tv Bloomberg Markets Balance of Power Bloomberg November 20, 2018 12:00pm-1:00pm EST
>> from bloomberg's world headquarters in new york, i'm shery ahn. kevin: welcome to balance of power, where the worlds of politics meets the world of business. an exclusive interview with the morgan stanley ceo james gorman. first, we want to get to the markets, which have seen a wild day so far. we seem to be recovering much of today's losses. >> that is right. we're looking at the selloff in u.s. equities using now. we're still looking at major asset -- averages in the red. down 1.4%. lost six points. slipped below it slows. the nasdaq again would see a better recovery. we take a look at the nasdaq 100, an intraday chart through the whole day. we see how it is coming back. , tech, amazon,
facebook, and google. one thing to note, apple is still down in bear market territory. it is a growing concern about consumer demand. take a look at some laggards that remain. looking at retail having a really messy day, down 13%. l brands, consort good but they cut their dividend. the victoria's secret unit continues to struggle. target missed earnings per share guidance. looking at coal, retailers really need to put in a holiday. shoppingount of starting friday and after thanksgiving. a very good quarter for wall
just the number of stock. you talk about more than 300 stocks in the s&p are down. most of the stocks in the nasdaq 100 and all the major indexes are down. when we talk about the bear market, we talk about 52%. stocks are in bear market territory p or 206 or so stocks in the s&p are flirting with bear market territory as well. it is the heaviest weighted names. you aree of the reasons not seeing a little more positive sentiment that this is somehow coming to an end when you have apple and paste the and the major weighted names down 10 or 20%. it is hard to feel confident. classic seems like investors are focusing on all of the negatives. target, 5.1%. they are saying for this quarter, it will drop to 5%
feared you saw something similar from best buy. a lot of retailers and walmart as well, a lot of the retailers that are still growing are not growing at the same pace they used to. this has been the same narrative since the earnings season. the -- >> it is not just retailers. is really the fear, that this is as good as it gets and it will not get any better through the holiday quarter and certainly not into 2019. quite a lot about what is going on in the tech sector? what are you noticing the silicon valley? >> are beastly, you have the growth narrative and a lot of the momentum names lifted the market higher. degree.ing the same is for apple a lot of
concern about how they are dealing with these platforms. you are seeing it in some of the cloud cover -- companies. build the companies that business models largest -- ,argely on consumer a heavier you see these stocks and not a lot enjoy 19. hasomebuilder confidence been seen in the influx in the housing sector. >> he break down the numbers, and you have that number on monday.
two analysts i talked to said a lot of this is people thinking this might be the bottom. and it could be positive for the homebuilders. first time, i homebuyer type of home. >> you need to watch out especially at the federal reserve. really moving. thank you. romaine. coming up, a vocal group of democrats, no alternatives have emerged. aware sheendon boiled -- where he stands next. ♪
>> this is balance of power, on bloomberg. bloomberg has learned that president trump is on track to submit written responses to special counsel robert mueller as early as today. the president told supporters he wrote these responses himself, not his lawyers. it is not clear whether robert mueller will be happy with the answers or will still try to interview the president in person per the german chancellor angela merkel stepping up pressure on the u.k. government to back a exit deal, expecting a european summit would fall apart, prime minister theresa may reopened the accord. berlin, to reporters in
merkel said it is time to sign the agreement. theresa may is returning takingw for talks personal charge of negotiations with the eu after the brexit secretary quit last week. the french president is defending feel tax hikes that have prompted nationwide protests calling for dialogue to calm tensions. than a quarter million french drivers blocked roads saturday and president macron and knowledge people are frustrated but said he is trying fromeer the country away fossil fuels p or he is promising subsidies for low income households to buy cleaner cars or switch to cleaner home heating methods. ,wo weeks after election day , and november 6 vote.
32,000 votes 22 hours a day. i am mark crumpton. this is bloomberg. >> president trump seemed poised to>> president trump seemed poid to make deal -- make a deal with democrats. a growing voice of democrats in the house of representatives are saying they might not support nancy pelosi's bid in the house. democratic smith in the philadelphia area, congressman, is nancy pelosi going to be the beaker next week. >> she will be overwhelmingly nominated by the caucus.
most successful elections since 19 84. odd to win a little the super bowl. what is the point of coming out against her. isn't really going to help democrats if you need some republicans abstaining from voting or not showing up or jumping through some procedural hurdle in urban -- in order to get her elected speaker? well, so you kind of touched on my point. i would much rather be talking about infrastructure, much rather be talking about delivering on the promise made in the campaign to make health care more affordable, and the affordable care act and talk about the ways to bolster
corruption. quite popular going into the campaign. she deserves the victory and she earned it. the u.s. -- to vote to policy, if it gets to that point? i think that donald trump probably just enjoying the vision happening now on the democratic side. probably stoking that a little bit. the reality is all of us in the house on the democratic side of should send a big
thank you bouquet of flowers to donald trump because we probably would not have had our best results since 1974 without his remarkable popularity and competence as president. he should be a little careful about having too much fun about the speaker rate right now. i think nancy will be elected speaker. along think we can get with the work of the american people. >> a leverage she has over a potential shutdown of the government, when it comes to trying to get his wall built, he has been counting a potential shutdown of the government as well. you are the budget committee. is it a real risk? up.gn glad you raised this the speaker vote is january 3 for the constitution but actually december 7 almost a month before hand we have a critical deadline. it is keeping the government up and operating and avoiding a shutdown. under donald trump's watch, even
with a republican house, republican senate, we have already had a government shutdown. i fear we could have another. he sees this is the last chance to get funding for his precious border wall, i am fearful that he will finally deliver on that promise. to shutdown the government unless he gets his border wall. >> are you going to attach the amendments? >> it is something to look at. my position is we must cut the integrity of the investigation. strong supporter of -- and a cosponsor.
as far as whether or not that is part of the december 7 mcafee -- negotiations. >> the saudi's particularly now with mounting evidence, that --y killed jamaal to shabby jamal khashoggi? it comes to foreign policy, the president is transparently transactional. unlike breezy -- previous presidents of both parties, he does not even make a pretense to about human rights. that said, we should take a step the weeks iognize served on the foreign affairs committee as well as the subcommittee, almost every issue in the middle east comes down to this cold war between saudi
arabia and its proxies and iran. and its proxies. to immediately throw away the relationship with saudi arabia, recognize the iranian regime is actually worse. no good answers. deeply concerned with what happened. i think we need to be honest about this. at the same time, we have to make sure that we don't over correct and do something that --l benefit woulds this mean you
elevate human rights discussions in the philippines from now on? >> what i think it means is not so much elevation of human rights as a restoration of human rights being a part of the overall foreign affairs of focus. let's not forget over the last two years, the term human rights was actually deleted from a mission statement of the state department. the trumpned under administration paired it is not something you would ever imagine in a reagan presidency or an obama presidency or a kennedy or eisenhower presidency. not to mention the fact that this president, when we are talking more broadly than the middle east, and we talking about a relationship with russia, he has signaled a really it comes to supporting traditional allies in europe. that alliance has helped reserve the peace and has built the entire post-world war ii global order bill.
i expected in many ways to be a bulwark in the next couple of years of pushing back against the ways in which this administration is a real departure from the norms of american history. >> thank you for your time today, congressman, brendan boyle. in brussels, there are some developments as the eu waits next steps in brexit p or joining us now from brussels bureau, we know that prime minister may is meeting commission president tomorrow. come up withlly something better than what has been laid out already? >> i think the answer from this perspective is quite clear, it is no and has been set for days now. theresa may seems to operate under this impression that she will come back with something
better. something she could sell back home. what we hear from the european union is what has been negotiated already has not been renegotiated now. 30 days since the summit takes place. there is a faction of those who argue that in any case, they should be a clear political message and the uk's not a winner here. even the european union cannot be a good thing by definition. >> walk me through p or you know this better than anyone. it seems that every twist and turn she runs into some type of political stumble. walk me through the next 72 hours for the u.k. prime minister. >> really a big week now, the prime minister is a weak prime minister. at the same time, no one wants to replace her, and in a strange way, it has become her biggest
strength. back home, speculation over the weekend that she would be toppled and forced out of office. that is not been the case. really no one at this point wants to be accused of ditching the prime minister in such a crucial week. to the european union, she is trying to say don't focus so much on the nasty bits we don't like, focus on the future and the big trade deal. the -- the european union has its own agenda. it is a clear message out of this that brexit was a bad decision for the u.k.. >> we continue to see a more fractured europe. the right wing and italy and hungry. has he said anything. he said brexit after the
democratic choice. he argued a position pushed by he did say we will not renegotiate anything really just take it or leave it. show by the end of the year that he has been able to deliver on something. his big idea for the european union is working for the time being, the reality is he has not managed to get much. >> thank you so much. maria in brussels. still ahead, an exclusive interview with morgan stanley ceo james gorman. he will talk about market volatility, the credit crunch, and how long with other banks. this is bloomberg. ♪
a our stock of the hour is currency, specifically crypto. bitcoin was falling more than 11% at one point. the losses have paired somewhat. emma isere with more -- here with more. >> that is right. you look at december last year, almost $20,000, today fell below to or thousand two at $25. a 13 month low. back around 4500 p or the route isn't just with bitcoin. we have seen all of the other major coins fall. bitcoin itself is down nine straight days. one analysis putting losses for the past year for all of the major coins at $700 billion. that is since january. >> they also have regulation nightmares and washington, d.c. the department of justice all ramping up their investigations into this.
>> that is right. they are being attacked by a number of different fronts on friday here the he says they announced civil penalties against two cryptocurrencies, a describesone analyst those as the nail in the coffin for cryptocurrencies p or today, bloomberg reported in the doj is investigating whether last year's rally had been manipulated. a lot for bitcoin. >> thank you for it. coming up next, an exclusive interview with morgan stanley, chairman and ceo james here from new york and washington dc, this is bloomberg. ♪
deadlyoday -- two wildfires could cause up to -- could cost up to $2 billion. the fire in northern california accounted for the bulk of the damage, killing at least 79 people and destroying thousands of homes. the trump may take another shot at china on trade. the government is considering tighter curbs on technology exports. deutsche bank says that that would have a "profound and lasting adverse impact on relations between washington and ."ijing caravan inthe tijuana have been arrested for minor offenses, drug possession, public intoxication, disturbing the peace and resisting arrest and that they will be deported to their home countries. the mayor of tijuana has said that the city is not comfortable
with the caravan the began arriving last week. fighting between saudi led coalition forces and shiite rebels flared up again today, despite u.n. calls for a cease-fire. the fighting undermines the latest u.n. efforts to end the three-year war. tens of thousands have been killed and much of the country has been pushed to the brink of starvation. onld news 24 hours per day air and on tictoc on twitter, powered by 2700 journalists and over 120 countries. i'm mark crumpton, this is bloomberg. -- shery: mark, thank you. i was going through twitter last night, lock her up was trending and it wasn't in relation to hillary clinton, it was about ivanka trump using her personal email for official white house matters. of course, this written plays
into social media and now house democrats are threatening to investigate her email use, according to the post. right, this bombshell "washington post" report that came out, in which the first daughter used private you has to arrange scheduling, according to her spokesperson and her attorney. she says that once she was informed of the procedures at the white house that she immediately started to use the white house account, but there is no question that thisattornet is the backdrop of one of the key central arguments of republicans and that candidate donald trump on the campaign trail was attacking hillary clinton for, her use of a private server. i want to note that she did not have a private server and did not is, as of now, classify emails. she said through a spokesperson that these were scheduling emails. that said, the house oversight inmittee with the democrats control are fully prepared to
investigate and we could have a situation where she is testifying publicly in the new congresstifying before , facing questions about that. particularly if she was engaging in you males with her husband and other advisor to the president, jared kushner. shery: they were apparently using a private domain that they shared. another headline am watching right now, the trump legal team is on track to sit -- -- submit responses to the mueller team. i remember the president saying that he was really been on sitting down with the special counsel, so this may not be happening? it's likely not going to happen. i spoke with sources down here in washington and what they told me was that the president had to kind of reverse course on this and take the legal advice, his lawyers didn't want to do this at all and they are worried about him potentially saying something to bob mueller that would be used against him or
they would argue that he wasn't telling the truth. so, the reality is that he's going to submit and finish those questions. he said that he was the one who drafted those questions and all of that if you are outside of washington and trying to forecast what this means suggests that the investigation is wrapping up. as we have reported every day, we truly don't know when exactly and per cicely this investigation will conclude. but all signs would point to it somewhat nearing an end. come: if these questions as early as today, tuesday, the likelihood according to sourcesg right now, close to this investigation, is that it would really be limited. it's not about obstruction of justice, it's just about russian collusion. kevin: well right, and up until now until you -- we look at things that have come out publicly from the intelligence community, there's been no
evidence that actual vote tampering happened during the presidential cycle. but all the public documents as of now from the department of , as wellintelligence as from other testimony that we have seen from intelligence officials testifying before congress, no one knowingly colluded with russia. the question becomes is there some type of new information that will be made public if bob mueller's investigation calls that into doubt. we have all been following and remember that paul manafort meeting in june of 2016. donald trump, jr. at trump tower, that of course has been a key focus in terms of where the folks have turned their attention. but we also of course have a host of other investigations that have really gone outside washington in many cases, including to san francisco. shery: coming up next, the
morgan stanley ceo james gorman joins us for an exclusive interview. one of the things he will be talking about is the markets. stocks are still low right now, we are seeing the s&p 500 losing and i've got to say coming back on those earlier losses, we saw the dow at one point losing about 500 points. it has come back a little, the nasdaq also losing ground. we know that tech has taken the brunt of the selloff with trade tensions rising between china and the u.s. and we know that the trump administration is trying to curb those tech exports to china. this is not going to make things easier when president trump meets is using ping in boyne as i raced next week. it's also a shortened trading week of course, with black friday coming up, a start to the u.s. holiday shopping season. that well,ot doing
the s&p 500, every sector in the red, including that s&p 500 retailer sector, which is no losing ground for an eighth consecutive session and is down its lowest level since april. we got some solid results from a lot of retailers, although investors seem to be focusing more on the outlook and what that means for earnings season as we continue to see earnings season peaks. we will have plenty more coming up. live from new york and d.c., this is bloomberg. ♪
and the stock market. most of the credit for that goes to james gorman. today he is kickstarting entrepreneurship and celebrating diversity. he is with erik schatzker in midtown, manhattan. eric? erik: i want to point out that we are live to bloomberg radio listeners worldwide. it's great to see you here at the multicultural innovation lab . one of the reasons i like coming to an event like this is that it serves as a reminder that no inter how chaotic things get the business markets, the show must go on. something that is phenomenal, we started this a couple of years ago, the idea a workspacee a lab, for venture startup organizations, women owned. in this second year we brought theyhere to showcase what
have produced. we have had over 100 businesses , tremendous interaction, i'm just so proud of the team that put this together. erik: do you call this impact investing? james: it's more than that. of all the venture that has been raised, built by women led organizations, 98% of the money is not going to that, less than half of 1% of people of color. we are trying to create an opportunity to bring investors and money to where the talent is. you are putting some morgan stanley balance into this? trying toare not dominate, we are just trying to give them some working capital to get going. but the most important thing is we give them the space to work
here over several months, give them all the firm's resources, no working, training, and we bring the investors to them. erik: do you expect to make money or is it ok if you don't? james: absolutely we want them to be successful. today we just sent out the application efforts for next year. oversubscribed. we expect them to be successful. of course they will be. let's talk about what's happening outside as we speak. these are challenging times for your clients. how challenging are they for morgan stanley? erik: with what we have been through, eric, not to be 2008, it's not the dot-com bubble burst of 2000. when i first came to the u.s. out of graduate school in 1987, listen, this is a market correction we are going through
right now and i'm sure we will talk about the details. this is well within our wheelhouse of what we can handle. erik: is this a healthy shakeup, this correction, this contraction in the broader market and what we have seen happening to tech stocks in the last two days? erik: first of all, we are in a tightening process around the world, led by the u.s. that has consequences. the ability of monetary authorities to shrink balance sheets has limited what they can do and we have got a lot of political turmoil. that you arerising seeing some correction against that backdrop within certain sectors. it's an incredible run-up in valuation. hundreds of billions of dollars of credit these companies, it's not surprising that this has been taken off the table. there is a lot -- erik:
there is a lot of debate reflected in what we have seen over what you have itemized. sustainability of u.s. growth, for example, the magnitude of rate increases, the implications that theandoff administration was undertaking with china, for example. is there any consistency around that debate as far as what you hear from clients? erik: -- james: the most important thing to take away is that there is just a lot going on. brexit, tariffs, political risks, protectionism, and i immigration. before we get to the markets, right, before you get to china and the middle east, before you get to russia and the war in syria, before you get to north korea testing were not testing,
when investors are confronted with that against the backdrop of on the one hand very strong economic fundamentals but on the other hand tightening and clearly some corporate credit, let's just say when the corporate credit boat is full, clearly there are issues around tripling credit. it's not surprising how markets are reacting. this is what they do with uncertainty. in the short-term they sometimes get it very wrong. james: there are -- erik: there are so many directions i could go on -- james: we are on for two hours, so i'm good. [laughter] erik: market direction? james: i care more about how it affects our clients. marketnto the equities right now, some of that volatility is good, it's not great. think about it, the equity capital markets that have been m&aed back, it's more about
transactions in equity derivatives that have been positive. erik: are you seeing more or bigger trading buyer clients? -- by your clients? james: it's give-and-take. the fixed income space, there's more difficult markets there for fixed income. it's not quite, none of us, we don't wake up every morning and say g, we hope that the market is really volatile. listen, this is not our objective. fundamentals and we try to make sure that our clients are well-positioned. do you share the view that there is a bubble waiting to burst in corporate credit? what, chuhave got trillion dollars total exposure? you know, you are going to have
some issues. this is a consequence of a very long fall back, coupled with inevitable timing towards the end of it. do i think it's a bubble? i don't know if i would call it a bubble, but it is certainly a factor. if you look at where issues are in the market, it certainly a factor. erik: when you say issues, people wonder to themselves how they will work those issues out the way the market can relatively smoothly, or will it be in a disorderly fashion in which some people might want to call the moment when it comes, a crisis? james: we have economic growth in china, japan, southeast asia, in europe, across almost every
part of the globe you have got economic growth. that basic economic growth and stability in there, that's for you start to see that conflict. i certainly don't expect growth above 3.5% right now. it will moderate. effective buts that level of growth is unlikely. i'm looking at the 2.5 range of the gdp growth. is it axiomatic that morgan stanley can do as well in a decelerating economy as a cannon and accelerating economy? some some bit -- james:
businesses do well in -- do better in the decelerating economy but i'm not as focused on that now. what i'm focused on is the long-term strategic positioning of this firm and we are strategically i think in a great place for growth. i'm blessed focused on what's going on right now. erik: you entered 2018 breakup of the strategic priorities, one of them is getting bigger as a bank and the other was to expand asset management. what's next required to fill those priorities? we did our first acquisition in 10 years, mesa west, it went really well, great integration. we're looking at a series of those kinds of products and services. in the back it's pretty simple. 150know, we manage about million dollars in deposits for clients. we have a huge mortgage lending
with high quality large jumbo mortgages. and we are seeing more opportunity, clients have stolen banking services away from us and we bring them to morgan stanley. asset management, it's going to continue to be small with some people at the firm having good reason to explore larger deals and some are exploring multiples relative to where they have been historically, even lower than yours. in. could create deals. james: we look at all possibilities. strategically we have tried to ace revenue of around the firm on what we do. butre very close to that, if you have industrial logic around your strategy, as doors open you take advantage of it. i'm not saying no, but right now our focus is on continuing to
grow the core businesses where we see opportunities from acquisitions and we look at them. erik: you have become a larger bank, $200 billion in bank assets, you have committed credit to ge, which has been in a bit of trouble lately. is it becoming problematic for morgan stanley? james: no, and personally i think that larry culprit is doing a great job. in -- been thrown into a an incredibly tumultuous situation. i have walked a few miles in those shoes myself. it reminded me of what we went through 10 years ago. market is over worried. ge is a fantastic and can with a tremendous ability to restructure those assets and selloff businesses and they are in the process of doing that. theirt concerned about credit at all, it's a world-class company going through a great time.
you are -- erik: you are confident its money good? james: absolutely. erik: talent in investment tenseg and tech, it's as as it has ever been, is that the case? james: talking about tech banking? erik: data science possibilities. 's programmers, it's mathematicians, it's engineers. it's people with data skills, andrtise in cloud computing machine learning, ai, all the stuff that we read and talk about, before the blockchain's and so on, it's a war for talent on the tech side. erik: is a getting harder, the discipline around cost?
erik: looking at our -- james: looking at our expense ratio, it's not so much as it affects up your tech company. not so much where it affects us. erik: i guess i would say that wisdom thational what's bad for morgan saks is good for morgan stanley. is that the case with mbpd. james: a not going to comment on that. and i also don't think that that conventional wisdom is true. we are often on the same side of a lot of transactions. i have great relationships with the leadership that goldman. i have a great relationship with lloyd, they are a tremendous institution. our challenges and we will let them work through it but i'm not going to answer that.
erik: in a time when goldman was confronting controversy, let's say, you were asked about that and said something to the effect of their but for the grace of god go i and has remember that. do you feel the same way here? when one firm encounters trouble it's the kind of thing that could any other day of the week? james: there were things of the did before the crisis where i wouldn't have expected another firm to do that. things are changeable and you look at those situations differently. all i'm saying is that this, you know, the corporations in this andtry need strong independent banking businesses and i have a lot of respect for our competitors. they have got to work through their own issues. i know you have put together these goals and priorities, these list that you work from, but what's new at the
top of strategic priorities? i can tell you, early ,anuary, get some education clearly it focuses on asset management, which is critical for us. we are doing a big review of our asia strategy right now. both china and non-china asia. our partnership is reaching new levels. there is a lot of stuff going on , but if i could summarize it in one word, growth. erik: we are here at the multicultural innovation lab on bloomberg television. back to you. shery: thanks to erik schatzker for that exclusive interview. and kevin, i believe we have headlines from saudi arabia? kevin: president trump saying that while the crime against jamal khashoggi was terrible and one that our country does not
condone, he also says that the financial ties with the saudi's are important and he says that he negotiated at $450 billion worth of arms deal in the united states and he said that of that, spent onion will be the purchase of military equipment from boeing, lockheed, martin, and what he calls other great u.s. contractors. kevin.thank you, oil is at its lowest level this year, continuing to check those markets, the energy sector is one of those sectors that losing ground, down 1.4%. live from new york and d.c., this is bloomberg. ♪
has often said that a transition is needed for financial stability. he also says that they are looking at brexit scenarios rather than making precise forecast. poland is the latest country to globalw from a group migration pack, citing national sovereignty as the region -- the reason. the global compact for safe, orderly, and regular migration, which will be legally binding, is due to be formally approved at a u.n. meeting next month in morocco. in brussels the european union held an event marking the 70th anniversary of the universal declaration of human rights. speakers caution against a divisiveness and nationalism threatening human rights across the globe. >> advances made in previous decades have stalled and are being pushed back. even with the european union and its strong human r