. repairs are expected to take about a year. day onnews, 24 hours a air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ >> live from bloomberg world headquarters, i'm shery ahn. >> i'm amanda lang the. welcome to bloomberg markets. >> here of top stories we are following. saving the summit. president trump and north korea's kim jong-un indicating
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they could still be open to a meeting. + plus, a bloomberg exclusive. we're from the fairfax financial chairman and ceo. >> the u.s. is said to have struck a deal for chinese firms zte to stay in business. let's get a quick check of the major averages. u.s. stocks at mixed at the moment the head long memorial day weekend. s&p 500 falling 4/10 of 1%. for a secondng consecutive session. the nasdaq is up 1/10 of 1%. lagging and at the lowest level since may 1. this after saudi arabia said the supply would be boosted. at what the s&p 500 has been doing in the last few weeks. libraryon the gtv go
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and it lacks clear direction. is on the s&p 500 has gone down and the green bar is when it went up recently and it has been flip-flopping. a lot of views on the geopolitical side was traded tensions with china and will the summit to be on or off with north korea. amanda: no kidding. italy, been watching political turmoil there has been taking a toll. inside your terminal, this is the spread between italian and the 10 year.on rain for themium italian bonds that rises concerns over the fiscal policies that may be moving this country forward. we watch this one. to a bloomberg exclusive, fairfax financial is a global player in the insurance industry , but it's not insurance investments grab headlines.
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against the u.s. housing market in time for the 2000 credit crisis, but things can be difficult. i sat down with chair prem watsa. i was fortunate enough when i began my career to be introduced to ben graham. thatd a very simple rule said that when you are implementing value investing, -- i wasgure out fortunate enough when i began my career to be introduced. when you are implementing value investing, try to figure out worth andcompany's then wait for the stock market to go down. asnk of the stock market your partner. sometimes her partner is optimistic and perhaps you sometimes yourd
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partner is pessimistic and you should buy. orn you're at the bottom close the bottom in your to be pessimistic, the market is pessimistic on the company, you have to be contrary. you have to go against the crowd and you do the same at the top. identifyily trying to your not contrary and for the sake of being for the sake of being contrary. sometimes things go against the market. prem: yes. they take some time to work out. but our number one goal at and investments portfolios -- and that is all we do -- it is to protect it.
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make sure we do not lose money first. if we see risks around, be careful to protect our portfolios. for 2004,at we did 2005 with the real estate bubble in the united states. we want to protect ourselves. 2008, we had problems. wrote in one of your letters, "it is better to be wrong, wrong, wrong and then right than the other way around." what do you mean by that? we talk about the worry of the real estate in united states, the aaa bonds, and we stayed away from it. and 06, and in 08, we did very well.
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in 2009 in 2008, you had to survive. a lot of companies did not. businesses basically went bankrupt. in the back ofat our minds, we have to survive. we are trying to build our company over a long time, long after i am gone. our company is focused on going strong for a long time. the macro call for you now when you look at the world with the equity valuations where they are in central banks beginning to move, what do you see? prem: we see the rates going up. what we see is eight years of poor economic growth united states. when you poor economic growth, 2% or less, lots of pent up demand takes place. in housing, housing stocks have been very very minimal -- very, very minimal for a long time. what that means is in the next four point years, you have to
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make up for that and new households being formed. you do that for housing, automobiles, infrastructure -- and think it might be a pretty you add theand then new administration for what they have done on taxes and depreciation. you can write off of the whole factory in one year. huge, huge plus. inrastructure being rolling back at regulation, so we see all of that being positive for business. business drives the economy. amanda: inflationary, you had a bet on deflation for a time. , we changed after the new admin station came in and instituted policies. we said, my goodness, these
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inicies -- 21% tax rate america. 21% corporatehad tax rate since the 1950's. most people are underestimating the effect of that. still. traffic from net market businesses from a large , and capital spending in the first quarter was very robust. we are the biggest economy in the world, when the economy does well, canada will do well and the rest of the world. amanda: your fair amount of cash in the investment portfolio. prem: trying to find out what a ompany is worth and buy
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below. cash is an option for us. we are not finding opportunities. amanda: opportunities like toys "r" us? like toysrtunities "r" us, that was a huge opportunity. that is an example of a company in the united states having a problem, a lot of debt in the u.s., but the income was terrific. we were able to buy a company in and had a very good price. amanda: they're my the opportunity to buy back at some of those u.s. stores, potentially? prem: u.s. stores are different market, so we think that is a long shot. amanda: in the world, is it the u.s. that you are looking at?
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prem: c-span. it is a container ship company. look, run by ao terrific guy. the company we are really excited about happens to be the country i emigrated from, india. indiassibilities and in that the possibilities in india are enormous. the possibilities in india are enormous. we have been there for 20 years of so we know a little of -- a little about it. sense: there has been a that it just keeps not living up to their potential. we have a great expectations to indiana does not quite get there. but you are a believer. prem: i am a believer because they have a prime minister today about four years
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ago and he is business friendly. he has got a track record. when is the last time you got a politician who has run a state or province for 13 years, 10% economic growth. for 13 years and then he becomes the prime minister of the country with 1,000,000,002 in population. that is not easy. slowly but steadily, he is freeing up the economy and making it business friendly. they have an election next year, and he has got a majority. if that is repeated, india is in good stead. is aa: the geopolitical it factor -- the geopolitical is a factor these days. do you ignore that? prem: 40 years of experience,
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i've traveled all over the world, and i find that country that have business friendly policies do really well. countries that do not, they suffer. person, man,ary woman, and child, business friendly policies provide employment, jobs, and i've seen all over the place. yeah, i am sensitive to that. at yourwas prem watsa fax financial holdings and founder. , the u.s.ews on bayer justice department's may be set to announce approval of bayer bu ying -- a deal worth of $56 billion that for two years has been under review. toking with the companies resolve the issues they saw as harming competition. german obviously a giant chemical company.
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coming up on the program, back in business. administration is told congress it has reached a deal to allow chinese firms the -- zte to continue. this is bloomberg. ♪
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♪ >> this is bloomberg markets. i'm amanda lang. . the trumpry ahn administration is set up told congress that it has reached an agreement that would allow zte to remain in business. for more detail, let's go to the trade reporter jenny in washington. what did zte promised to fix here?
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that: we know right now the trump administration told lawmakers that they reached a deal. we do not know the exact details. we know that there is a management shakeup of the needs to happen in u.s. compliance officers have to get access to the zte sites. complies, the u.s. will lift the sales bans. the chinese have made it a precondition before they engage reach a deal on zte, otherwise there will be in no commitments to buy agriculture sales so that is where we are right now. this is been that part of ongoing trade negotiations. our what we are seeing here are the u.s.'s offer or is this an
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agreement between the two sides? jenny: it seems like an actual agreement between the two. knowing what we know, the chinese have said you need to do some thing about zte otherwise we will not engage in the trade talks. wilbur ross wants to deliver on this trade deal on the framework bout,the two sides talked a but he cannot deliver anything if he does not bring anything on zte. it seems like this is a deal. we do not know the exact details and we do not know the number even though president trump has thrown around the $1.3 billion but we will see the details trickle down. >> jenny, thanks for being with us. bloomberg's jenny leonard. >> it is time for the bloomberg business flash. thew drug from
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company that has provided relief in cancer patients. they are already seeing to develop life-saving therapies for lung cancer. confirmed one of the more upsetting reports about alexa. record theid private conversation between a couple in oregon and then sent the audio to a neighbor. the discussion after misinterpreting other parts of their conversation, the house uses the echo to control security. that is your business flash update. amanda: a lot of concerns over wasacy and yes, alexa
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listening. if you want to see how twitter is reacting, go to gtvgo on the library, we can see this chart showing cow twitter -- showing how twitter is reacting. green and red bars are positive and negative twitter sentiments for amazon, but definitely raising concerns. source is not just the of gossip, these really up the creepy factor. we expect invasion but we do not want to be creeped out. >> that is true. >> coming up, what a difference a day makes in the trump white house. after saying this summit with kim jong-un it was not happening, it could be back on the originally scheduled date. we will have the latest on that after this. this is bloomberg. ♪
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>> this is bloomberg markets. i am amanda lang. >> i am sherry ahn. is it on or off? north korea has responded saying they are willing to meet whenever the u.s. wants to. just this morning, the president said maybe they would be having the summit after all. pres. trump; we will see what happens. it could even be the 12th. they very much want to do it, we would like to do it so we will see what happens. him bill fariome es. it seems that the talks behind the scene are continuing. yeah, that was the key line from the president this morning. we are talking to them now. whether the june 12 date is set in stone, there is committee case in going on
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behind the scenes. there is definitely the potential of this summit that was suddenly called off may be back on. maybe the weeks or months after that. the concernsf raised is that this is a situation that requires careful diplomacy. it is not something the president is known for. does this show that there is a motion -- emotion driving this? hard to saystill whether this is going to be more of a traditional summit to where you have mid-level officials going in to sort out exactly deliverables of the meeting, or is it something that kim jong-un and donald trump workout over a phone call. as june 12 see approached is that a lot of those details that were not worked out were starting to loom large on everyone's agenda.
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things started to collapse, and it is still not clear whether to make a moree traditional approach. shery: i was surprised to see north korea's response. they even credited president trump and giving them saying the trump formula -- they were hopeful about the trump formula. ilatory was north korea? was not the response we were expecting one went to bed in washington last night. latoryoed the more conci aspects of president trump's very between boasting about the nuclear arsenal and then thank you very
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much about the detainees, that was a great gesture. had harsh and even reaching out aspects of his letter. the north korean response guaranteed that the door stays open. the president said talks are continuing. there are hopes in washington that maybe the summit will actually happen. ies, thank youar for that. a quick reminder, you can catch all of our interviews on the bloomberg with the function, tvgo. you can go there anytime you like. this is bloomberg. ♪
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scarlet: it's 2:00 p.m. in new york, 11:00 in san fransisco, and 7:00 p.m. in london. i'm scarlet fu. lisa: and i'm lisa abramowicz, in for julia chatterley. welcome to bloomberg markets.
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scarlet: we are live and bloomberg world headquarters in new york over the next hour. here are the top stories we are covering on the bloomberg and from around the world. come up the volume. oil plunges below seven dollars -- $70 a barrel as saudi arabia puts on the brakes. and another tense week with the global economy with investors trying to make sense of fluctuating trade talks and political strife. and trump tactics. global leaders in struggling to come up with ways to deal with the disruption wrought by the u.s. president. at u.s.ke a look markets, closing in about two hours time. julie, i would expect low trading volume. julie: yes. but what volume there is, or at least the trading activity, is in the energy stocks, and that is to the downside. the three major averages -- the nasdaq holding up at her as -- better as large-cap tech is on
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the s&p energy index is down 3% on that crude tumbled. it just keeps tumbling through -- thresholdr told today, from $70 to $69, now down to $68. halliburton and baker hughes trading down as part of that. today eating a friday, we did get the rig count. we can look at that as a baker hughes rig count. see we have seen a steady climb along with oil prices, so the one-year u.s. rate count is the highest -- rig count is the highest since march 2018 -- 2015. there is a question on whether they would change -- or with a
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start to expand production. if the recount is going up, does that mean production will go up and create more supply in the marketplace? we will be tracking that over the coming weeks and months. other latebreaking news and developments that we are following has to do with zte. the trump administration has told members of congress that to remain ine business. that potential deal has already drawn fire from some members of congress, so we will see what the outcome is. we are seeing some u.s. suppliers of zte on the rise today in the optics industry. and we are also watching herbalife today. isl i can -- ichan says he selling some of his shares. he has been a long time supporter of herbalife, but now it has an outside position in
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his portfolio. 11 million shares of his 45 trillion shares -- 45 million shares in the company. -- president trump says the summit with north korea could still happen on june 12. he canceled a meeting with kim jong-un because of what he called anger and hostility from pyongyang. trump praisednt north korea for what he called a warm and productive response. in venezuela, newly erected -- elected president nicolas maduro admits his country is not dead government is not doing things well. oil production has fallen in half from a few years ago. that is where the is suffering from hyperinflation and other economic distortions that make for people to feed
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themselves. russia's foreign minister says he has urged his counterparts to present -- study facts presented by moscow before being blamed for the mh 17 flight disappearance several years ago. legallys being held responsible for the crash that killed 298 people on board. followed an announcement yesterday that the plane was downed by russian military missiles. and disgraced movie mogul harvey weinstein has surrendered in police to new york, and being held on charges of rape and sex abuse. those are the first criminal charges to be filed against him after a month of allegations of sexual assault. those claims ruined his career and sponsor the global me to etoo movement. global news, 24 hours a day, on air and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz, this is bloomberg. scarlet? scarlet: thank you.
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oil is the big mover right now wti plunging below $70 a barrel for the first time in two weeks, off by better than 4%. saudi arabia says it expects opec and its partners to boost supplies later this year. for more, we are joined by tina davis. this marks the first offered to since january 2017. it sounds significant. is it? it isthe market thinks quite significant. we have not seen a single day drop like this that if it hold at this level at the close, will be the biggest single drop since the middle of last year. there is a concern about what that added supply will mean to the balance. scarlet: and when we say saudi arabia, opec and its partners, we are referring to countries like russia. do you know how much they are thinking about? tina: they are debating between 300,000 barrels a day and
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800,000 barrels a day. we have differing factions on either side, where the russians are pushing for a larger increase and saudi's and other folks in the middle east pushing for a lower end. scarlet: crude is headed for the biggest one-day drop since july of last year. javier blas put out a story showing this is an about-face for the saudi arabian leadership and opec, and pointed to a tweet by president trump. can you explain? tina: sure. a month ago, president trump tweeted essentially that the higher oil prices we are seeing globally were all opec's fault and they were maintaining a very artificially high -- i believe that was the phrase he used -- rice for oil. that is trickling down to the u.s. consumer and forms a higher gasoline prices, which are of a of utmostcern -- concern to every politician. what we heard today from the
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opec secretary-general was this was a response to that tweet. inyou talk about the twitter chief, this was a strong about-face movement from saudi arabia and a direct response to this outcry from the president. scarlet: i am interested in how russia is part of this. russia certainly played along when they were going to hold off on production to keep prices rising for the spring. now that russia is involved in discussions to lower prices, is that more meaningful? is that a harder thing to find consensus on? group tos is a tough keep together, a tough series of nations to have pulling at the same yoke in one direction. a lot of the credit goes to the opec secretary general and the saudi's to maintain this agreement and keep it operating. in fact, they are exceeding their target in terms of press, heard, venezuela is dropping precipitously with each passing day. data todayd get
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showing 15 oil rigs were added in the u.s. this past week. the biggest increase in three months, which makes a lot of sense. crude supply is up and people wants to pump more oil. will this feed into lowering prices going forward? tina: potentially, but you are seeing a widening spread between the press of the international benchmark and the u.s. benchmark. still somes there is problem moving all of that u.s. oil out to market. we have seen a lot of bottlenecks in terms of pipeline. we hear about higher truck traffic and the cost associated with moving higher production out of texas. scarlet: and you brought up gasoline prices and the midterm elections. it is memorial day weekend and that is when everybody starts traveling, and you can see gas prices are at $2.97 a gallon. the president tweeted his this highure -- displeasure at oil prices, but how do you think opec sent his partners -- opec and their partners are
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developing on this? is this something they will be mindful of each time? they did this time, but will they continue to do so? tina: no one has figured out how to respond to the president's tweets just yet. muchems to see how agreement the countries will have moving forward, but the oil price has crept up over $80 for rent, and hopefully this will put a cap on any kind of switching away from fossil fuels. davis, getting a look at the oil markets. let's get a market of the market action -- a look at the market action more broadly this week. an interesting week, largely down. not the nasdaq, picking up on the week. what is the overall there it is that can tie up all of this week's action? is thathird of political risk still matters, trade risk still matters.
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these were the big drivers both of and down that we saw this week in all of the major market and we are seeing them reflected in how we will end up for the week. we are clinging to some modest gains for the dow and s&p for the week. it wasn't bad, but we are getting the geopolitical risk price back into the market. scarlet: why do the markets respond? again and again, they get paid to buy the dip and president trump will reverse some of his high rhetoric as quickly as it comes out. romaine: there is a broader issue that goes beyond north korea, and it is really about the business environment, the global business environment and climate that is being upended by a lot of the trade changes, regulation changes that trump seems to want to push for, and there is a lot of uncertainty tied into that that the market does not know how to model. you talk to analysts who are trying to chart out what will happen for the next few quarters going forward, and they cannot tell you what is going to happen it must -- unless they have some sense of what the supply chain will look like.
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scarlet: we are clinging onto gains for the week, which is the case for the year as well. the dow up by 1/10 of 1% for 2018, the s&p gaining 1.7%. one thing we haven't mentioned yet is oil and emerging markets. marks as big question well. what disruption are you hearing the rise and to today's plunge in oil, as well as the woes in turkey and argentina? romaine: oil is weighing on the market today. i think it is a long-term issue. we talked to a bunch of folks when oil was shooting up over 70, and they were pricing it in as something that would be transitory anyway. turkey and what you are seeing in emerging markets is a different issue, and if you think about the interconnectivity we have there and look at the strengthening of the dollar and how that seems to be directly dovetailed with a lot of the problems that we saw brazil,re in turkey, argentina, and now we have these issues going on with the populist government in italy.
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who knows what is going on in spain with regards to their government as well? you are seeing a repricing of that, although i would like to point out that when you look at the reaction, a lot of it was contained to the european markets. butdid see a bit here, think about where the vix is. we are still below 14, i think we are around 13 when the program started. we are averaging well below where we were. scarlet: 13.10. romaine: and we were averaging 17 leading up to may. the vix is down 2%, 3% on this week. vix for the to the vix for the euro, they are up about 15%, 16%. you see the risk being priced in much more on the european side. on the u.s. side, there are more insulated from that. scarlet: and you can see that in the outperformance of small cap versus big cap, and in respect to high-yield bonds which are on fire.
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cccle sealed rated debt -- rated debt is gasping in. romaine: people smarter than me seem to think it is a good place to put money. we are up 6% on the russell 2000 month today from may. scarlet: and holding on to record highs as well. there is a lot of data coming out next weekend we will europe for the federal reserve meeting on june 15. it is a done deal that the fed will raise rates? romaine: the bond market is pricing in a 90% chance that that will happen. it has come down a little bit since we got the minutes, but i do not think anyone is pricing in any idea that we will not see a rate hike in june. you go forward again, and the estimate for what people are thinking -- they really come down once you get past june. there is not as much conviction that we will see the third hike necessarily in september and the conviction that we were going to get a fourth by december is pretty much below 30%. scarlet: the federal reserve
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--'s code -- dow list -- dused doused cold water on that as well. lisa: heading into this long weekend, people can put away some of their fretting. scarlet: enjoy the barbecue. lisa: the world is not on fire yet. ain int: enjoy the r new york. and the view from dallas, texas, because robert kaplan is speaking out on the biggest threat facing the u.s. economy. this is bloomberg. ♪
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scarlet: this is bloomberg
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markets. i'm scarlet fu. and i'm lisa abramowicz. the fed is still in focus. let's head to michael mckee, where he caught up with dallas fed president robert kaplan. greatesttalk about the threat facing the economy. >> the financial sector is part of that as key leverage. what i am looking for is systemic risk. if the company fails or defaults, it is not a good thing, but it is not going to pull down or shouldn't pull down the rest of the economy. corporate jet to gdp is something to watch, but i do not think a red flag is there at this point. michael: another thing you did not mention is oil. what do you see happening with oil prices and how much of a danger is it to the economy? robert: it is not a danger. we are in a fragile equilibrium right now. what do i mean by that? we are in relative supply-demand
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allen's globally. but some of that is based on opec and other oil producing countries agreeing they are going to cut 1.8 million barrels a day, and there is some talk they might revisit that. for the next 3-5 years, what you -- what youolatile will see is a volatile up and down in global prices. my concern is not in the next few years, but the out years. we think we might likely get into a global undersupply prolific ascause as shale is, it will not be enough to keep up with global demand and we are not spending on long, long projects. risk to there is spike the upside. that would worry me, because if we are growing slowly in these out years and then you get an oil increase or gasoline increase, it is like a tax on consumers. --i think we are in a found fragile equilibrium and in a good shape for the next few years. michael: there is always the question of when people think
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that recession might be coming. recessions do not die of old age, but there is a feeling in the market that maybe we are seeing the yield curve start to tell us something. well, there is always some not immaterial probability of recession, as you know. what i am worried about is sustainable economic growth. we are going to have recession. i job is to make sure that ups -- wewns in the cycle have maximum sustainable employment and price stability, and what i am worried about right now is not the short-term cyclical questions, but i am worried we doing the right gdp is madeow gdp? up of growth in the workforce and growth in productivity, and i do not see us making policy steps to address either, and i think those look like they will be sluggish in the out years. we just do not notice it as
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right now because we have a large fiscal stimulus and that is how the fed has been accommodative. michael: you are getting less so. how do you know when you get to the point when we are starting to tighten policy? robert: we are raising the fed funds rate and moving toward neutral. neutral -- the theoretical fence fed funds rate where we are no longer accommodative. that is in the neighborhood of 2.5, 2.7 five cent -- two point 75% -- 2.75%. in three or four moves, we will be at neutral. you said you would not intentionally vote for a policy that would invert the yield curve, but that is almost the psychology. question is can you avoid a policy accident by raising the funds rate to far? could happen, because we do not control the curve, we control the federal funds rate.
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2-10 is relatively 50 basis points. this is why i have said and others have said every day, i will be watching very carefully .he shape of the yield curve what the shape of the yield curve tells me is that prospects for future growth, out your growth, are sluggish. it is worth paying attention to that. that is the reason why i am saying we will keep the base case for this year at three. i am not looking to increase that because i have the shape of the yield curve and out you'll growth -- out your growth in my mind. speakingrobert kaplan earlier on bloomberg. a quick reminder, you can catch all of our interviews with the function tv. coming up, this cinderella as we charge -- chart futures. from new york, this is bloomberg. ♪
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♪ lisa: --
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scarlet: this is bloomberg markets. i'm scarlet fu. lisa -- i'mmean lisa abramowicz. the eu is introducing new rules that will dramatically impact how companies collect, store, and use data. it is called be general data protection regulation, coming into effect may 25. it applies any company that collects personal data. print and of five legal jargon, companies will have to post clear note to get unambiguous consent. that includes credit card numbers, and even biometric data. affects schools, property management companies, and even scout groups. all companies with over 250 and for these -- employees need to contact the authorities in 72
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hours. -- o 20 42 -- up to for a company with worldwide sales of 100 billion dollars, that could mean penalties of $4 billion in certain circumstances. that is a good incentive to comply in terms of scrambling to make sure you don't meet the deadline. scarlet: it's now time for the bloomberg business flash, a snapshot of some of the biggest business stories in the news today. level finance leaders are urging turkey's president to maintain the independence of the central bank. imf managing director spoke this -- spoke to us today. >> in terms of monetary policy, it is always better to let the central bank governors do the job that they have to do and to preserve and secure the finances. comments made a alerted the international community. scarlet: and more from christine
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lagarde coming up later this other. followingife shares -- falling after a large shareholder is selling 25% of his stake. can -- carl ichan would still be the majority shareholder. forgotar's winner almost $2.47 million. business flash update. from new york, this is bloomberg. ♪ k, this is bloomberg. ♪
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scarlet: this is bloomberg markets, i'm scarlet fu lisa abramowitz. >> a male student opened fire
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headed -- at an indianapolis suburban middle school this afternoon. police say the student asked to be excused from class and returned with two handguns. the two people shot were taken to hospitals and the extent of their injuries is unclear. about 20ing happened miles outside of indianapolis. authorities say an eruption at the summit of the volcano on hawaii's big island have said to nash cloud about 10,000 feet into the air. survey sayslogical small ash explosions are coming from the seven -- summit. the kilauea volcano has destroyed nearly 50 structures and forced thousands to evacuate from their homes. in spain, the opposition has called for a vote of no-confidence for the prime minister's scandal that administration. after the national court convicted former officials of running a multimillion dollar racket. the vote could lead to another election this year.
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trump is telling graduates at the united states naval academy that "we have begun the great rebuilding of the u.s. military." trump told the graduates that "the best way to prevent war is to be fully a pair -- prepared for war. there is no alternative -- only victory." global news, 24 hours a day, on air and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz, this is bloomberg. , the now to st. petersburg international economic forum is underway. john mickelthwait sat down for an exclusive interview with managing director christine lagarde, who defended the benefits of jobless rate -- global trade. trade is actually good from many perspectives, with enterprise, reducing the cost of
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particularly poor countries around the particularr countries around the world, and opening roots -- routes that were unknown, including in political terms. trade has its downsides as well, which he does we have very much -- wed for a long period have very much ignored for a time.eriod of there are many sectors and regions in many countries that are damaged and have been welicted with wounds that have not really focused on healing and helping. we'll --hat is the one the one real deficit of international can trade -- trade. the second thing that needs to be addressed as well but in a cooperative, collective way, because it concerns all of those involved in trade, which is pretty much everybody, is the
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compliance with the framework and the rules that regulate the industry. [inaudible] to compulsory technologies, sanitary rules, restrictions on investment, some players around the world -- not only china, but many players actually have taken nationally justifiable measures that actually hinder international trade. that needs to be looked into, collective, four of basis because it is in everybody's interest. it cannot be addressed efficiently on a purely unilateral basis. john: it sounds like you are proving the idea, at least in principle, of opening up china more but you do not approve of threatening them in a unilateral way. it is an incredible opening
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that we saw, and it needs to be continued. discussions with the chinese authority, and i have, on a regular basis. that is what they want to do. they want to continue opening, they want to continue to welcome foreign investment. they want to reduce the threshold that has been in place and that were regularly reduced, but they want to continue that process. they want to open the capital be part of the internationally [inaudible] all of that signals, to me, that they want to be part of that game. they want to be part of a circle of nations that actually matter economically on a global basis. john: what about russia? vladimir putin wants russia to be one of the top five economies in the world.
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he has declared by 2024. at the moment, russia is growing slower than the world economy. do you think that is a credible ball? -- goal? russia russia -- surely must be opening up in the same way. >> he has a six year term and incredibly ambitious goals. he wants to research and develop investment, a goal of all russian companies -- it is that 2% at the moment -- and he wants to be in the top five. i do not know why he did not say top six, but it is incredibly ambitious. at the same time, it is an economy that has proven to be incredibly resilient. christine lagarde speaking at the st. petersburg international economic forum. one of the factors putting pressure on russia's economy,
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falling oil prices. part of that is due to the u.s. fracking industry. for investors interested in fracking, there is an etf for that. this unconventional oil and frak.f trades under unconventionale oil and gas sector. among the 50 holdings are names including occidental petroleum, .nd pioneer natural resources there is only a 25% overlap with xle. mid and small caps and canadian companies provide unique exposure, but also extra volatility. while it has underperformed xle by some 50% since launching in 2012, it is pulling ahead this year, with returns of more than 10%.
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there is more than $80 million in assets and comes at 54 basis points. it gets a green light in our traffic light system with no infractions. lisa: -- to join us sure every wednesday for bloomberg etf iq, available at 1:00 p.m. new york time every wednesday. and looking at oil prices today, they made a complete u-turn given what we have seen or heard from opec and the president. lisa: to me, the question is how much meat is there behind saudi arabia's rhetoric? theirey going to boost production to try to lower prices, or is this just rhetoric? scarlet: job owning. that is a big question going forward. of uti off by more than 4% on the friday before a long weekend . but get to charting futures with abigail doolittle.
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abigail: for charting futures today, we are starting and sticking with oil. you were just talking about oil and the they pledge -- the big plunge in wti crude. oil down 4%, its worst day in about one year, and this as you are talking about saudi arabia. they have gone from advocating higher prices to try to stop the rally in crude, perhaps after and in intervention of sorts from president trump. last month, the president did tweet "looks like opec is at it again. oil prices are artificially very high." that does not take into account the iranian sanctions and the collapse of venezuela's energy industry. thate technical suggest increased supply will continue to weigh on oil? let's hop into the bloomberg and view this chart of oil using the jgb function. it is a longer-term chart of oil. in blue is the 30 day moving average, above and below it by about 10%.
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the moving range for oil has protected its trading action quite well. right now on today's drop, plunging back below that 33 day moving average, suggesting it might drop to the lower end of the span. $62 a barrel. pretty interesting. that would suggest that the dollar is going to continue to rise, surprising some perhaps. i would like to bring in vincent cigna rela of bloomberg. we just took a look at this chart of oil, suggesting oil might continue to drop. let's bring the euro into it. what are your thoughts here? the euro is down 4% on the month, the worst since 2016. >> the euro is having a tough month and it looked like it might get tougher. we have the italian political situation weighing on the euro and potential contagion spreading into spain with the prime minister and the opposition parties essentially calling for snap elections or for him to step down. withuro has been suffering
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a higher oil price -- rather, the lower oil prices. this trend looks like it might continue. abigail: let's look at the technicals. mightndamentals, the euro -- >> this is a chart pattern that i have used as a former trader, introducing traders. abigail: the front month contract? >> the euro futures contract. this sets the 12 month average closing price for the assets, and the standard deviation bands above and below. this is the first aviation band. this opens up a significant amount lower, you can see this go -- >> down to 114? >> correct. >> sofa trading strategy were to come out of this contract? >> something along those lines, yes. >> let's look at the liquidity there.
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>> in the june contract is where all the jew liquidity, the bond yields, over 337,000 contracts trading today, over half a million in open interest. it gets scattered a little bit down here, but traders like to stay in the front end of the contract. >> do you think that 1.14 comes before the contract expires? >> it could come next week if the political situation in italy unwinds of it or if some damage comes to the political situation in spain. fx future contracts for charting futures. lisa and scarlet, back to you. reminder about gtb go, that is where you will find all of the exciting chart you see on bloomberg tv. you can click on the next checks up on key and out it's and save chart -- announcements and say charts for the future. since we are heading into the memorial day weekend, this is what you will be paying at the pump.
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this is not what you will be paying in new york, four dollars a gallon here. it will be a little more painful than it was a couple years ago. for more, go to gdb. this is bloomberg. ♪
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scarlet: this is bloomberg markets. i'm scarlet fu. and i'm lisa abramowicz. our stock of the hour is foot locker. it is sprinting higher after expected earnings. julie hyman is here with the run down. what happened? i am surprised. julie: it is surprising because it hasn't been doing well. the same reason it wasn't doing well is now the same reason it is doing well, which is it is
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all about product offering, at least that is what the locker was weighing. when it was struggling and it last earnings report, it blamed the lack of good shoe offerings. -- essentially kicking the can to suppliers. it says the offerings have been refreshed, it is better. the company is therefore doing better. earnings per share came in 20% above analyst estimates. revenue beat estimates and comparable sales did fall 2.8%, but that is better than 2.6% estimated. a lot of this has to do with that turnover. even though the gross margin was down, it will improve by 20-50 basis points in the current quarter. scarlet: for that bothers me, because that suggests they have no control over anything. julie: that is the problem, isn't it? today with bloomberg view, you can see that the shares of the five years as
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well, even though they have recovered substantially, they are still below the record high they reached years ago. and also take a look at the bloomberg. this is a chart of sdlc, the supply chain analysis. hopefully you can see this as well. nike is the top supplier and accounts for 47% of the cost of goods sold. adidas, 13.7%. as sarah points out, when you are that reliant on one supplier, it can be an issue, especially because nike is .pening its own stores that so manyruck suppliers are going direct to consumer this point. what the retail industry will tell you is experience. that has been the buzz word over the past two years, but they have to make it appealing to come into the store for one
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reason or the other. it isfor foot locker, sales people are trying on the shoes, whatever it is. lisa: that would get us in the store. that is something they are focusing on. julie: i also want to mention -- this one is about inventory turnover. again, this speaks to the issue of how quickly are they selling these things out of the stores? isn't piling up? you can see the inventory turnover has been improving. that is something also that has been helping the earnings and should theoretically help the gross margin. scarlet: if you don't buy it today, who knows if it will be there tomorrow? coming up, we will be can printing -- confronting canada's challenges. you will hear about the country's biggest obstacles. from new york, this is bloomberg. ♪
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scarlet: this is bloomberg
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markets. i'm scarlet fu with lisa abramowicz. the servicemen and women who have sacrificed their lives and the line of duty, we want to pause and reflect on a story that is little told -- african american nurses in the u.s. military during world war ii. alexis clark opens an unknown chapter with her new book "enemies in love." in today's business of equality, our conversation about the bottom line of diversity, i sat down with alexis and found out how she started investigating this story. >> i found out i was a distant relative of colonel charles young, the highest ranking african-american in the army until his death in 1922. so i stumbled across this book ,"lled "g.i. nightingales about nurses in world war ii. they had a chapter on black nurses and i did not even know they serve. that was something i wanted to --act the us unpack and 12
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unpack and delve into. >> obviously, they had other options in the city where they were living, for instance? to workthe option was at a city funded, underfunded hospital for blacks. they would be paid the least amount, so the army basically was almost like a promotion. it was higher pay and more stability. that also drew a lot of black women to the underscore -- the nurse corps. are there a lot of women who signed up for this kind of job, or could the military not recruit enough? had wantedck nurses to join long before world war ii. because of discrimination, they were largely shut out. with public pressure and civil nurses in 1941, 56 black were enlisted. that was the first time they were officially enlisted in the
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army nurse corps. scarlet: this is a love story, but there is a lot more than that. it serves as a prism to a period of american wartime history that few people know anything about. when i was reading this book, that is who i discovered that that is when i discovered who eleanor powell was. war held fond memories for her because she met and married a german prisoner of war in arizona. german pows in the u.s. during world war ii? know anything about this. when i started digging, it turns out they detained almost 390,000 german pows during world war ii in the united states. scarlet: what was the interaction between the german pows and the black nurses that you were studying up on? robert: it was a -- it was a mixed bag.
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largely the relationship was fine, but there were instances where there was a lot of discrimination that the nurses encountered from american officers as well as german peter w's desk pows. this is a moment when jim crow was law and the military was aggregated. -- segregated. scarlet: why is this important to know about now, given the divisiveness and segregation in the country, and the world? alexis: we should always be excited and interested in our history, and this is a moment we have not touched on. specifically, i was drawn to it because it was about black nurses who had served in the military. i knew about the teske airmen, tuskegeeairmen, -- airmen, but i thought it was important to build the story. scarlet: what happens to the main character? alexis: they fell in love, and then they had to move to a place that would accept them. it was a black woman, a german
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soldier, and their mixed children. they finally settled in a wonderful place in connecticut called village creek. it was advertised as a prejudice free zone. raceet: speaking of mixed children, that brings me to the next chapter of what you are working on. you have another book about mixed race children of black soldiers and german women during the u.s. occupation. it is like in your image of enemies in love -- a nearer of enemiesrror image in love. robert: they were -- alexis: they were referred to as the brown babies, and they were ending up in orphanages because think about the time. they have a lot of returning not , a lot ofnazis discrimination, and the mothers would be stigmatized. people were saying can you help?
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this woman started writing back and generating resources in the united states, and african-americans started to adopt these babies. they are raised as americans, so it ends well. scarlet: that was journalist alexis clark, the author of "enemies in love." lisa: time for the bloomberg business flash, a snapshot of the biggest business stories in the news today. they are could get the green bayer could usc -- get the green light to buy monsanto as soon as next week. the approval will soon be announced to the $66 billion deal that has been two years in the making. chinese smartphone diet xiaomi plans to seek formal approval for what could be the biggest hong kong ipo since 2014. people with knowledge of the matter say that the listing
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could raise $10 million. the beijing-based company helps price the share sale late in june. it is expected to turn early employees who bought stock in two billionaires. that is your business -- into billionaires. alexa, areming up, you listening? how amazon's privateevice recorded a conversation and how this could be a turning point for big tech. from new york, this is bloomberg. ♪
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scarlet: i'm scarlet fu. lisa: and i'm lisa abramowicz. elcome to marcellus wiley --
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"bloomberg markets." scarlet: here are the top stories weaver covering on bloomberg and from around the world. oil plunges below $70 a barrel as saudi arabia butts us -- tuts the brake on crude oil with the help of russia. investigationors are trying to make sense of -- since -- sense f fluctuating trade talks. alexa, please stop recording me. we have -- we are one out from the close of trading. let's get a check on the markets. it's noticeable that the nasdaq has unperformed. >> a surprise that stocks are up at all on the week because it's been a turbulent week here. the dow just turning negative in
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the past few moments. yes, a clear out-performance from the nasdaq. that's continuing today with some of the large-cap tex on the rise. crude emily: hasn't had a positive week. it started off the week stronger but has now tumbled for four straight sessions on this talk by saudi arabia and russia that we will see a change to the opec agreement on production cuts before the end of the year, a softening of that stance and emily: down nearly 5% on the week. and the s&p 500 has been stuck in a trading range now for several weeks after tall volatility that characterized the action earlier in the year. things have settled out a bit and the range has tightened up. some of the large cap tech heavyweights doing well, here are some of the index point movers to the up and down side. pple gaining, amazon gaining
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.4%. amazon, by the way, is trading at a record once again. on the down side, unsurprisingly, the oil stocks, chevron and exxon mobile having a pretty steam tumble in today's session. the energy group is the worst performer by far in the s&p. one thing that's been benefitted today and this week, the airlines. here are the airlines. american, swept and delta, just a few examples. something elves we've been watching today, the retail earn eggs. foot locker coming out with numbers that beat estimates. decker's outdoor, uggs, that company also beating estimates in its forecasts. but then there's gap and rock stores gap. believe estimates, particularly for its name-sake -- take sake
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chavenlt it also talked about delivery issues and ross stores worst than -- worse than expected outlook for the second quarter. analysts are still pretty positive on the stock, even as it falls by 7%. lisa? lisa: so you so much. kali? >> president trump is accusing democrats of rooting against nuclear talks with north korea and he says democrats are -- 13 ng what he calls thug and concluded by saying north ve lost touch" korea says it is still willing to give the u.s. talks at any format. any
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the talks could still go on june 12 as originally planned. according to a top iranian official, teheran wants europe to come up with a package of economic guarantees -- guarantees my next month. iraq's prime minister has ordered the creation of a high-powered commission to lock into alleged i were regular later in this month's parliamentary election. the first sign the parties are limit he votes serious and disgraced movie mogul harvey weinstein has been charged with rargese sexual assault and swul misconduct in an nypd court. the case involves two women. bail was set at $1 million and he'll also wear an electronic monitoring advice at all times, have restrictions on his travel nd wunder his pass port.
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alelection -- allegation against instein powered the he -- me too movement. this is bloomberg. leasea? lisa: thank you so much. alexa can stream music and now listen to your priverplet conversations. canada saidouple in they were recorded and the roareding sent out. alistair barr joins us. he is a bloomberg tech reporter. alistair, do you have an alexa? >> i do not. i'm kind of proud of that right now. lisa: does this make you and others think again before getting an echo advice? >> i certainly thing -- think it does. i personally was given one as a
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holiday present a year ago. my wife refused to punishment it in the house. to tell the truth, my phone has the google assistants on it so we do have a recording device in the house. soip scarlet: what does amazon do with the roaredings it collects. sit data to recommend things to that person or do they push it all -- off for third-party users, do they sell that data? do we know what amazon does with all that information? >> it's actually the reason investors are so excited about this from a business point of view for amazon. it gets them into the online search service. before google dominated. you wanted to find a product or something, you went on google and actively typed it in nowadays if you wake up alexa and say, hey, what's happening
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in dallas? maybe you want to go on a trip. these companies don't actively sell that data to third parties. amazon doesn't do a lot advertising right now but hey'll use that data to inform in and help target webs maybe that follow you around the web but certainly on amazon properties. lisa: full confession, i do have an echo device and i quite enjoy it. i'd like to get more details about this particular case. could this be a user issue, that they did something wrong accidentsly or was this just completely out of the blue that alexa decided to take things into her own hands? >> it wasn't a user error, that seems pretty clear. what i find so interesting about this is that i think it's about 60 million people in the u.s. will ask alex ah a -- alexa a question in the next month.
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i think that was the statement we have in our story and when you have activity like that happening on such a grand scale, random things like this will happen. i think the law of large numbers will make that happen and where amazon's response and how they explain how this happened, there are four or five different stems, each one which seems crazy and accidental but it did -- did happen. let's say in this five years' time when 100,000 people are asking a question every day snetch -- instead of every month, this could happen again. scarlet: clearly this is not having an impact on the market because it's trading at ann a record high. you have an echo device. lisa: ill do. she doesn't laugh at us but she'll occasionally pipe up out of the blue. we weren't asking any questions
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and she'll say i don't know the answer to that. we didn't have ask you, alexa, so pipe down. did amazon give a response to the seriousness of this. was their response satisfactory? >> the main response is why -- while it's rare, they're going to try and make sure this doesn't happen again. they're sensitive to this type of thing. they want to sell more but they want to gather more data on people's interactions in the home, what they're interested in, things like that, that's very valuable. this is another example of how, you know, maybe five years ago, most of the public were pretty happy to accept these times of gadgets to interact with technology companies and they didn'tty so much about the privacy side. i think that balance is shifting
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a bit where more people are thinking about privacy. i think it's still the case that these gadgets do provide some great value but i think people are now realizing what they're giving up as well. cafrlt: thank you. did dulls alexa ever -- siri ever pipe up? >> no, we ask her for the wertz every day and my kids ask her to tell jokes because her jokes are pretty good. scarlet: i had no idea. our exclusive interview with the c.e.o. of t.d. bank. why he says canada's biggest obstacle is uncertainty. ♪
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scarlet: this is "bloomberg markets." i'm scarlet fu. lisa: and i'm lisa abramowicz. from trade talks to government infighting, uncertainty has emerge is as the biggest obstacle for canada, according to the head of the nation's largest legender. amanda lang spoke to the c.e.o. of t.b. bank to discuss the company's expectations for growth. >> in the u.s., for example, we are a young company so we continue to take share. although you might see pockets of weakness but because we are taking share, should continue to see growth from t.d. it will be bumpy, quarter to quarter, depending on what happens in particularly asset classes but i feel good. particularly given the tax reform in the u.s., i think it will provide more momentum to the economy. in canada, yes, there is some worry in a sense that a we at
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the point in cycle where things might slow down? from our perspective, we've been consistent tuesday how we do it. again, there we've been working very hard to build pipelines with new bankers coming along so we're doing it the old-fashioned way. as always, as a bank ere, i get paid to worry. we always worry about macrotrends here and there could be some thinks thanks here that could during that picture. >> what's on that list for you? trailed protections? >> my own bleach is that at the end of the day we'll get a sensible deal on that but in the meantime there's lots of uncertainty and that does drive investment decisions that are not opt malsometimes. within canada we have our own issues and overwhelm there is always some head winds here that we have to manage through.
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>> obviously higher rates are working in your flavor here. are you worried about railtsdz getting too high and/or not keeping up with inflation? central banks are in a tight spot in some ways. >> no document higher rates, as long as they go up in an ordererly fashion and don't go too high. one of the key reasons central banks raise rates is because they want to slow things down. so if that happens too abruptly or too deep then it's not going to be helpful but to date, things have been pretty order early. nd for t.d., we are a dome sit-rich franchise sexrnings rising rates is very help to feel us in that respect. i'm particularly pleased how well we're doing on the deposit side, attracting for franchise customers to t.d. >> there was a reference today
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to an expectations of higher costs on the back side of this year. what's that associated with? >> we've always believed in investing for the future. we are transforming the bank. we want to make sure what you see out of t.d., we are america's most convenient bank. known for service and convenience right through north america and how do we make sure that in the world of digital that we continue to have that unique space we've carged out for ourselvess? that's a key focus for the bank and we've also said that we want to make sure that we were ready for the future so there are other forms of investments we have to make. we are making sure that we do make them and there are certain projects we're looking at in the second half that will -- you know, my expectation is that we will be able to deliver some of them. >> we saw some changes to dodd frank, as expected. does that change the land same
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for you in the u.s. market, including acquisition that is may come along? >> along the key difference in that bill is that banks with over assets of $250 billion will see a meaningful change through the revisions to dodd-frank. u.s. bank and u.s. entities, more than $250 billion. so we don't see a dramatic shift for t.d. but having said, that there are certain changes that are very help. stress testing and how that will be conducted in the future so it is positive from that perspective. i think, as is usual, whenever a major piece of regulation is introduced, it takes tyke time for it to mature and then figure out how it will suit the environment more generally. >> the president did muse today publicly about possibly extending some changes to the bigger banks as well.
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would you will welcome that? >> yeah, i think there are always opportunities here. as the vimpletse evolves, i think it's important that regulation evolves with ill. i'm sure there are untended cons queenses with dodd-frank that people have to look at. regulation adapts to the environments, that is important. and not lag it. because it is important to have a robust economy and at the same time to have safe and sound banks, which is important for the economy. scarments: that was the c.e.o. of tsmed banks. a snapshot of some of the biggest news stories today. federal reserve jay powell said strahm banks should be allowed to september rates woucht political interference. >> this is clearly a challenging moment for strahm banking. opinion polls show that trust in government and public
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institutions is at historic lows in this environment central banks cannot take our measure of independence for granted. scarlet: european central bank officials haven't yet giving up on winding down stimulus as early as next month. members of the council remain confident that is economy is in robust growth. executives are now eligible for cash severance if they get fired after a change in control at the chip maker. that reverses a long standing policy for not providing these terms for senior managers. presidents trump blocked a hostile takeover bid by qualcomm. employees get health coverage for a short period and that is your business flash update.
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lisa: you can catch all our interviews on the bloomberg with a function t.v.-go and also get breaking news, charts, related functionalty that have been discussed on bloomberg. i love this page. scarlts: and there's also bloomberg radio so we can willen from earlier in the day. lisa: yes, we can. greats function. check it out. from new york, this is bloomberg.
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lisa: happy friday. this is "bloomberg markets." i am lisa abramowicz. scarlet which which -- scarlet: and i'm scarlet fu. lisa: joining me is dan pastorelli, perspective of market mentoring. thanks for joining us. we brought up the chart a while
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ago to show the s&p 500. anything else to tell that is all we're going to have a breakout in either direction anytime soon? >> no, technically it looks like e might have one at some point but even when the market pulls back a little bit, we don't really see that rise that one would expect is the -- if the markets is truly expecting a breakout. >> everyone has been watching the back and forth on a potential trailed dispute between the u.s. and china. you're looking at ford as one of those proxies. what are the implications for formed? even this week there was a back and forth to whether we would see a benefit for u.s. auto make,. >> yeah, we used to talk look risk on-risk off, trade war
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on/trade war off and it could be back on. we're looking at this really close limit what we're looking amount is trump suggests we might initiate tariffs and foreign cars being imimportanted into the u.s. that language with china, either way it could end up being beneficial. either a, we institute those tar riches and that's bullish for american cars or b, china backs off and lower their tariffs more which is great for our cars being exported into other countries. china. >> how does this compare to potential tariffs on the imimportant costs for many of the automakers, talking of steel and aluminum? >> right, whether it's the finished product or the omponents going into the
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product, it's beneficial for the united states to try and institute some of those -- these things the president is trying to accomplish. >> so you think this would be bullish on foorled -- ford? >> right. technically speaking, we're seeing higher highs and higher lows which indicate it's in an up trend. we're bumping up right against the 200-day moving average. i think it's a great time to get ahead of the technicals and maybe get in before we see the breakout occur. what i like is buying the july 11 style calls. i like them at 80 cents or lower. the y it's great because volatility is so low we can pick these up and not have to worry about a spread for such a low cost. >> thank you very much, dan.
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joining us from chicago. scarlet? scarlet: thank you very much. still ahead, are emerging markets headed for a metdown? we'll be speaking with paul mcnamara about economies, notably turkey. go. check out bloomberg quite a few to choose from when it comes to emerging markets, including this one. this is bloomberg. ♪
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>> let's get the first word news this afternoon. defense secretary jim mattis says there is "possibly good news about a u.s.-north korea
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summit." matusz said diplomats are working to get the summit back on track. matusz called the recent -- mattis called the recent back and forth between the president and north korea, the usually give and take. the death toll of the air crash has his on the 112. that leaves a 19-year-old as the sole survivor. the jet crashed shortsly after takeoff from havana. the crashes remains under investigation. the navy's new aircraft carrier is headed back to a virginia shipbuilding yard after problems were discovered during sea trials. the gerald r. ford already needs fixes. repairs are expected to take about a year. and the british economy

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