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tv   Bloomberg Markets Americas  Bloomberg  June 11, 2018 1:00pm-3:30pm EDT

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says the meeting can have only one acceptable result. the complete and verifiable any reversible denuclearization of the korean peninsula is the only outcome the united states ccept. remain until north korea eliminates weapons of mass destruction programs. if diplomacy does not move in the right direction, those measures will increase. mark: secretary of state added the united states will add investment help. theresa may is calling for unity with americans friday to prevent the government from being defeated in key votes this week on its main brexit bill. the votes tomorrow and wednesday, after the u.k. house amendment torts the eu withdrawal bill to soften the terms of bruce's departure.
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-- britain's departure. she wants to retain close ties with the block after britain believes in march of 2019. the unit humanitarian agencies expressed concerns today about recent airstrikes in rebel held provinces, warning we may not have seen the worst of the crisis in syria, even after seven years of war. the added the military isolation could become in his words much more complicated of brutal than other conflict zones in syria. >> we have seen in the last few weeks of escalation of fighting between these groups that are taken place. we have some out in public statements and fighting that has taken place on house facilities that have taken place in multiple occasions. a special solution needs to be
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found with all these groups inside italy. says attacks have killed 13 children and added that one million children live there. alleged $2.5of inlion in aid to jordan effort to stabilize the kingdom as it faced its worst protest in years over government austerity plans, including tax increases. there will also cover world bank guarantees for jordan and offer budget support. the five-year a deal is similar to a package offered by gulf states in 2011. global news, 24 hours a day, on-air, online at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. scarlet: it's 1:00 p.m. in new vonni: it's want to
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talk p.m. in new york, and vonnie quinn. hery: i'm shery ah welcome to "bloomberg markets." vonnie: here the top stories of the bloomberg and from around the world that we are following. president trump and qingdao moon -- kim jong-un set to meet in singapore. we talked potential outcomes. decision times for the fed ofths announcing rate decisions within 24 hours of each other. with investors looking for direction. retailpocalypse is over. there's evidence we will guard is figuring out how to manage and -- inventory and adapt.
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julie hyman is with us halfway through this auspicious trading day. we are seeing further gains. julie: we are not seeing enough to recoup the losses at the end of last week and push the nasdaq to a new record, but nonetheless, stocks have been strengthening marginally throughout the day after the dow opened just a little lower and it's now moving a little higher here. the fireworks could come later this week in terms of economic data with cpi coming out tomorrow to kick it off and in terms of central banks meetings. for now, the fireworks are coming in m&a. we have boston scientific and at the both halted moment after moving sharply on a report in the wall street journal that striker had approached boston scientific for potential deal. both of these stocks are no halted i'm seeing one headline that boston scientific will not comment on speculation according to a spokeswoman for that company so it's unclear what the
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news is going to be coming out from either of these companies. before theyhappened were halted and we will keep on monitoring them and give you a development. has agreedalth care to a buyout from kkr owner of emergency care centers and according to analysts we could see more deals like this meeting we are seeing some of the hospital stocks trading higher cording to analysts. hospital emergency departments and physician staffing assets are also poised to be taken private. arms race regulatory units likely continue to those hospital staff that we are watching them also been trading higher and i think we have a look at some of those as well like tenet healthcare. they are all trading higher on that speculation that we will continue to monitor the other developing situation. stocks in the oil that is trading higher on the session and a couple of things going on, cracks in the pipeline in nigeria that threaten those oil
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exports and there appears to be a schism developing and opec whether to boost production. according to cnn, the opec president says the u.s. has not asked the group to increase oil production, contrary to a prior report. while up now by two thirds of we just had a treasury auction, we have to mention that. the 10 year yield you can see over the past two days creeping back up to 3% and there is a lot of supply coming to market this week and this auction we just had $22 billion worth of those 10-year note. shery: julie hyman, thank you. awaye about eight hours from the first face-to-face meeting between sitting u.s. resident and a leader of north korea. president donald trump and kim jong-un are set to meet at 9:00 and theyl time surprised a cheering crowd in a rare public appearance. mike pompeo standing firm on
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sanctions against the regime. bloomberg's chief washington correspondent kevin cirilli joining us now from singapore. the middle of the night in singapore and mr. kim is out and about. and he took himself it was singapore's foreign minister. remarkable been a evening watching north korean leader kim jong-un who is really left north korea felt since he assumed power accepts a visit actuallyitarized zone touring downtown singapore in the middle of the night. just ahead of his meeting at 9:00 a.m. with president donald trump. just within the last two hours we are also getting word that nba all-star dennis rodman who we of course are members also met in the past with kim jong-un have also arrived here in singapore and he is not going to be or expected to be in any of those meetings tomorrow. president trump for his part meeting with the prime minister
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of singapore early yesterday and then largely hungering down in preparation for the night talking a meeting asia time and i like p.m. new york time with the newark -- with the north korean leader. they will be one-on-one with the translator and expand their circle or a series of bilateral discussions and the president will be joined by secretary of as well aspompeo chief of staff general kelly and national security adviser john bolton. ism there, the president inspected to make remarks at about 4:00 p.m. asia time or 4:00 a.m. new york time. from there, he will leave. a busy day, a monumental day, and a store day between these two nations. one where the stakes have never been higher and it's unknown exactly what will come out of all of this. shery: kevin cirilli, thank you for keeping us up-to-date. bloomberg's chief washington correspondent joining us. for more, let's bring in reva bhalla goujon, thank you for
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joining us. we know president trump is just coming off a g7 meeting where there was name-calling, finger-pointing against allies, who needs a victory more from this pacific summit, mr. trump or mim? trump isn: of course, looking for a big foreign-policy victory that he would love to prove the naysayers wrong by getting the diplomatic ball theing and i do think strategic foundations association as they are. , dramake the g7 summit is part and parcel of the process. could there be walkouts and name-calling between trump and kim, whether or not it says meeting or future summits, absolutely. we can expect that. we are looking at a fundamentally different situation now where north korea is coming to the table is a nuclear. , dealing with a very different president in the united states, he realizes the importance of and of coursengs
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it's going to have some reservations is going to want to control the pace of that. at the same time, i think united states has a real strategic interest in seeing eventually unified korea and using that as an element in its containment strategy towards china in the long term. there are a lot of reasons why i think we should have an open mind towards the summit overall. vonnie: we've been asking what the success looks like, but what does failure look like? ms. goujon: failure is pretty straightforward. now the you are putting the two leaders of the top together room with translators and it's whether they can agree to a political framework to move forward. the technical details have to sell. you can follow with all the technicalities, a complete verifiable irreversible dismantling of the nuclear program, the estimate of local will on both sides to say it's better we move forward with this and will work out the details in time. failure would be the political will just is not there. the two sides don't see it and
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they walk away and the u.s. then resources to military action, though i still think we are not there. fall apart,talks north korea has an interest in trying to gi diplomati momentum going, particularly with china and south korea on its side and the u.s. doesn't have the same element of maximum pressure to impose it a snap if we see the summit failed. it would not have the support of its allies this time around. shery: you said north korea is coming to the summit as a nuclear year and that's what north korea has wanted for the longest time. and they already won by legitimizing the regime? ms. goujon: in some ways, yeah, but the clutter -- a critical layer of legitimacy. i think there's a level of political legitimacy that pyongyang is seeking and that's where creating of legal framework for normalization of relations, so when we talk about
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the armistice and replacing it with a peace accord, those are all forms of political willimacy that pyongyang be seeking. it does not mean they will get everything all in one fell but i think that's the crux of the negotiation moving forward. vonnie: how did you analyze the end of the g7 and the whole thing in the context of the summit? we had a distancing and even perhaps something stronger than distancing from allies and we can president trump calling for russia to be included. the fallout from the g7 summit was theatrical, but was it really surprising? what would look at the grievances this white house has at its willingness to alienate many of its trading partners and security allies, there was nothing really that new. i think the bigger take away is where themit u.s. is going to be focusing its attention on his next big economic assault.
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which is where we have to watch very closely that section 232 investigation on automobiles auto parts. if this white house is a they are within it and very serious about following through and it is something that's going to take time. where key security allies like japan, germany, south korea, are already looking at the negotiations with the white house on the section 232 tariffs on aluminum and steel which didn't go anywhere. and there would have to repair themselves for potential a worst-case scenario. thanks to everyone follows her down -- to reva bhalla goujon. decisions foring the fed government ecb, and the bank of japan this week. take a look. this is bloomberg. ♪
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shery: this is "bloomberg markets," i'm shery ahn. vonnie.i'm looking ahead is a major wait for the global economy. tomorrow, federal reserve chairman jay powell will announce that they are almost certain the latest hike in interest rates expected to top 25 basis points. the ecb and doj decisions both hang in the balance this week as well. joining us is genus molech -- smaller.ech -- gina gina: the meeting starts in washington and it is going to be a really interesting meeting. the rate hike almost guaranteed and we basically know it's happening in markets expected.
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what's more interesting is the and there'sjections a good chance we could get another hike and is a good chance there going to change the employer forecast i think those two things are something to watch when the numbers drop. vonnie: what should we expect we see those economic projections and the sort of looks like right now. jeanna: the first one is the obvious point that everyone is talking about which is how many rate hikes do we have? can we get one more or do we think we get to more? the second question is how i is that terminal rate? do they move up the furthest hike out in the hiking cycle and can that you higher because that would be a really bullish sign, that would be the fencing we think this economy can have a
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little more juice and we were previously expecting. shery: we've seen core cpi stabilizing at just about the two present level that we have tariffs or could see a potential tariffs coming up and that would be inflationary. how important will all this calculation be? jeanna: when you are the fed and trying to assess these counterweights, you really have to think about both sides of this. on one side it could hit harder, it could evolve into a trade war at this negative for companies. that can be bad for unemployment and hiring. in his individual mandate is inflation. if we see inflation taking off because of a trade war, they are stuck in really bad position because they have slower growth and higher inflation the need to figure out how to deal with. shery: it's not just the fed, we have the ecb and boj. jeanna: the ecb is going to be interesting. boj is going to be policy. they are looking at potentially announcing a date for the end of
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tv sometime this year and some people because going to be this meeting and some people think it will be july and that's the big question going into this meeting. shery: jeanna smialek. fed reporter with what we can accept this week. lypse is over. as evidence the old guard is figuring out and manage inventory and adapt in the digital era. this is bloomberg. ♪
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vonnie: this is "bloomberg markets," i'm vonnie quinn. shery: i'm shery ahn. as 2018 the years nightmare ends for traditional retailers? posted almostment and itns year to date led one leading industry analyst to declare the retail apocalypse to be over. emma chandra spoke with omar saad and asked him what
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profitable call. mr. saad: even with that of whether we've had, these are pretty big signals to last but there's more going on here that didn't cap bounce in retail and think there are structural changes happening in the industry that are sustainable. the most important things is the number think there are structurl changes happening in the industry that are sustainable. one thing as inventory management and number two additional marketing. >> you double upgraded macy's in this report and reversed your position from short to long. the posterlong been child for the struggling old world retailer, why this reversal? alexis the quintessential left for dead traditional old world retailer that is being disintermediation by disruptive skerry online pure players with amazon and others. we come to the conclusion that this company has got lots of assets and levers to pull and they're going to benefit as well
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from centralized inventory management in a digital world where you can service decentralize demand through sandra bullock inventory which is incredibly effective for faster inventory turns, better cash flow production, should improve profitability with less promotions of the end of the season and i think even allows companies to take more risk of the tales of the bell curve of inventory and do more fashion because you don't need to carry as much of the basics. we look at those factors listed on marking -- digital marketing and we see manager that's willing to try new things and it's a really interesting start area. macy's is seeing sales surprise to the upside in the last quarter. we have a chart and you think they still have a lot to do when it comes to things including reformatting the way stores work. low-cost no-cost real estate, we see a scenario where they can really create a trend is not a value for the shareholders by
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focusing on the top 400 or 500 stores and he one corner of those stores the traditional wholesale model and imita quarter of those stores and monetior sublet them out or sell them back to the landlord who can put in pharmacies are restaurants or coffee shops or other experiential driven retail concept and the remaining piece in our mind and we think this is true for most of wholesale should involve to more concession marketplace format buildhe brands manage and their own shops and macy's which is a really lucrative scenario for a department store we think it is the pharmas artisan the ebola merchandising organization and the store associates and a concession shop format. they have their own versions and buyers in the department stormy seas would be left with this -- department stores would be left inventory the result of a higher valuation multiple.
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>> we see that style of the permits are in europe. amazon we looked at the amazon threat that we mentioned briefly and has back on away -- has that got away? we look closer at this off-line space is eagerly apparel, footwear and we think the risk is overstated and the size and the and i can that business is overstated there are a couple of factors we point to a number one i think the market thinks it's a $30 billion, $40 billion business already which will make it one of the top if not be top apparel retailers and we size it more at $10 billion or so but more importantly, amazon's core advantage is its cost efficiency and convenience factor. other old world retailers are figuring out for inventory management shipped from store and pick up in-store that these consumers are really gravitating towards family can be competitive with amazon. >> this off-line space? mr. saad: is moved a lot off the bottom that we look at the
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valuation in the market is still below where it has been, it's an incredible macro consumer environments and stocks are still below historical valuations and margins are still below where they used to be. sentiment is just on the turn. we think consumer discretionary could be a great sector the next couple of years, soft lines especially. shery: chandra speaking with omar saad. on theet a quick check majors now come up about one third of a percent apiece, sempra energy is the best performer in the s&p 500 after activists called for an overhaul. explore how to win 70% tariffs set president trump off of the g7. this is bloomberg. ♪
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mark: i'm mark crumpton, this is first word news. the world is watching the events in singapore and gutierrez discussed the upcoming summit with reporters today in new
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york, he committed both leaders were trying to find a diplomatic solution to what has been in his words a dangerous cycle of global concern. >> i believe the two leaders need to be credited for the courage with which they decided to move forward with the summit and to engage in constructive negotiation to reach objective is vital for us all. the peaceful and verifiable mark: goodyear is conceded there will be does rim is on both sides with during tough negotiations, he says the united nations stands ready to support the process in any way, including verification if requested by the key parties. the u.s. supreme court gave states more power to purge their voter databases of people haven't cast ballots recently. fourvote of five to justices upheld an ohio system that could become a model for other republican controlled states.
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they said the system was a legitimate effort to identify people who had moved away. spain's new prime minister had ordered authorities to allow rescue ship carrying more than 600 migrants to dock in the eastern port of valencia after the boat was refused by italy and malta and the ship has been stuck in the mediterranean sea with its passengers including more than 120 unaccompanied minors and seven pregnant women. medical workers a food on board the ship is going to run out by tonight. pope francis accepted the resignations today of three bishops including the one at the sexual abuse scandal. following an avalanche of acquisitions of abuse and cover up. the archbishop and 30 of the other active bishops altered there really -- the resignations to francis at a vatican summit. global news, 24 hours a day, on-air, online at tic-toc on twitter, powered by more than
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2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloo ♪ shery: live from bloomberg world headquarters in new york, i'm shery ahn. amanda: i'm amanda lang, welcome to "bloomberg markets." shery: here other top stories we are following from around the world. summit looks successful than the white house slammed canadian prime minister justin trudeau for betrayal. tripadvisor peter navarro going as far as to say there's a special place in hell for mr. trudeau. and king johnp and are sent to me tonight in singapore and u.s. secretary of state mike pompeo says the talks with north korea are moving more
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quickly than expected. plus, taking flight with the air canada ceo, the company's top executive discusses foreign investments in his airline. we start with the g7 because president trump blew apart a carefully crafted effort of the toty from a summit of allies one with north korea, plessis escalated a fight with canada a steadfast military ally that buys the most u.s. goods and white house trade advisor peter navarro double down on the criticism of canadian prime minister trudeau. >> there's a special place in hell for any foreign leader that engages in bad faith diplomacy with president donald j. trump and then tries to stand him in the back on the way out the door. and that's what bad faith justin trudeau did with that stunt is conference. joining us now is josh
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when wrote to cover the g7 meeting and he is in ottawa. give us some background as to and led to these comments what they are reaction has been so far from canada. josh: the rug got pulled out from is a couple of times at the summit in new york and the summit was less contentious than we maybe thought. with tweets on friday and things didn't look good and then the leaders spent a day and a half really trying to find something they can live with a teasing trump you might say and they got there, they got a final communiqué that the u.s. supported and the summit wrapped up in front left early and trudeau gave his press conference in minutes after the communiqué was published online, trump blows up the whole thing. this is where we are at now with up and trudeau ramped it other countries seem to be coming down on canada's side of this so far.
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shery: any clue at this point what happens to the nafta renegotiations or retaliatory tariffs for u.s. steel and aluminum tariffs? josh: we're sort of full steam ahead, i think this is a signal aat nafta talks or not in great spot and they have essentially been put a little bit on the back burner given that we are widely considered to have missed the window to pass a new nafta deal in this congress, that means that deal that can --s the next conference congress might look different very there's no and last-minute push we can tell right now on have to answer tariffs, canadian countermeasures and counter retaliatory tariffs taken on july 1 that remains the case, canada's that it would cancel the stairs of the u.s. canceled its tariffs on steel all over them and one thing that came from the summit is that trump again raise the prospect of auto , wave ofthe third hit
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tariffs on his national security reasoning or excuse to putting on your view. that would hit canada very hard, a major auto trader supplier with the u.s.. throwing- amanda: autos into the mix is a bit of an eyebrow raiser have a hugely integrated north american supply chain that would be a disaster for canada. absolutely. it depends on what else trump does. early on in nafta, the changes they were talking about autos were designated in a people said we are not going to bother, you will just pay the u.s. tariffs on autos which are pretty low. if nafta exists and there's an exemption, there's a lot of moving parts on this one for we know what it will mean for u.s. and canadian automakers. amanda: josh when growth, thanks. growth, thanks. ambassador, i want to start with your reaction, to this kind of level of discord at this kind of
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meeting which i think was without precedent. >> it shocking. over the last few weeks, there was a lead into this. one of the problems we have and those of you in the media and those of us watching this, who watch each step along the way. let's go back in time a little bit june 1, the president makes the decision not to exempt a number of countries including much of the g7 on steel aluminum tariffs. because of done is differently and just waited nine days and had that conversation at the g7 meeting with our best friends in trading partners, made the decision to do this overt move. that in turn cause a reaction from the country, these retaliatory tariffs were either landor put in place and then of course there were rumors and stories thate may not come because he was so upset because of the retaliation, he does come
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but he's late and he proposes gh, a hostile the move because there was no they -- no way that was going to accept it. he shows up to meetings late, called an impromptu press conference at the end and uses language that i think is indicative of where we going with nafta which is not a good place because again, it brings up the sunset provisions. so we are problem here. i think the problem is larger because actually think the president was going out of his way to be incredibly disruptive to the world order and to the g7 if it exists and we are looking at each of these individual points for collectively, no one would behave this way of us they wanted to ruin the party. strongwe've seen a reaction from canada, the primers are saying canada will not be pushed around, his foreign minister condemning the u.s. is ad hominem attacks and canada started with a charm offensive towards the new
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president, will this approach change? josh: i think you have to continue to engage and have conversations. you do the best you can to find a path forward. live that path forward is as i think that the president wants to be completely disruptive to western liberal democratic institutions, that includes as a trade pact we've had now coming up on 25 years, he has been talking about this for years as to how bad it is. is going to beh a bit more challenging going forward i think the likelihood that the u.s. backing away now from steel aluminum tariffs is small i think canada will and proceed in the question is what's the next step for the u.s. and i hope we take a deep breath here and find a good path for a good diplomacy in conversations, but
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i fear that the president will react poorly as he has done all along the way. raising the issue of the amount nato allies spend on their militaries nodded and compared to the u.s., not fair recorded president trump. is this another salvo in what will be a new strain of bad relations with nato allies? josh: it's just a compounding of the various issues. thatman has the belief every agreement that the u.s. has entered into since world war ii is we have been taking advantage of sorting is pretty amazing we been able to build the country we have being a -- being taken advantage of to the extent he thinks we have, but in all reality, we don't have any of these agreements with russia and with china and with some of these other countries he seems to be embracing these days and north korea, he talked about going to north korea and the with ations for that
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good attitude coming a really bad attitude with his friends. at the g7. coming up, count down to the historic trump kim summit is on. with just hours to go before president trump means the north korean leader face-to-face, both sides say a major gamble. live from singapore next. this is bloomberg. ♪
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amanda: thibloomberg markets," i'm amanda lang in toronto. shery: i'm shery ahn in new york. amanda: a quick check of the major averages and we are seeing positive movement here, the s&p 500 coming we have all but one of the sectors moving higher, just utilities modestly weaker
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and stocks largely looking through the trade rhetoric here following europe a lite that higher and we will wait to see whether there's a stronger reaction tomorrow, post any kind of concrete news coming out of singapore. take a look at the u.s. canadian dollar cross here, the canadian dollar is being hit on some of the remarks being made by president trump. there are chinese imports from north korea and look at what's happening, looking at the last few quarters, a gradual march lower to levels not seen for years, well below the reason average. interesting to see that economic relationship between china and north korea actually has been lessening in recent quarters. shery: that's adding pressure to the north korean regime. we see more optimism in the markets, we are already seeing south korean cost to insure their debt falling. take a look at the south korean five-year credit swaps which are now at the lowest in more than a decade and you see part of the asset-management saying if you
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by cbs and hedge in south korea, because whatever the outcome is, your moneygative and the cost will rise. if negative away on investor sentiment and if it's positive on people start wondering will this cost a lot if we see an eventual reunification of south korea and north korea? let's discuss the upcoming summit now with donald trump and north korean leader kim jong-un set to meet in less than eight hours, 90 5 a.m. local time in singapore. kim and making a rare public appearance unsurprising a cheering crowd with a late-night whilef singapore secretary of state mike pompeo is standing firm on sanctions against the regime, kevin cirilli joining us now from singapore in the middle of the night, kevin. thank you so much for talking to us. we have seen mr. kim making the rounds around in singapore at the same time we have seen president trump just coming off from the failed g7 under how much pressure is the president
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to get a win from the summit? that he wants a win, but they are also trying to downplay expectations in the sense that they feel that this is only the first step in what potentially could be a much longer process. there's been the theatrics that have surrounded this evening, the evening before president trump will meet one-on-one with north korean leader kim jong in in just a little more than seven hours. north korean leader kim jonil and accompanied by his sister and his senior advisers going across town on a tour of singapore. dennis rodman touching down, there's a lot of theatrics that in terms of really the u.s. is trying to maintain expectations and the president tomorrow at about you than will depart from where he is saying from his hotel and he will go to santos island through that meeting. they are only going to be meeting for about 45 minutes
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unless the amount time schedule between president trump and his translator and north korean leader kim jong-il and his translator which is monday evening new york time and then they will him and delegation meeting and then ultimately if all goes according to plan, is very muchmp excited to make public remarks and take questions from the global press corps from the white house press corps from around the world. the stakes are never been higher. you mentioned the g7 and trade is ray much on the might of the government advisers surrounding this president, most notably secretary mnuchin as well as senior advisor larry kudlow, neither of whom are with the president on the strip. -- on this trip. amanda: there were concerns about some last-minute issue of meeting.he mike pompeo saying his remarks about sanction is not new policy, that the existing policy, but are there any concerns that there could still see something between now and then meeting the collapse of the progress? -- that could upset the process? secretary pompeo
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addressing reporters earlier took several hours ago in which hadaid essentially the u.s. more than 300 additional sanctions ready to go show the north koreans not be cooperative with the second point about how they are managing expectations really on capitol hill back in washington, d.c., many republicans within the president's own policy -- own party say they may not authorize a long-term denuclearization deal. kevin cirilli with us from singapore. saysg up, air canada ceo the company stock trades at a discount compared with u.s. carrier peers. we hear from calin rovinescu next. this is bloomberg. ♪
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shery: this is "bloomberg markets," i'm shery ahn in new
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york. amanda: i'm amanda lang, in toronto. i sat down with air canada ceo caitlin romanesque you to talk to him beginning with how his world might change now that canada is losing the rules for foreign ownership of airlines. ms. rovinescu: we always had a large number of foreign investors. foreign investors owned more than 25% of the airline at the agm or any other shareholder meeting, their votes got crammed down. if there were 30% foreign ownership and they can only vote 25%, there would be that prorating down for the value. somewhat of as negative for investors, foreign investors. i think the elimination of the 25% cap when raising it to 49% will continue to attract foreign investment and that should be a positive on the share price. wheew the outset announcement was first made by
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the government, we saw a little bit of a bump at the time and i think with the passage of time it will continue to be a favorable factor for investors who don't like the risk factor of having their votes prorated thate events -- effectively makes them subordinate voting at some level depending on the owners. could that be part of the reason your stock trades at a multiple -- a lower multiple? ms. rovinescu: there's a discount effect in relation to u.s. carriers and we've looked at that many times to try and assess as to why we have that trading discount and we describe it largely to the fact of the loyalty program, frankly. all the u.s. carriers have their own loyalty program and as a result of that, get the benefit of that directly without having an intermediation that i was referring to. that is one factor. the higher cost of aviation infrastructure in canada as well, we have a higher airport cost, airport of researcher cost, security surcharges, led
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taxes, etc. and that has been another factor that is not quite the same when we compare apples to apples with the u.s. researcher,y aviation of researcher, the loyalty program and we have had a high regional connector cost as well, whi is one of the tackling,are also those are three or four the factors that contributed to the lower multiple. we think a lot of it will be improved as a result of the loyalty program coming back in-house. -- made the first amanda: you made the first chinese-american venture, why did this user canada -- why did they choose air canada? ms. rovinescu: we had a lot of success with our partners lufthansa and united. this is our first joint venture over the pacific into asia. general in his of joint venture spring is a tremendous amount of efficiency to the
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marketplace. making it possible to support other routes. i mentioned that we started flying shanghai for montréal, which is not a large enough market to support that, so any connections on this end and then want to bring people to shanghai, we connections on that end. the evolutionism these partnerships and china is particularly strong in beijing. beijing is constrained right now, we can't more flights in the beijing but as we bring traffic in there, having , wegrated joint venture would be share revenue on the air china flights that we can put our passengers on the air china flights. that dynamic has been proven to positive astive and well for customers by enabling us to have a stronger business. there's also been a lot of competition from foreign carriers and chinese carriers in particular over the last several years and this joint venture
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will make us more competitive. amanda: you really pursued the u.s. traveler, bringing them into international markets. is that a very limited business? -- is that a lucrative business? ms. rovinescu: we are evolving our hubs into global hubs and toronto in particular is the strongest of all of our canadian hubs. we build that by bringing traffic into toronto and then out of toronto globally. pittsburghaces like and boston and philadelphia and cleveland in nashville, places that will not a surly have the breadth of network that places like chicago or jfk really asked might have and that has been a fantastic market for us, we of course have the largest operation in terms of number of flights into the united states. it covers some 65 cities in the u.s. which has been a big source of revenue for us and recently
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many including the wall street journal recognized us as having the premier product out of north america. amanda: air canada ceo caitlin romanesque you. -- caitlin romanesque. --. calin rovinescu. shery: especially if you have ines in cooperation with asian airlines, that market is growing and i guess air canada as he said in an interview is just taking advantage of that. great interview. if you missed on any of our charts shown throughout the program, g tv is your function and you can save them and use them for future reference. this is bloomberg. ♪ s bloomberg. ♪ whig of data?
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well, it's a whole day's worth of love songs. 300 minutes of baby videos. or, it's a million chat messages. a gig goes a long way. that's why xfinity mobile lets you pay for data one gig at a time. and with millions of wifi hotspots included, you'll pay less for data. it's a new kind of network designed to save you money. click, call or visit a store today. 2:00 p.m. in new york, 11:00 a.m. in san francisco, and 2:00 a.m. in singapore. i am scarlet fu. julie: i am julia chatterley.
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welcome to "bloomberg markets." scarlet: we are live in new york over the next hour. here are the top stories on the bloomberg and from around the world. brace yourself because here comes a hectic week with presidential standups, trade tensions, and central-bank meetings. we will talk strategy with liz ann sonders. high-stakes and singapore, president troubles if the gamble on kim jong-un can pay off. citroen saysains, the stock more than doubled. why heluck tells us thinks fitbit is in pretty good shape. market closes in two hours. we talk about this being a big week. lots of catalysts. julie: but today is eerily calm people may bethat
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bracing themselves for all the data, central-bank action, and of course that little matter of the summit and singapore. -- there was terminally turmoil at the g7 over the weekend. in russia, gains across the board that are relatively modest. when developing story has to do with fitbit. those shares surging 12.5 percent on that recommendation from citroen and andrew. stock,ce target on the $15. generally, he's looking at fitbit as more of a medical technology company than the traditional fitness wearable type of company. dexcom could play a role in that, which does glucose monitoring. google could play a role, as well, terms of data. all three stocks are racing at the moment. we are also watching some health insurance companies, all new buy
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rated at suntrust. many details. but these three are all getting a boost at the moment. also have the developing story of boston scientific and which according to "the wall street journal," boston scientific was approached by stryker for a potential deal. both stocks are halted pending news. they have been halted for more than an hour. we're still waiting for developments. perhaps someone has some developments at of time. looking at the options activity in the se bloomberg, someone who monitors options noticed a couple interesting trades on friday before the rally began and before today's big leg up. you look at the options $32vity, as he did, july calls changed hands on friday.
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there was one block of almost 7500 that was but for 72 cents. that would have yielded a gain of 400%. dollar call,0 five there was another big block of 900 that was bought for c 80 cents. perhaps a couple traders getting lucky with those buys on friday. julia: thank you for that. let's go to mark crumpton. mark: there is that little matter in singapore, talks between the u.s. and north korea. before the historic summit, talks appeared to be going well. the white house says negotiations with kim jong-un's regime are moving more quickly than expected. american officials say president trump plans to leave singapore ahead of schedule. secretary of state mike pompeo saying the u.s. will keep
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sanctions in place until north korea eliminates its nuclear weapons capability. a programming note some a bloomberg's chief washington correspondent kevin cirilli is covering the summit and will join us live from singapore and just a few moments. the british prime minister, theresa may, is warning countries of the risk of taking unilateral action on trade. she just parliament and it's a -- and discussed recent tariffs imposed on the eu by the trump administration following what she called a difficult g7 fight this weekend in canada. >> we need to avoid continued tit-for-tat escalation. that is why it is right that we have such an open and direct discussion of this summit and the u.k. will continue to support a constructive dialogue. we do not make progress by ignoring each other's concerns, but rather by addressing them together. minister sayse after detailed discussions, there was common ground of the
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g7, which was reflected in the end of summit communiqué, which was not endorsed by the united states here the trump administration has slappesanctin helping russia's military with other malicious activities. they freeze any assets they may in u.s. jurisdictions and bar americans from doing business with them. president hasian been returned to the country to face political espionage and embezzlement charges. by theextradited today u.s., where he has been in jail in miami since june. froms panama's president 2009 to 2014. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg.
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julia: less than eight hours away from the first face-to-face meeting between a sitting u.s. president and a leader of north korea. president trump and kim jong-un are set to meet at 9:00 a.m. local time in sentosa island. kim surprised to crowd with a late night tour of singapore in a rare public appearance. we're joined now by kevin cirilli, live from singapore. kevin, great to have you with us. explain what the atmosphere is like and what people are saying there. images thatg the are beamed across the world. here and were right get news and north korean leader kim jong-il and was actually touring downtown singapore -- kim jong-un was actually touring downtown singapore. just then, north korea leader kim jong-un making what is described as a rare public appearance, accompanied by his sister, by the foreign minister, general that was
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the top ranking north korea official the visited the white house the other week in washington, d.c., all of them seemingly enjoying themselves. about 90 minutes at her, nba all-star dennis rodman touches down here in singapore. theof course, here for spectacle of it. in terms of policy, president donald trump meeting with the singapore premised earlier today and then hunkering down and meeting with top advisors to go over strategy. he will meet one on one in just a few short hours with north korean leader kim jong in. they will each have a translator. after that, they will expand their teams. general john kelly will join the team, as well as secretary of state mike pompeo at national security adviser john bolton. beyond that, we're hearing from the white house and other administration officials that president trump plans to give public remarks. really, we are going to be hearing a lot in the next tony
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four hours as this -- the next 24 hours as this finally gets underway. scarlet: thank you. kevin cirilli working overnight. summit, on the historic we're joined by bonnie jenkins of the brookings institution washington, and founder and president of women of color in advance of peace and security. great to speak with you. the president has made clear that personal chemistry the hope determined is excess of this summit. he says he will know within the first minute whether kim jong-un is serious about doing a good arising. give us a sense of whether this will pay off in a relationship between north korea and the u.s.. is something important that president trump is saying he will be able to tell in person. hopefully that will mean something. hard to see how you can determine in a minute whether someone is serious or not.
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however, he does have the rest of the time to actually determine what is going to happen and how serious the talks are going to be. so developing an early understanding, an early on, is going to be very important in terms of the success of the summit and also the potential meetings that may follow. apparently it will only be a day of meetings. 11 hours from the first handshake to president trump's final presser. earlier he said it may be more than one day. do you read anything on the fact that it seems now that this summit will be shorter than perhaps some anticipated? >> i think we are seeing a recognition of the fact that you can only do so much with one meeting. i think there is a recognition look at the to discussion between heads of state and see that they are willing to make progress. it is a recognition that we're having the meeting and will touch base, see how things are, and then we will get to serious
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discussions about denuclearization. that will take much more, so i see more meetings, a phased approach. i think you are hearing that with the recognition of the limitations of what could happen in one day. julia: it is about addressing and acquiring some level of understanding. the principal issue is that the sides have very different views on what denuclearization is. we keep coming back to that. do they touch on the prospect in this meeting and the fact that there are clear differences between the expectations on each side or do they save that for later negotiations? that is a touchy subject. a touchy subject, but i do not see how they can ignore at least some discussion on the topic. of course, they will recognize the details of almost anything that will be happening between the two countries will have to ha after the summit. but it is difficult to imagine them walking away from the summit today without some kind of invitation or discussion about the definition of denuclearization.
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that is fundamentally what is driving the discussion. so they would half to have some kind of indication where mention of that topic. much: what caused so tension in the lead up to this meeting was the idea of a libyan model and what happened in light of the qaddafi denuclearization and the fall of the regime there. ise pompeo said the u.s. ready to offer unique security guarantees to north korea here. how pivotal do you think that is? is a very pivotal. i think you want to reassure north korea after the statements made about libya. i think that really made kim jong-un nervous. also, i think there is a recognition of the fact that if you really want serious negotiations with north korea about giving up the nuclear weapons, they will have to have a sense of security, a sense
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that there is a secure environment. so if you're going to have a discussion on nuclear weapons asian,or didn't wear his you will have to have the -- or the nuclearization, you will have to have a security guarantee for north korea before they consider giving up nuclear weapons. scarlet: we know the president is more comfortable with bilateral deals rather than multilateral. buy andes not have the from south korean or other countries, it could be undercut from the start. when it comes to the other countries that need to be courted, has the u.s. done enough? could do more. i do not think we have had enough conversations with china example., for we have had several with south korea, and that is very understandable. but we really need to look at the regions, as well, and that may even involve discussions with russia. actefinitely want to step
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and also recognize that there are other countries who have a very important interest and a discussions.e it is going to be important to include them. it is good the secretary pompeo will be visiting countries after the talk to recognize that this an issue that is not just between the u.s. and north korea. julia: bonnie jenkins, thank you. coming up, central-bank bonanza. the fed, ecb, and the bank of japan alter up for meetings this week. we will talk with the chief investment strategist at schwab. from new york, this is bloomberg. ♪
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julia: this is "bloomberg markets."
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i am julia chatterley. scarlet: i am scarlet fu. time for the bloomberg business flash. daimler order to recall 774,000 vehicles in europe. the order follows reports of five defeat devices in the diesel engines. daimler says it will work with maximum tempo to fix the vehicle emissions system. a u.s. federal judge will rule tuesday whether to block at&t's 85 billion dollar takeover of time warner on antitrust grounds. the department of justice has sought to block the merger several times since october of 2015. tomorrow's hearing is scheduled for 4:00 p.m. washington time. women engineers and information technology specialist that microsoft claimed they were treated for years like second-class citizens on pay and advancement. today, theks at it class-action bias suit. microsoft says it does not discriminate on pay and
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promotions. and that our business flash update. julia: stocks higher as investors ease into an action-packed week. we will speak with liz ann herers from schwab to get take. from new york, this is bloomberg. ♪
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scarlet: this is "bloomberg markets." julia: investors are pressing for what could be the most important week of the year so far with president trump's much anticipated meeting with kim jong-un. and central banks will set rates and policy. and there are ongoing trade tensions. liz ann sonders from schwab joins us from connecticut. great to have you with us. let's talk about the fed and what you expect as far as not only the fact that they are expected to hike rates but what
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they indicate about the path forward. liz ann: we do think they are going to raise rates are that has been our view from the beginning of this year. attention will be on the dot plot sent economic projections. also information and he tells on inflation, particularly if we get cpi and ppi data in advance of the meeting that is seen as a mover in one direction or another. it will be interesting to see in the press conference how, if a all,ay powell addresses the trade disputes on going. scarlet: and we get the cpi data tomorrow at 8:30 a.m. whenou talk about the fed, is it implementing a flexible enough of a view when it comes to inflation? there are plenty of arguments that central banks should rip -- let inflation run hot the for it ramps up an interest rate increase pace. liz ann: they have pretty openly
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talked about the notion of it being symmetrical, and i do think that there is an allowance for inflation to run at least a touchdown or than their 2% target for some amount of time. we do not know what that would be, but given how long inflation was subdued relative to that target, i do not think they are going to have a knee-jerk reaction to a month or two with it above. we are going to have an increasing focus on the inflation data, especially given the tightness in the labor market and what we see in wages. fedink the movement by the is less important now, but the commentary can take on greater importance. julia: how important is this? there is also a view of how hawkish they want to be seen by the market. that could shape the curve and impact the economy and growth. how hawkish do they want to be perceived as? liz ann: maybe not beyond what is built into expectations. there are a lot of interesting
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things being done right now. they are looking into the transcripts of not only speeches that have been given but looking at recent fed statements, looking at the press conferences to see references to inflation and the hawkish rhetoric, to the extent you want to quantify it, there is much more hawkish rhetoric that has been coming out of the fed over the last six months or so. financial conditions have tightened in the last couple of months for the first time since the fed began raising interest .ates two and half years ago i think the market is already pricing in an ascension that the fed is leaning to the more hawkish side of things, not to suggest they are going to have a need to tighten more aggressively. then probably three times this year. i think they are already on the more hawkish side. scarlet: jay powell will be giving his second news conference since assuming the home of the federal reserve. if he makes any change to the press conference schedule and
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thereby opens up the possibility of interest rate increases not just that every other meeting but every meeting potentially, how do you think the market would respond to that? liz ann: now thatood question whether it is fully priced in, i am not sure. it is something we have been talking about and there have been rumors that that would be under consideration, questions about if the fed decided whether they wanted to make every meeting a "limeeting, would they let the market know by surprising the market with a rate hike during one of these off prints conference meetings or would they make that announcement? i wish i could judge what a short-term reaction by the market would be. i think of the conditions at that point sort of supported that move, that would be better long-term in the sense that it would prevent the fed from being seen by the market as being kindd the curve, that they of self forced a move only is so -- at press conference meetings. whether that happens as soon as
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this week, probably not. julia: what about the european central bank -- there is expectations of a detailed discussion on the end of qe. is that what you expect in light of the ongoing discussion on this for many months? how do you think the market reacts in the short-term? to ann: i think if they were -- if we continue to see turmoil in many of the european nations, not least being italy, i think if they were to reinforce a move toward beginning the end of qe and september, maybe that is more trouble son for the market if they were to push that to december -- troublesome for the market. if they were to push that to mecember, that might cal the markets. with this increased volatility we have seen, particularly recently in europe, you have not seen any kind of knee-jerk otheron by draghi or
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central bankers where, through rhetoric or actions, they are reacting very short-term to some of the volatility. i think that that long-term should provide some comfort. but the fact that it is sort of steady as she goes, whether it is a september commitment or a change to december, i am not sure that that has a major fect on scarlet: you referenced political turmoil in europe. the italian finance minister making reassurances that italy would stay committed to the euro prompted a rally in italian bonds and stocks. to what extent does mario draghi fold in or even acknowledge what has been happening in italy in his news conference? liz ann: it would be odd for him not to address it, and i think that is probably the component of the discussion that will be most closely watched. bottom line is what has gone on in italy started as a political issue, but with the kind of blowout in spreads became a
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broader issue around debt and refinancing that debt. it is part and parcel to an environment we are in right now to it with liquidity being drained, albeit slowly, and we are probably the point in the expressionhe fun always is, when the liquidity tag goes up, we have to look to see who is naked. i think that is going to be a theme for at least the next year or so in this environment of lusk would -- liquidity and tighter financial conditions. scarlet: liz ann sonders of schwab, thank you. coming up, a bloomberg exclusive with andrew left. he says fitbit is in good shape. ♪
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>> live from new york, this is bloomberg markets. we dive into the futures markets.
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this is such an event filled week. we are taking a look at how to trade for volatility. if you look at the markets on the day it is quiet so far. stocks on the one hand and bonds. yield slightly higher. bonds are pulling back a little bit. that does come after the 10 year 1:00.n at the fed decision wednesday. we are 12 hours away from the summit between the u.s. and north korea. is today the calm before the storm? let's hop into the bloomberg and take another way and looking at the markets and whether there is volatility. it is a long-term chart. onblue we have corporate spreads. basically the amount investor is demanding to be paid over the
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state treasury. it was a widespread. we have been narrow. riskier going higher. we see the corporate bond spread is coming off of the lows. 1.5%. putting in volatility here. maybe there is already some tells out there there is volatility ahead. is today the calm before the storm? >> there is a number of ev out there in the market. equity market has ignored them. the market has taken some notice. we are not seen yields rise back up again. there is definitely a divergence we want to take advantage of. julia: -- abigail: you made a great chart and the bloomberg. it is the spread on the treasury
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futures and s&p 500 futures. >> yes. the blue line is the treasury. the white line is the s&p 500 futures. wheren see the crisis volatility shot up. equity volatility is three and a half times that of treasury volatility. basically you want to use 3.5 is many dollars as you use for equity futures. when you talk about risk parity you will wind up with a bigger position in dollars. >> let's take a look at how you would do that. this is amazing.
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function measures the relationship between the two different instruments. treasury futures, s&p futures. the key to this chart is down here at the bottom. moving ins&p futures different directions. that is what the red is down here to a negative correlation. that is what the general relationship is. if you look at what has happened recently you have seen that has reverted and stocks and bonds have been moving together. there is a short squeeze in bonds because people are worried about trade wars and italy. all the numerous things that are out there. equity market is getting ready to go back and test its highs. we want to position for this
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relationship reverting back down to the red. and you would do is short s&p 500 futures contract and futures contracts and that gives you three and a half-one ratio of dollars. you are short both sides of the trade. stocks going one wake bonds going the other. abigail: another interesting idea. we appreciate your insights. back to you. mark: -- scarlet: we have an audio problem. he is going to give us -- there he goes. mark: they question the motives of an ally nation if it
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government demonstrates irrational behavior. the mayor say been critical of president trump. >> president trump says and does in to the american values that i know. we are going to call them out. policies around trade wars, messages of hate, messages from far right groups, i've got to call that out as the mayor of london. mark: they clashed following a terror attack last summer and the travel ban against citizens of some predominantly muslim countries. u.s. supreme court gave states more power to purge voting databases of people who have not cast ballots recently. justices upheld a system that could become a model for other
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republican controlled states. they said it was an effort to -- to identify people who have moved away. the treasury department i urging african governments to tighten loopholes that allow illicit money from south sudan to cross into regional capitals. an undersecretary for terrorism says authorities in countries must make it clear that corrupt money is not wanted here. it is why we believe many governments have used cash to hide real estate investments and other countries. ninek obama has met with 2020 democratic presidential candidates including bernie sanders, elizabeth joe biden, and deval patrick. president is expected to endorse is a candidate after the party chooses its nominee.
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i'm mark crumpton. this is bloomberg. julia: the legendary mark crumpton. today's charting futures, on the bloomberg, you can click on the chart and dig around in the chart you solve their with abigail. we are watching what is going on. you can track the relationship with the rising and falling. can just click on the charts. this is brilliant. are we friends yet? julia: we are working on it. that is the answer. this is bloomberg. ♪ r. this is bloomberg. ♪
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scarlet: this is bloomberg markets. julia: time for the bloomberg .usiness splash cryptocurrencies lost $42 billion in market value this weekend. this after the latest hacking victim. they would not disclose how much it lost. two thirds of the stolen assets have been frozen. a $500 millions heist. 50%oin has fallen more than since the end of december. -- ceo of wayfarer announced is now turning to profits overseas.
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>> it will become profitable the same way the united states business did. we protect the contribution margin. it doesn't all get spent on advertising. the advertising is more and more leverage. , the loss isough lessened. remainsugh it fast-growing. julia: that is your business up day. our stock of the hour, the car seat maker attended for its biggest loss since october 2016 after they cut earnings projection. the better to bring in then dave wilson. here is twofold. the company cut projections for their fiscal year ending in september.
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they don't expect to end as much as they did before. flow.ow expect free cash to be breakeven at best. it is not coming. on top of that the bruce mcdonald who would run the before the spinoff is gone. or he is leaving. there is a management transmission underway. you have fritz henderson from general motors as an interim ceo. there are moves of foot. julio that is a whopping change. are we looking at this as a story that is going to take months if not years in terms of the turnaround? >> it know what -- it may well be the case.
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this company focuses on car seats. there has been into your years and a component business. that is where the problems are. they have losses in that area. there has been a drag. they have to figure how to deal with it and do it with different people at the helm. dave wilson, we will keep an eye on this. julia: another stock wre watching, fitbit getting the most after the less than positive report. a $15 year in price target assuming the company is not acquired first. on the phone, great to have you with us.
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i mentioned it there in terms of valuation and expectation. looks like a good reason to get involved. is the saying the story bigger catalyst. >> if you look at the company. , this wentenough public at the same time. they have the ability to become one of the most important med tech companies out there. the fda granted a handful of companies approval to fast-track items. one of them was fitbit. and partnerships. as of right now they sell those wristbands. on the valuation side, it has the potential to assess business
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within it. we have to look at it as a med tech company. med tech devise company. investors data look at about way. is this an add-on to the existing legacy business? >> that is a good question. r&d spend, it the think they knew the days of settling wristbands that show how many times you walk will be outdated at best. sure enough that is what is happening. they have dedicated their money to diabetes, moving to next levels of wearables. they introduced their smart watch. that is irrelevant. the is more important is
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technology they have, and how they can be incorporated in the new world. interestingan point. have been given any credit for that. compared to a garment is spending, look at the earnings potential, even at the same point today can explain that. >> i think it is overvalued. research and development. you have garment. very respectful company. not evensee it is close to what fitbit is doing. how much money they were losing over the past three years, but they were underestimating is the
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change.l of once things wearables are going to outsell laptops. they're going to outsell tablets. wearables israel. the question is how it is going to play out. just like your cell phone operating system. which will be the first to buy bebit, i think it will google. they already have a partnership. that is still not only a company, the best brand when it comes to wearables. strong brand equity. >> i want to pick up on that. >> doesn't google get whether one side of that partnership, not having an equity stake? get?extra does it
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good question. i would have to know the extent of the partnership and research collaboration. it might just between point to incorporate that and not worry about a license fee. technology,t irreplaceable and you have to do it at a higher price. may just extend the partnership. it could be a samsung. we could well -- we could wake up tomorrow. situation,at the they ended up acquiring some assets. post that.w down they lost the design business. what is the risk of that? phone, if youcell look at michael cors watches,
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the licensing business is, there will be a market for people to wear wearables that are not just apple. , think the google platform qualcomm is putting out a new chip which is going to allow longer battery life in these. fitbit is being incorporated. i go back to google. i just believe we would be in a google, apple world. >> would you agree currently this is a hardware story? this is something that has been dabbling for many years. why do you have such faith in the execution? >> exactly. that is the question. the stock is priced as if they cannot execute. if you look at what the company has done spending the money,
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into the research, they have been waiting for this day. that camean article out. for the past 12 months they had been working, taking the steps waiting for this day. if they don't execute, they don't execute. but everything is there for them. some recurrent revenue, you are looking at a $15 stock. a brightif it but has future wire uv only one who sees it -- why are you the only one who sees it? is one analyst to has this. i don't know. maybe group think. know why people have not. thatn stanley have said
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consumer demand has not yet caught up with the technology. therefore he is a bear on it. that is positive. the flipside would be it cannot meet demand. there, the consumer demand will follow. those are the words that i saw from the big bear on the street. do i gose in the market ahead? they are not raising money. nothing that opportunity in front of them. think in line of everything you just said the catalyst will be for other investors to go you have a point? >> they are not missing guidance. that alone can make you breathe better. you will see more partnerships. better sales.
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talkingsaw they are about the wearables for kids. go through a fitbit on them for kids. not a bad idea. there are many ways to win. be frightenedll by what i was fitbit's tell us from hours and hours of fortnight. -- fortnite. this is bloomberg. ♪
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julia: this is bloomberg markets. scarlet: when we look at what is going on with north korea and the u.s. sanctions will be high on the agenda. a growing excitement about the opportunities that might open up if trade restrictions are eased. here is a look at how the
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government could play into the regional economy. president moon wants to transform his northern neighbor. improving roads and railways is the plan. the upgraded infrastructure could help north koreaealize the value of its mineral reserves. 200 essential resources are under the ground in the north. worth $6 trillion. gold, oil, the world's single biggest rare earth deposit, crucial for electric vehicles and high-tech gadgets. a word of caution before investors become giddy. shortages and outdated facilities, other infrastructure obstacles put
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rates at below 30%. the labor force is a bright spot. low wages of basic completed -- computer elementary education may see north korea become a new asian tiger one day. coming up, tomorrow is decision day. we will look at insights from an analyst who covers the stock. this is bloomberg. ♪ two, down, back up!
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that's why xfinity mobile can be included with xfinity internet which could save you $400 or more a year. it's a new kind of network designed to save you money. click, call, or visit a store today. >> is 3:00 p.m. in new york. i'm julia chatterley. scarlet: i'm scarlet fu. welcome to bloomberg markets.
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♪ live in bloomberg world headquarters in new york over the next hour and you're the top stories we're covering the bloomberg and around the world. week with hectic presidential standoffs, trade tensions, and central-bank meetings. hour from now, president trump will see if a gamble on kim kim jong-un denuclearization can pay off. a summit in singapore. question,lion dollar discussing all the details and today's deals report. we are one hour from the check trade. julie: modest gains.
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we could see more action later in the week as we get economic data. turn now the mid-cap reaching a record high. the s&p 400 index, just enough to put it at a record level at an intraday basis. her last week the small caps got there. -- s&p in the dow have not have been retaining record highs. interesting that rotation is happening. speaking of, we are not seeing the same winners that we have seen this year and the losers are the winners of today's ion. telecom andabout consumer staples taking all the performing better today, at&t is one of the stocks higher. stocks that have
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been struggling have been bouncing back and the index is now above the 50 day moving average. a mixed bag in terms of rhyme or reason behind the gains. of the groups became rhyme or reason where we see a split decision in technology. it is not as though we are seeing rotation wholesale out of large-cap into the losers like consumer staples and telecom. these guys are split. and we have faced in alphabet trading higher bicrosoftappl ar. not happening in the session. $22 billion of tenure notes that went relatively well. not much changed in the 10 year yield. it is portant to look at ahead of the fed meeting.
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the fed hike in 2018 and 2019, 2018, white, 2019, yellow. yearover three for this and about 1.5 for next year. we will watch this chart as well in the week of the fed meeting to see of odds are changing based on commentary. scarlet: we certainly will. thank you so much. let's get to the first word news with mark crumpton. mark: thank you. the white house talks -- says talks with north korea are moving more quickly than expected but secretary of state mike on pale says tamara's summit with north korea can have only one acceptable result. secretary of state pompeo spoke in singapore today after meeting with north korean officials. the complete and verifiable and irreversible denuclearization of the korean peninsula is the only outcome the united states will accept.
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sanctions will remain until most create completely and verifiably eliminate its weapons of mass distraction -- destruction programs. mark: pompeo and the united states will help north korea with investment of kim jong-un regime taking the right steps. reason prime minister to a is calling for unity within her conservative party to prevent the government from being defeated in key votes this week on its main brexit bill. wednesday.d in march ofg -- 2019. for syriaumanitarian expressed concerns today about recent airstrikes, warning tha
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we may not have seen the worst thehe crisis in syria moreary escalation complicated and brutal and other zones in syria. >> we have to come out of that, those that have taken place, facilities taking place in multiple facilities. so again, a special -- special solution can be found. mark: and the u.n. children's added onechildren, it million children live that -- there.
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it faces its worst protest in years after government austerity plans including tax increases. the five-year aid package mary's -- mirrors a similar package in 2011. 2700 journalists and analysts in over 120 countries. julia: tomorrow, a judge is expected to rule on at&t deal to acquire time warner. ed hammond has more. ed: thank you. an excellent and very detailed note. thank you for joining me.
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at the spreads before we came on air and you can still make seven dollars in the trade if you're looking at time warner. why? it seems insane. >> it is a great point. we are already in an unprecedented time right now. most folks expected the deal to pass regulatory muster late last year. we are now at june waiting with bated breath -- breath for the decision. the market historically look at precedent and judge or base decisions on the spread aced on how the trial has gone relative to that precedent. the decision as a little more uncertainty than most people are used to. >> let's look at short interests around at&t because it is unusually high for a stock at this process and the merger is about 3.2%. couldys know that at&t
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benefit it loses the case, this -- just the very clarity of being out of the process would be beneficial for the stock. market doing? why are we seeing this shortage? >> there are a number of factors. certainly uncertainty as you mentioned, looking at the ruling and what will happen tomorrow. i think also a lot of folks are thinking about what the strategic decision could be. it very different track if time warner happens than if it doesn't. at&t is also facing additional pressure from its business. of those factors, a high focus on the transaction for tomorrow, and also playing this in a very unique way. >> there are loads of moving parts to the equation but let's look at the midterm versus the long-term. they get the clarity, it is good for the short-term and it --s them in a position long-term, where do they go about time warner?
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>> it is a great question p are what they have been committed getting to the marke and the trial is how critical time warner is for the future of the distribution model. it is all about access to end customers and providing that access on a vertical basis. if you don't have time warner, how do you answer the question and the environment that you're basically saying you need to go against. strategicem in a quandary. you can try a sort -- string of and they willy focus on 5g and a shareholder friendly usage in an accelerated manner and the buyback and ultimately, that question is outstanding. >> right. won time warner.
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what is the future for him? can he survive? >> this is unprecedented as to where we are. havenk most folks anticipated the deal, i don't think there is any decision you made it fairly puts them in that position, but i do think how to however the deal transpires is definitely going to impact his tenure at the company going forward. given that it is unprecedented, it is hard to speculate how it will be viewed for his position. >> at&t has gone out with a narrative saying that they need content to stay relevant, they need time warner to offset or you have the likes of amazon and coming intogoogle
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the space to we are now in that future and time has elapsed. what is the rigarrative for questiontor post deal mark >> a very good point and a very good question. we have to understand the financial benefits to this transaction. i think investors need to better understand how content plus distribution equals synergy is across the platform. how can a distribution model to give an effect it has content under the same umbrella without crossing any of the regulatory burdens placed on them? >>. about $1 billion just across. >> correct. and the other is how to compete s who have direct access to customers. netflix putting a tremendous amount of money into content creation. the real question is how does at&t with its just edition plus content assets end up changing the game to go after that
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we are talking> about all of the various factors that lead into it, we are heard about the logical factors on each side. ultimately, it comes down to one person, the judge who decides tomorrow. what do we know about him and is there anything we can to do is about his character? on past rulings, he is one to take into account historical precedent. at&tlieve the deal favors in terms of structure and what with precedent. the question is devil in the details. how will it be structured and what our behavioral remedies that will be imposed on the transaction, that will determine how this all plays out. be a fascinating day. thank you for joining me. back to you.
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scarlet: thank you very much. forogramming note wednesday, make sure you watch the special report. our guest lineup includes bill gross -- jay powell hold his second news conference since being appointed federal reserve chair. this is bloomberg. ♪ ♪
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scarlet: black workers are one in 10 -- bloomberg's ongoing conversation about the bottom line impact of diversity, i sat down with mac
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abelson who wrote about this development and asked him how he went about the research. truth of the matter is, started about three years ago and one of my editors said let's go find out how many african-american people there it took a long tto get the data. the banks used to not say, this this isany women, common in asia people, this is how many african-american people. as of a couple of years ago, all six of the big banks started doing it. this is been doing itbanks have for a long time and we had numbers going back to 1999. the last year, we put out a that showed a think it was about five years of data. to our surprise, because you sometimes going to this as a journalist with an expectation, my was that things will get better.
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we out tumbers were declining. we decided to see how they are doing and they are down. >> how did they respond, citigroup? >> i do not thk any of the banks want to be going backwards like this. we knoe work to do. fair to the city, they are not alone. slid from .12-2016. fargo, executives went from a percent black 25% black. some of the banks used to show actual hard numbers and with say we have 17 black female executives and now, percentages.
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was harder to tell and i wish the banks that say they take diversity seriously, i wish they would put a hard numbers here a >> you have covered this for a couple of years and you have with the data going back five s available. compare and contrast the energy and resources that angst about to increasing diversity versus other initiatives they have? >> well, look. when the banks want to start a new business like goldman sachs decides it will get into consumer lending, they are really good atoming up to solutions to authority problems but they do not seem to do it with diversity for black people and also for gender diversity. no big tank in the united states has ever been run by a woman. when jordyn holman, my colleague, when he -- when we talked to black people on wall street and black people left wall street, and we spoke to academics as well, a refrain we heard is banks either do not
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want to solve this or they are creative, and consistent changes, it is safe , if notorporate america all facets in the united states, it has a deep-seated problem with systemic racism. it is not just wall street but if wall street will get better diversity,nd gender it will take sustained and , possibly expensive solutions. >> i think one of the things that frustrates a lot of people, people of color and those in the majority is there is a lot of time spent talking about the need for dessert -- four diversity in the ranks of organization, and some of my that and having
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people in the places and getting the good ideas from them on how to run the business better and how to do the job better. that is ultimately what it thats down to. you want more recognition of diverse talent because they bring different ideas to the e cannot come to the table if you spend all your time talking about how we need diverse talent. --i am not sure >> you make money through you -- wayne diss -- diversity. are going toey have women and people of color at the top of the bank and near the top of the bank, it will be because they like legitimately believe it is the path to making more money than rivals. right now, when i hear people not feelt it, i do there is a consensus or that they really believe they are doing it because it is a way to make money. i sometimes feel like maybe they feel pressure. catcheminder that you can all of our interviews on the bloomberg with function tv and be a part of the conversation.
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they recommended page shows you what you might have missed as well as a schedule that gives a sense of who is coming up. this is bloomberg. ♪
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>> we will talk options today and you want to talk about volatility of volatility. the vx x. what have we been seeing as of late? volatilitytility of since last august, if in our view we are right, it remains an environment.
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a trigger to signal that inflection. it is an etf based on the vix. what we are saying to our clients and the message to get ross is just for investors to find a better balance of risks assessment, this is no longer d fromve-year perio 2012-2015, a historic low, and what we're seeing is investors at the vix with a 12 handle on it believing we are still in that environment. >> it seems like a short volatility has come back in the past couple of week. >> absolutely right or 14 weeks earlier in the year when net positioning and vix futures was long and it slipped back to the short side. quite literally, investors are once again short volatility. he do not rush in and get long volatility. difficult position to
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manage and a difficult position to monetize, which is why we are talking about it. we want to get the word out, you want to pair it with existing hedges. level, andd long volility expore on top of that. not be a standalone hedge in a portfolio. week, weevents this are still of the view that we are around the trough and in the u.s.atility we are therefore looking at smart ways to play long volatility. straightforward. we want to keep short duration. looking at july exploration, it is july 20. the project even though it degrades a little bit. you out to july and by 3959 call spread. the reason it is soe is we
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want exposure to all the -- if you look at earlier this year, high 30's. 30's, he will have a fixed handle. for investors who pay attention to the portfolio, you can turn around and sell a 28 strike put. down close, you want to cover and get rid of it. you can do the whole package for about $.40. >> palm wine, do not get complacent. >> we are in singapore for the latest from new york. this is bloomberg. ♪ ♪
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mark: president trump set an
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earlier than expected to -- departure time. definite plans for departure. says thector general denuclearization of the peninsula is the goal of the historic trump kim summit. it is also to address the suffering of the people. >> we are seeking 11 million u.s. dollars to the immediate needs of the 6 million most phone herbal people. people need our generosity and help. mark: he says both men should be commended for their courage pushing for a diplomatic solution on the korean peninsula and added the world body will assist with the verification pr


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