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tv   Bloomberg Markets Americas  Bloomberg  February 5, 2019 1:00pm-3:30pm EST

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the president is willing to compromise especially on border security. he has hinted he make make news did that could be anything from a national emergency declaration on the southern border to the date for summits with the leaders of china and north korea. turkey is criticizing the u.s. over delays in setting up a buffer zone in syria. in ankara, president erdogan a said in washington without help with its promise to help cleanse the reason of terrorists, turkey will do it alone. president erdogan and president trump about establishing a safe zone east of the euphrates river. sayzo abe and angela merkel they both want to prevent a no deal brexit that could rattle their economies. the leaders met in tokyo. abe also told michael that germany and japan was bringing greater role on the global stage when the u.k. leaves the european union. a jury in new york city is deliberating for a second day at
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the trial of the infamous mexican drug lord known as el chapo. joaquin guzman is charged with operating a drug smuggling empire that moved hundreds of tons of cocaine north of the u.s. border over the course of two decades. the jury heard from 14 witnesses who described his violence against the cartel's enemies. the defense department says el chapo is a scapegoat. -- the defense says el chapo is a scapegoat. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. york,: it is 1:00 in new six :00 in london, 2:00 in hong kong. i'm vonnie quinn. welcome to "bloomberg markets."
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from bloomberg world headquarters in new york, here are the top stories from around the world. the fed chairman met with donald trump at the white house to talk about the economy over dinner but did not discuss policy expectations. disney reports after the bell. investors are breaking -- bracing for a profit squeeze. competition in student housing investing. we speak to the founder and ceo of harrison street. we are moderating some of those gains in the stock market. taylor riggs is with us. by the mostly green lower composite pmi we got this morning, ism nonmanufacturing index that fell to a one-year low. most of the positive earnings are giving us a boost. the russell is the only softness we are seeing. this is even as you are seeing a stronger dollar. but they are up almost 20% since
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december, so nothing to panic about. interestingly, the russell is the area of weakness we are seeing. i want to look at a one-year vix. of the next -- going back to february 2018, that is my initial vols spiked up. since then, we have had low volatility. a little bit in q4 and then again when the equity markets bought them up. vix heading lower throughout all of 2019, down to a 15 handle. very different from the 35 handle one year ago today though knows short vol trades gave out. interesting to see the s&p 500 and the 200-day moving average providing key support through all of 2018. we know that it's been bumping up against the 200-day moving
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average three times. classic headline resistance level. we are closing up against near the 200-day moving average. need to see we multiple days of this to see if it can become a support line again. very interesting that we are again closing in on that average. looking at the individual movers, church and light is off about 8%. they say margins are being pressured from tariffs. this is the same story we are hearing from kimberly-clark. is another one. 56% of their revenue comes from china. they are seeing revenue weakness hardemand going beyond the disk space. gilead scientists, off more than growther projecting no for all of 2019. vonnie: taylor riggs, thank you.
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bill dudley, the former president of the new york fed has a message for the markets, stop worrying about the fed's balance sheet. wrote, the fed's effort to shrink its holdings have been blamed for various ills, including decembers stock market swoon, and any nuances that follows. amazed and baffled by this. it gets much more attention than it deserves. joining us to discuss those comments is jeanna smialek, who comes to us from washington, d.c. why is he so surprised by this? don't the markets need clarity on whether the fed would be using this as a tool? he doesn't think jay powell gave the markets a lot of surprising information at the january meeting. he makes the point that while jay powell told markets that the
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fed is going to keep operating with this floor flame -- framework. to run a require them larger balance sheet going forward. that was not totally unexpected. he makes the case, something that markets already knew. this idea that the fed is going to be watchful, paying attention to the balance sheet runoff, and that that runoff will continue -- continue gradually. we have known how the balance sheet will play out. he makes the case that stock markets have not been weak on the balance sheet because that trend has been priced in. they have been weak in other developments that have happened since. vonnie: also the inclusion of the word "patients" had an impact on the market. why is it so critical that it is deadly writing this opinion piece? jeanna: it is really interesting that this is coming from bill
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dudley. he spent time at the new york fed, was an influential leader during his time there, prior to that at goldman sachs. he has a lot of experience in this area where markets touch economics. i think he is really seen as an authority on these issues. it is interesting that he is the one saying, all of you people paying to so much attention to the balance sheet, you may want to look at rates over here. vonnie: does this mean the balance sheet will not be used as a monetary policy tool, ever? jeanna: absolutely not. and i don't think the fed would say that. they are not using it as their primary total as a look to remove monetary policy accommodations, but they certainly want to make the case that it is still in the toolbox, that they could grow the balance sheet to ease economic conditions going into the future, especially if we get into a situation where zero rate vines again. vonnie: you have a piece out from an essay from the dallas
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fed president robert kaplan, saying there should not be any further rate actions, nothing about increase or decrease. is he complaining about the crop of high frequency data that we are getting? jeanna: he is pointing more toy the risks on the out side and saying they may take some time to resolve. confident the fed has achieved its inflation goal but doesn't see prices moving up to four year he thinks that that should be wary of things like slowing global growth, potential of yield curve inversion. a lot of the crosscurrents that have been going on in the economy between the trade war, government shutdown, etc.. he really wants to see how those things play out and then make economic policy accordingly. feel it wasdid he necessary to write this essay now? isn't that what the fed has been
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saying ad nauseam for the past few weeks? jeanna: it's an interesting question. regularly, iaplan was with him in austin last week. i wonder if one of the reasons that he is putting out this essay now is, he has been making this case for quite some time, really starting in october. it seems like it is just now that people are starting to listen and hear him, so maybe he is just trying to lay it out more clearly so that people know exactly what he is thinking, and can get markets as much clarity as possible. vonnie: what is his reaction to the high-frequency data we are getting? today we had a services reading that was fine, a little lighter than the market was looking for but fine. market services pmi also on the nose. that is january data. does that suggest january was not as bad as we thought? jeanna: certainly, the jobs numbers were really solid
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actually. i think it's entirely possible january's data comes in relatively decent. but i think we will have to wait and see when we have all the data in front of us. for the fed, in an environment where inflation is contained, where there are these global risks on the horizon, not to mention a trade war, government shutdown that are lingering uncertainties, and it's not clear how they are affecting the economy right now, it is probably owing to be their reaction function to look at the meritson and say this attention. vonnie: the president, fed chairman meeting last night. it is not a typical that a fed chairman would have dinner with a president. just a little bit of the wrist is a bad are made from the dinner? what, if any pressures but be placed on the federal reserve chair. are you hearing anything? jeanna: it is interesting, this
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dinner is not unprecedented, but it is recently in the sense that president trump has been so critical of jay powell. the fact that it happened was clearly closely watched. it will be interesting to see if we hear anything more about it in the coming days. if we don't, it was just a routine meeting. but if you see more information leaking out about what was discussed, that could be something that i think everyone will perk their years at that. vonnie: we have not had a tweet about that particular dinner anyway. jeanna smialek from washington, d.c. coming up, chris merrill, founder and ceo of harrison street, will tell us how investors are positioning themselves in this woul latest credit cycle. this is bloomberg. ♪
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vonnie: student housing is starting to attract high net investors and has landed on the radar of pension funds and other institutional investors. harrison street has $22 billion in asset management and has been a player for quite a while. chris merrill is the chairman and ceo. he is here to talk about new competition potentially and how investors should be positioning themselves in his credit cycle. where are we in the cycle? >> good to see you again. we have always, since we found in the business 12 years ago, have focused on asset types that were more need-based. when you think about where we are now in the real estate cycle , we are getting toward the late innings. people are somewhat concerned about where is the man going to
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come from, how sustainable it will be. we like asset classes that will do well in good and bad times, resistant.n student housing, medical housing, senior housing is something that we are focused on. storage was a huge boon for you after the crisis hit in 2007. what is the winner now, where are you seeing growth? across sectors but we are spending a lot of time in the health care space, senior housing space. you look at what is happening with demographics, the 70-plus population, the need for assisted care. there will be over 20 million people above that age cohort over the next decade. we need to focus on how we can take care of the seniors. assisted memory care is a big focus. we are also seeing a lot of the hospital systems we work with moving outpatient.
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been a offices has focus. student housing is still a focus for the business. we are working with 145 universities from across the country. vonnie: and that is new. chris: lots of new entrants coming into the space, which is great. instead of just working off-campus, we are now working with them on their on-campus facilities. working with them on their dormitories and other real estate assets where they don't have the capital. that will be a big part of our business model. vonnie: in a way, social infrastructure could insulate the investor from credit cycles. chris: that is where we have been fortune with these asset classes. we started this before there was a financial crisis and we saw how well they did during the downturn. is we canazing to us get better pricing than traditional real estate. you have asset classes that we saw in the last downturn preserve capital, yet we can get 200 points better yield. vonnie: talk to us about the new
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entrants. they may not describe themselves as such, but kkr definitely rain blackrock. on this, how much competition are they providing harrison street? thes: when we started business, a lot of folks are that you could not do this. to see a lot of these folks coming into the space is terrific, it is creating a market. these firms are raising a tremendous amount of capital. very hard for them to drop down and do smaller, one-off investments. we have made over $22 billion of investments. 80% of that is single developments. what we have been able to do on the sales side, 80% have been through portfolios. we have been able to accumulate large portfolios to sell to these groups. because of their size, they will never be able to focus as we do on these asset classes. vonnie: is there an ideal size?
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chris: we face this all the time in terms of how much capital we raise. is 80% of are doing investments in single as a development, we have to be careful about how much capital we raise. if you become to barry, you will to buy portfolios from groups like us. vonnie: you are spread across the country. any geographic area better than another? chris: that is what is fun about our strategy. most traditional real estate investors are in five main cities. we can be across the country. we have invested in almost every state. now we are expanding outside of the u.s., investing in student housing in the u.k., ireland, europe. universitieswhat and hospital systems we can be associated with. vonnie: definitely a different credit cycle going on in europe and the u.k. is there a typical return for an investor? can you tell an investor, you are guaranteed at least x, y, z?
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chris: no guarantees but we are trying to show there is an arbitrage. the asset classes we invested are typically 100 to 200 basis points higher than income return. we can give you a better income return, and during the last global financial crisis, they retained capital. we cansing environment, capture the upside as well because 80% of our leases are short-term. we think that whole package is a great return profile for our investors. vonnie: you talked about health care, one of the areas you are focused on. what happens in the next election cycle, will there be big changes that will impact you? be as immuneted to from policy changes as possible. when we think that our strategy, there has been positive impacts with the affordable care act. more injured people means more doctor visits.
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outpatient visits were more than 700 million last year. what we try to do is stay away from where policy can impact. we don't do skilled nursing, we focus on private pay, rental housing, seniors. hopefully, the strategy is to be immune from those things and really focus on social infrastructure. .t is neat-based real estate students need housing. people are going to the doctor. that is where we are focused. vonnie: what is your experience in britain and europe, where it is a version of medicare for all, if you like. chris: right now we are just focused on the student space. we are a bit of a first mover in europe, as we were here in the u.s. europe, there is a huge need for off-campus housing. there is a real opportunity to create student accommodation space, and that is where we are focused. mentioned, you said
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the singapore government is investing? chris: there are a lot of investors interested in the space. we have been sellers to a lot of capital. we recently sold a billion dollars worth of student housing that we put together in a portfolio and sold it to the canadian pension fund and the government of singapore. vonnie: looking forward to next update. chris merrill, founder and ceo of harrison street. disney's park and streaming services under the microscope. what to expect after the bell. ♪
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vonnie: disney set to report earnings after the bell. analysts expect few surprises with earnings declining 18% to $1.54 a share. joining us is paul sweeney.
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when you say it like that, it doesn't sound so good, but disney has not had a terrible quarter by any stretch of the imagination. there are some long-term headwinds that the company is dealing with in terms of cord cutting, but the core businesses are in good shape. theme parks remain very strong, continues to churn out low double-digit operating growth every quarter. the film studio is a juggernaut year after year. the real question for the company is, they are beginning this pivot toward a streaming business model for a lot of their content, sports content with espn+, and their disney content. that would be a long-term pivot and will be a very expensive pivot. investors are trying to get a handle on that and what it means for earnings, the stock. vonnie: so far, streaming has not been point to any negatives, people are embracing it as the industry predicted.
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obviously, investors were to look at margins. will they give disney a pass it margins continue to get squeezed paul: costs are definitely going up for the company as they invest in streaming. that will impact profit margins. if you look at consensus eps estimates for the next two years, the street is looking for virtually no growth from this company. things,any is doing two investing in their new streaming services in terms of programming and technology, headcount, and at the same time, pulling back some of their content from the offlix's and amazon prime's the world, so they are losing some of that syndication selling to third parties. that will be a hit to earnings. the question is if it will be worth it at the end. vonnie: surely, there be asking about the fox networks. fox networks adobe acquiring, they have 90 days to close them once they close the
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transaction. they are actively looking to sell those. the question is what is the market like, what kind of valuation? the market believes they are unlikely to receive the bids and a valley equal to what fox is paying them. it is tough, regional sports business, still dealing with the cord cutting that local levels, so the issues what price they can get. vonnie: our thanks to paul sweeney. you can listen to him daily starting at 9:00 new york time. stocks are higher, the s&p up .1%. this is bloomberg. ♪
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comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers.
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"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. mark: i'm mark crumpton with bloomberg first word news. president trump's inaugural committee is still reviewing a subpoena for documents from federal prosecutors in new york.
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a spokeswoman says the intention is to cooperate. the group raised a record $107 million to celebrate the inauguration. donors and potential foreign contributions have drawn scrutiny. northam governor ralph is holding onto office despite growing calls for his resignation. nearly all of the state democratic establishment has turned against the governor after a racist photo from his 1984 medical school yearbook surfaced last week. the state republican house speaker says lawmakers are hoping northam steps down. the picture shows someone in blackface next to someone in a ku klux klan robe and hood. nor them originally apologized but now denies it is him in the photo. nicolas maduro has an offer for the united states. if you want to bring humanitarian aid into the country, with economic sanctions first. whenever claims he was imposed sanctions on food and medicine which existed before, saying he
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will block the delivery of aid into venezuela. the shipment are being organized nylon glider and an international coalition including the u.s. and canada. in paris, a fire in an apartment building shown at least 10 people and injured 31 others. residents fled to the roof or climbed out their windows to escape. the building is located in the high and 16 the district. police suspect arson and have arrested a female resident who is said to have had a history of psychiatric problem's. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. live from bloomberg world
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headquarters in new york, i'm shery ahn. amanda: live in toronto, on the mandalay. we are joined by our bloomberg and bnn bloomberg audiences. shery: u.s. stocks clinging to a fifth straight day. the s&p is on track to tie its longest rally of the year. president trump will deliver his second state of the union address tonight. white house aides promising a speech will of optimism. star board taking a bite out of papa john's pizza. we will speak to jeff smith and steve ritchie of papa john's. let's get a quick check on the major averages. u.s. stocks higher today. the s&p 500 gaining ground for the fifth consecutive session, up .1%. we are seeing it weighing on the index. financials leading the decline. the 10-year below 2%. energy shares falling as we see debbie ti turning lower expectations for rising u.s.
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crude inventories. we are seeing optimism challenged right now. investor still awaiting the state of the union this evening for any signs of perhaps a political infighting or corporation. also something more about trade relations with china. the dow getting .4%. of course, we are also heading toward fed chairman powell's first comments after the january meeting. investors really looking at all of the different variables right now, pulling the market in different directions. ground, upr gaining 12%, the most in seven years. second-quarter adjusted eps beating the most bullish estimates. amanda, that is doing a lot with their sales in asia. if theree will watch is positive sentiment that spills over from that story. take a look at this chart. proportion of revenues
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coming from asia. white and blue is asia. green is the americas. you can see declining in recent years. a bigger part of its growth is the asian market. as it raises its outlook on the eps, raising its dividend, it is offering up a sense that perhaps not all is lost in asia. there is a giant middle class growing there that wants luxury products. a side, it is not all bad news here. shery: goldman sachs downgraded but itell last month appears china is still performing well. to pizza dough. starboy thinks it has the right recipe for papa john's, investing $200 million into the business after reports that the embattled pizza company was abandoning its efforts to find a buyer. by theond is joined
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company's top executives. that's right. i'm here with steve ritchie and jeff smith. steve, when i think of an investor like jeff, he comes into a lot of companies, comes with some change. other than the investment that sherry mentioned, what changes will he bring to papa john's? >> first off, thank you for having us. exciting time for the brand. the last couple of days have been a momentous opportunity for the brand, so much positivity and energy. a lot of that is will be on the $200 million. we found a great partner to be able to think about how we stabilize the business. clearly some challenges over the past year. over the last five months we have been through a comprehensive and gigi process to identify new partners for the brand. we identify what i believe is the best solution to move the business forward. probably a little bit different
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than what you have seen in the news, but i want the viewers to know that this is truly a partnership with jeff and the papa john's organization. ed: on that point, this is a conciliatory position for you, you didn't come in in a way that was hostile. is this something that you are looking at to go activist on previously? not activist. i believe it is the best product in the space, we love the pizza. that is where you have to start. i think the world has been watching what has been going on with papa john's. we wanted to help. we saw this as an opportunity where we could get involved, use leadership,e, my and in this instance, some capital him and to help the company and return the brand back to where it should be. consumers have to come back, hopefully, and recognize that this is the better ingredients, better pizza company. focus on the quality of the
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product, move away from distractions. ed: how do you get that out there? much abouthat ingredients as it is convenience. steve it's about getting the message out, whether that is socially or other means. way to make sure the consumers understand the quality difference, the ingredients difference, and who we are as a company. we believe they will come back and appreciate it. we believe the consumers deserve that quality. a financialnot engineering play, this is like coming and running the business. it is similar. a pizza company instead of a large restaurant chain. all of garden, we recognized it was a terrific brand with joe heck products that have been the last some of
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its messaging around improving the guest experience. that has turned around. has done a at darden wonderful job, we helped, but we have improved the guest experience. it is the same thing here. terrific brand, best product in the space, highest quality ingredients. we need to improve the guest experience all the way through. the quality is fantastic, but they can sure the guest is getting that message. onset, we weree going to eat it, but could not get it on the table. a lot of the experience is about tech. i will not name the brand, but i can order a pizza and track it on the app. how does papa john's close the gap on other companies like dominoes who have the head start on that? i started 22 years ago working as a delivery driver in the restaurants.
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it still sticks with me today, what is uniquely special about the brand. it also resonates with the customer, this quality story. the technology is one thing. we have great technology but what is uniquely different about the brand is the quality story. i don't think most customers know that we have fresh, never with just six ingredients, we have the cleanest label in the pizza category. our sauce is vine ripened tomatoes, from the vine to the can in less than six hours. we were the first to launch online national ordering in 2001, loyalty programs. but we know we need to continue investing in the area. we know that leveraging technology is big. we just restructure the entire executive leadership team last leverage the technology
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to improve the overall customer experience. but never forget, product is king. if you own quality, you have a brand that can grow above and beyond what anybody else can do. that is what is uniquely special about this category. jeff and i agree, that is the piece we have to keep pushing on. have a great customer experience at the door, over-the-counter, telephone, through all of our channels that we distribute to the customer. ed: that is the future, talk about now. there has been a problem with image, a lot of that coming from john schnatter, the founder. you have this cultural audit going on at the moment. what is likely to come out of that? provide up there with the product is the people. one of the most important things to me is how we enhance the culture to move forward.
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have had some challenges over the past year to change the itception of the company ed: all relates to one person. we are 120 team members around the world. we always want to get better. we strive every day to get better in everything that we do. really working on diversity and inclusion. we just restructure the executive leadership team, now have five women on that team, great new leaders, lots of diversity. we have a new chief of diversity, equity, and inclusion. ed: is he under pressure to sell his stake? steve: the thing about john that is similar to my views -- i've been with the brand 22 years. we have a passionate commitment to quality. youjeff, i will not ask [indiscernible] if you were a holder of a company like bristol-myers, what
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changes would you like to see? jeff: i think we are here to talk about pizza. pizza is fun. i don't think we will be talking about bristol today. but i appreciate you asking. thank you so much for joining me. amanda, back to you. amanda: thank you, ed hammond. coming up next, trump will take center stage. what to watch for during the state of the union address. this is bloomberg. ♪
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shery: and this is "bloomberg markets." i'm shery ahn in new york. amanda: i'm amanda lang in toronto. president trump will deliver his
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second state of the union address at 9:00 tonight after being postponed for one month coming off of that partial government shutdown. the president is expected to touch on infrastructure, trade, and immigration. we have been asking all of our guests for their take on the address. this comes against the backdrop of the shutdown, all the emphasis on the southern border. willnk it will -- he reemphasize that, his chance to make the case that his administration is successful. is said aboutt china, any positive comment whatsoever will be interpreted that by the end of march we will have a deal, even if it doesn't have much in it, it will be a deal. we will be looking for signs that he is doing a victory lap on trade ahead of what is lucky to be a summit with xi at the end of the month. similarly, that he is not starting another round to the shutdown. it would be great to see something on infrastructure that
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we have all kind of given up on that. urijah -- eurasia group u.s. director is with us now. a lot of suggestions about what could be in the speech. will it be negative intel, will this be an opportunity for him to be presidential sounding, or do you think that he will get into the weeds of these partisan issues? >> good to be with you. yes, i do broadly expect the president to be very forward-looking and optimistic. most of his predecessors have taken that opportunity to be that way during the state of the union. i think the president laying out a vision like that for american policy plays an important part in political life here. and businesses, the policy signal from that is often weak. the speech is usually very long on optimism and usually very short on reality.
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especially on trade, we expect some positive noises continuing the story of the past few months . we are more concerned about how things play out in actual decision-making the rest of the year. todd, a different environment from last year, but one where we will see new pelosi literally looking over his shoulder this time around. does this signal that the speech will be substantially different from 2018 as well? right.hat's that change of the past year is certainly what i think is one of the major drivers of 2019 confrontation in washington, versus 2018, when you had unified republican government. while we do expect the president to be talking conciliation, extending olive branches to the democrats, i'm also expecting the president will -- and
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perhaps a more subtle ways than at other times -- double down on some of his policy proposals, including the wall funding, that was at issue in the shutdown from late december until recently. we do start to expect to hear pre-campaign kind of rhetoric. anything new that you are looking to hear, hoping to hear, in terms of policy direction, ideas from the president? for one thing, presidents always like to keep a couple of curveballs at the ready for the state of the union. those are usually played pretty close to the vest, not really hinted at before hand. i would expect in this state of the unit to be no surprise. the president has talked about an emergency declaration, hinted at it, that it may have some
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place in the state of the union. ,hat is still an option for him to remove himself from this impasse over border funding. it is a very flawed a solution for the white house, but it does remove the president from americans blaming him for the shutdown and the economic impact of one. tory: only two weeks away get a deal, secure the southern border in order to avoid another government shutdown. have we seen any progress from the bipartisan congressional committee in coming up with a solution? todd: we have seen little progress to date. it is not a lack of ideas that is at issue, it is very entrenched politics over border security. shutdown,ly after the how that deepened each side in their position. there are certainly bipartisan out -- ideas out there that
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could resolve the impasse. the issue is at the politics of it on either side is not exactly attractive for accepting something that could be construed as a climbdown. think, as of yet, the conference committee has really reached a solution that both sides could agree on. therefore, for investors, businesses looking at for major tensionear, i think over fiscal policy is going to remain. we have much more serious things the debt, such as ceiling, then appropriations for fiscal 2020. we know the closer you are to the beltway, the closer you watch the speech. does the world watch this as important as outside of the united states? is.: i think there i think there is particular focus on this because of the media,nt's status in the
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certainly the possibility for a constitutional crisis in washington. this presidency is watched in a different way, i think, than others. certainly, outside of the united states, there is always an sense in which the american president, with the u.s. still being the superpower of the world, the lone superpower, is always of interest to see what is going on that u.s.n the affect policy has on markets, businesses, and citizens around the world. shery: todd, always great to stop -- to talk to you. tune into our state of the union covered starting tonight at 8:30 p.m. eastern. staying with politics, we recently had chuck schumer and bernie sanders releasing this new york opinion piece, amanda. really arguing for limiting corporate stock buybacks.
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it was interesting because this lloydfor -- prompted blankfein to tweet for the first time in seven months. he said a company used to be encouraged to return my two shareholders when it could not reinvest in itself a good return. getsoney vanishes, it reinvested in higher growth businesses, boosting the economy and jobs. of course, we have also seen this criticized as a solution, coming from the senator, saying this would reward that investment. but it is true that companies have spent more than $4 trillion since 2008. amanda: one of the concerns, it does sometimes show a lack of creativity to do with lack of capital. there is a look at what influence that has had on the markets. if you look at your terminal come at the rate of the buybacks, the biggest s&p 500 companies, they are driving the
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market, the financial engineering of taking your operating income and returning it to shareholders, does drive results. the question i would put to lloyd blankfein and others is should you not be increasing wages, other things that you could do that is good for the economy and your business, rather than just returning it to the investor class. shery: a very good opinion piece. you can find that on the bloomberg for our viewers. this is bloomberg. ♪
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shery: this is "bloomberg markets." i'm shery ahn in new york. amanda: i'm amanda lang in toronto. shery, we often hear talk about the one percent. in political rhetoric in the state of the union address evening, often about taxing the 1%. interesting research on what it needs to be in the 1% around the
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world. in india, annual income is 81,000. in the oil-rich uae, 10 times that. isser to home, canada 190,000. in the u.s., 478,000. quite the range. you wonder if people feel as wealthy as the 1% when we talk about it. in india making up one person in the uae. also have to keep an eye on property prices. a wide range all across. a quick reminder that you can catch all of our interviews on the bloomberg with g tv . this is bloomberg. ♪ the latest innovation from xfinity
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isn't just a store. it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. mark: i'm mark crumpton. the house judiciary committee said it is prepared to issue an subpoena to matthew whitaker.
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whitaker is expected to appear before the panel on friday to discuss robert mueller's russia investigation. he took charge of the justice department in november. mr. trump has picked william barr to serve as attorney general. theresa may is insisting that she wants to keep the most contentious part of her brexit plan for avoiding a hard border with ireland. she said the deal won't include a guarantee for keeping the irish border open for goods trade. >> i can only get a deal through parliament if these changes are made to the backstop. that's why the u.k. government and majority of mps supported the amendment from brady last week. if we affirm our desire to leave with a deal and our commitment
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to no hard border between northern ireland and ireland. mark: the prime minister's comments were aimed at reassuring a local audience in northern ireland. turkey is criticizing the u.s. over delays in setting up a buffer zone in syria. erdogan said if washington won't act with its promise to cleanse the region of terrorists, turkey will do it alone. they talked about establishing a safe zone east of the euphrates river in syria. iran says european nations haven't responded to offers to sell crude oil despite having u.s. waivers. the u.s. began ramping up sanctions after trump withdrew from the nuclear cord last year. oil exports are a key source of revenue for iran. the temporary waivers were
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intended to give countries more time to comply with the sanctions. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. carol: it is 2:00 p.m. in new york. i'm caroline hyde. scarlet: this is "bloomberg markets: the close." ahead of the speech, fair ted powell -- fed chair powell dines with trump in the white house. composting -- via composting --rofits beat for the bell
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viacom posting a profits beat before the bell. slump hangsg there over the euro area. scarlet: first, let's get a check of the markets. the u.s. stock market spent the last hour coming up its lows. this would mark the fixed-rate advance with the s&p bumping up against the 800 a moving average. financials are the big laggards. today has been an interesting day. still well in growth territory for the u.s.. pretty poor looking across the pond. scarlet: an area of concern for investors had been the slowdown in asia. the anecdotal's from estee lauder seem to be good. because medics maker boosting
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its full-year outlook on skincare sales in asia. the cosmetics maker boosting its full-year outlook on skincare sales in asia. we will keep an eye on all this. equities, bonds and commodities. the 200 i'm looking at day moving average on the s&p 500. this is a when your chart that shows why this is so important -- a one-year chart that shows why this is so important. last year, for much of the year, the s&p 500 above that moving average. what had been support has turned into resistance. edging up against it right now. you would want to see the s&p
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500 close above the 200 day moving average. basis, maybe even two weeks -- this is a sideways trend. let's see if the bulls can get stronger. about: you talked a lot after the equity markets bottomed out on christmas eve, the rebound in the rally we have seen. i'm taking a look at the chipmakers, the philly semiconductor index up 12%. off thes shrugging earnings we got from seagate technology. they underwhelmed on margins and guidance. micron and intel have underwhelmed as well. analysts are looking for a second half rebound for these companies. a lot of what we are looking at, the 200 day moving average on
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the philly semiconductor index. -- now at 1294. the moving average is 1295. you need to see that rebound crossover to the 200 day moving average. so far so good for the chipmakers. if you take a look at some of the data, it seems to suggest some of that did take place in recent weeks. a lot of these momentum driven investors primarily the commodities trading advisor still relatively short the market. they reduced their exposure, measured by the beta, at the lowest level since 2015.
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charlie expects that to flip back to a net long position at some point. you have seen that in nasdaq futures, just not s&p futures. of the suggest that may never terry lies. -- other data said just that may never materialize. other data suggest that may never materialize. there isn't a tremendous amount of conviction to continue chasing this market higher. caroline: great analysis. meanwhile, president trump appearing to deliver his second state of the union address this evening. his are marks come 10 days after a critical deadline on border security -- his remarks come 10 days after a critical deadline on border security.
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heritageined by a foundation senior advisor. wonderful to have you joining us now. the economic message of tonight -- what are you expecting? >> he will take a victory lap, for sure. our economic data has been so good over the last three months. we have our lowest on employment rate and 50 years -- in 50 years. we just had a blockbuster jobs report that came out. the economy is growing. i heard you all talking about the slowdown in the other countries around the world. the united states continues to grow at a healthy pace. will say we are doing the right thing and that will be a primary message. seelet: others want to increased government spending on programs that would benefit them.
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americans support raising taxes on top earners. >> we are into lowering tax rates. we did our historic tax cut just a little over a year ago. one of the reasons the american economy is so well performing. states story, the united is sucking capital in from the rest of the world. we went from one of the highest tax rate countries to about average or a bit below average. a 70% tax rate would be catastrophic. we want the lowest rates in the world, the most competitive tax system in the world to make america an attractive place to do business. scarlet: this would be on those making $10 million. >> we call that a tax on the american dream. i don't think the american
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people would go for that. there have been calls for very high estate taxes on people over $10 million. this is a fundamentally american thing. most americans are against that kind of thing because they realize we are an aspirational country. if i succeed or my business exceeds, they don't want to have the government take two thirds of that away from them. because if you did get a president kamala harris or elizabeth warren, they would move in that direction. that is one of the fundamental disagreement between the two parties. caroline: one year on from the initial tax cuts, how has that helped the general public? it hasn't incentivize that many companies to start i
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investing. >> the proof in the pudding is in the eating. we said we would grow the economy and get wages up. that is precisely what happened. it's hard to look at what's happened in the aftermath of that tax cut and not say it's been a phenomenal success. we were just saying this is working better than we even thought it would in terms of performance of manufacturing, blue-collar jobs coming up. we've had the biggest wage gains for middle-class workers in 15 years. those blue-collar jobs in those states like michigan, ohio, pennsylvania, kentucky, west virginia, those blue-collar jobs are back. i would argue the middle class has been the biggest beneficiaries of this tax cut. trade deadlined da is fast approaching. what can happen by march 1? >> this is the big one.
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trump has staked his whole presidency on getting this trade deal done with china. i happen to agree with trump on china. china is no longer a friend and ally, they have become an adversary in terms of their abusive trade practices and military buildup and engagement in espionage against the united states. this is a big one. , getump can get a deal some reasonable concessions from china, the american economy will go through the roof. you will see the dow go to 30,000. on the other hand, if he doesn't get the deal done, they will go to the 25% tariffs, that will hurt both countries a lot. elseis above everything
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the issue of the american economy over the next several years. caroline: would president trump allow a deal not to occur. ? i get that question asked a lot by investors. he will take a deal that moves in the right direction. whether china agrees to buy more american products -- he will require specific metrics that china meets these promises. china doesn't always keep their word they often don't when it comes to these trade deals. if it's just some kind of symbolic thing, i think trump goes ahead with the tariffs. this would do substantial damage to their economy and they will come around to our way of thinking.
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there's nothing donald trump is asking of china that's unreasonable. they should open up their markets. they should stop stealing our intellectual property. it would benefit the chinese consumers and american producers. i will put the odds at 60-65% that we get a deal in the next few weeks. scarlet: we will see what the president hints at when he speaks tonight. continuing our state of the union preview coverage with tom perez in the next hour. of course, tune into our special 8:30 p.m.eginning at eastern time. coming up, a good first quarter for viacom has investors hoping for a merger with cbs. a quarterly earnings report this morning shows how negative the situation has become.
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oil caught in a tug-of-war between opec cuts and u.s. stockpile growth. this is bloomberg. ♪
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caroline: time for our top calls. a $52 price target -- next up, boeing's price target raised at bernstein. look at that. up exactly 3%. cut.'s price target was
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analysts questioning whether inla can meet financing 2019. scarlet: media giant taking the earnings spotlight today. viacom topping estimates, providing evidence that a turnaround is taking hold. next up, disney reporting after the bell. investors bracing for profits. let's bring in chris palmeri with more context. viacom's earnings to indicate the turnaround is starting to gain traction here. can this company survive on its own in a big sea? >> that's what the ceo has been arguing. there's no question that viacom is in a better position than if years ago. -- a few years ago. with then't be merging basketcase that viacom used to
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be. there's some weakness in the numbers, particularly advertising, nickelodeo n delivering poor results. is a strong viacom, but not without a deal in the future. caroline: not a deal that viacom is claiming to be forcing right now. >> absolutely not. we are on a good track moving forward. growthrn the company to both top and bottom line. ofare expanding the presence our i.t. caroline: they don't need a deal. do you feel the investor base feels they still need this? >> there's been a turnaround in
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the last year in terms of the positions of the two companies. cbs was the stronger one. now, les moonves is gone, cbs has their own troubles. there's been management turmoil. now, bob bakish has the upper hand. even though he has said publicly we don't need a deal, he's going into any negotiations that may occur with those conditions. scarlet: disney has been paring the market for some tough numbers. -- preparing the market for some tough numbers. what are investors likely to tolerate? what numbers will they be focusing on? >> we did a deep dive into this recently. investors seem to be willing to tolerate a lot. nobody disney's size is betting
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as much on a digital future. the fox acquisition bringing a lot of new content. bob iger telling folks this may earningsar with down -- everyone is looking at the long-term. there will be a lot of discussion about subscriber numbers, what the metrics will be going forward. caroline: it's incredibly costly , what disney is embarking on, catching up with netflix. willu think investors stick with them through that ride? saying look ate bob iger's track record. he's made acquisitions that have turned out to be brilliant in the long run.
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he's made a huge bet with fox. the general word from investors is we are sticking with them. we realize this is a long game. paul with ais pau look at disney. this is bloomberg. ♪
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scarlet: let's get a quick check of the latest business flash headlines. of itsts to move part business out of the u.k. by march 1. the swiss bank asking a judge in london for permission to transfer some worth to germany. ray dalio's investment firm has fired a senior manager over how an office romance has been handled. bob elliott did not properly disclose a relationship. elliott denies that and believes
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he was dismissed without cause. janus henderson parting ways with bill gross because of underperformance. when you look at the firm, it has seen -- among most strategies. many withdrawals came from equity funds. ofthe past year, only 36% fixed income assets outperformed the benchmark. that's your business flash update. interesting given the timing of gross -- bill gross' departure. caroline: the bond fund went into equities -- scarlet: unconstrained. caroline: i'm looking at the performance of janus henderson. down about 40%. a company that has been beaten up. blame therying to
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generic trend across the entire moneyry, saying movie is -- money is moving to passive. scarlet: investors feel doubleble -- more come -- investors feel more comfortable putting money -- caroline: coming up, the world's biggest oil company's pumping out cash and investors love it. exxon,ut the moves on that shall -- dutch shell, chevron and bp. ♪
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mark: i am mark crumpton. president trump expected to call for unity in tonight's state of the union address. democrats see little evidence
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that the president is willing to compromise, especially on border security. that he could make moves ranging from declaring a national emergency to conducting summits with china and north korea. chuck schumer is unconvinced about reports that the president's speech will focus on unity. andnowing this president his penchant for hyperbole, he will probably say the state of our union is stronger than it's ever been thanks to him. distortion and made up next to mislead the american people. -- made up facts to mislead the american people. how often will he distort? how often will he resort to fear? mark: the president tweeted that senator schumer has not even seen the speech yet. talibantatives of the
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and prominent afghan figures gathered in moscow for a two day meeting. meeting has sidelined afghan meantime,esident -- the taliban launched a predawn attack on an army base in northern afghanistan. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
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caroline: this is "bloomberg markets: the close." scarlet: we are 90 minutes away from the end of the trading day. caroline: shares of bp rose today on an earnings blowout. they joined big oil peers by posting profits that beat estimates. to the bp ceo earlier. >> it's been a good quarter, a goodyear. running all across the company -- good financial results. caroline: dudley also weighed in on the state of the global oil market. >> it does look to me that the opec plus countries is making a difference. they've announced reductions in
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-- the oil price fell when the iran sanctions were granted. those reductions are only kicking in and the first quarter now. disciplinembine that and look at factors like venezuela, the human tragedy, there are things that confirm up the oil price. later in the year, the bottlenecking in the permian infrastructure will come. >> how is the venezuela human the gulf ofting -- mexico has become a parking lot for venezuelan crude. >> we don't do business in venezuela. it certainly changes flows of .rude it's a human tragedy scarlet: that was bob dudley speaking with anna edwards.
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we welcome gina mayor from houston. -- regina mayor from houston. what do the results from shell, exxon mobil and chevron tell us about how the big oil companies are navigating the swings in oil prices? volatile.uite very large companies are able to withstand those ups and downs. where we see things falling out at the margins are the smaller shale producers. there are three key things driving the macro impact for crude price. number one, the fact that opec plus appears to be disciplined in terms of its cuts. we are seeing it three quarters of the way toward the committed cuts already. 12 million barrels per day even with four out of five weeks of reduced count -- rig counts.
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and then what will happen with the venezuelan sanctions and iranian sections and the conversations with china on an ongoing basis. those are the things that anyone watches on a given day. caroline: today, it is driving the price down, focusing more on oil stockpiles. i want to get your take on where you see the price when going -- the price swing going. will be see it creep higher? >> there are supply shocks that could happen. we will see if those end up happening. thereezuela unwinds, could be a big upward spike. if we see trade talks fall apart with china, that could have a
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huge upward momentum. overall, the industry believe things are relatively stable. brent will stay in the $60-65 range, wti staying in the $50-55 range. we will see ups and downs as we see opportunity. they are planning on that type of a price scenario. scarlet: are they prepared for wti to break out of that range and revisit the highs we saw in october or go back to the low 40's we saw in december? -- if wesaw debbie ti saw wti hit $70, there would be celebrations in houston and elsewhere. we are not prepared to see a significant drop off. that would have a big impact on the u.s. economy, could have
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recessionary impacts. caroline: perhaps this is a smaller companies seeing a fallout but bigger companies showing incredible discipline, but still able to reward investors. at $50ash payout, one million -- $130 billion. >> they have grabbed momentum from their shareholders. i don't think they want to lose that momentum. they stay committed to their and capital allocation discipline and cost-cutting. they are being rewarded in terms of their profit and shareholder sentiment. they will still complain a bit about their stock price, not getting the inflation they believe it deserves, but getting a lot of love from the
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shareholders in general. scarlet: what does that mean for their investments in their own business? we were speaking earlier on about how last year's tax cuts haven't prompted companies to spend more on themselves. what are these companies ?pending on youf you're a big player, are preserving our dividend, buying back shares. that's one of the challenges our oil company clients have to deal with. players get very squeezed at the margin. these are the ones making choices about cutting back one rig or two rigs and not having as much access to capital. that is a potential governing effect on u.s. shale production. frankly, i haven't seen any of that have a material impact on
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production. i remain bullish that u.s. production continues to exceed expectations. caroline: regina mayor joining us from houston. we thank you. maybe the supply-side is driving the oil market today. 1.6% lower at the moment. we have this concern about overall stockpiling of u.s. crude. take outperforming once again -- tech outperforming once again. money moving back into the emerging index. scarlet: dollar higher versus most of the major currencies. the pound the big loser here, declining as the u.k. services sector slowing to a 2.5 year low. caroline: a lot of technical is in place here. this is bloomberg. ♪
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scarlet: let's head to our sector spiders report. taylor: it's all about consumer staples today because they have a lot of earnings out. one this morning i want to touch on, we were heading lower a bit, now, fox swinging between gains and losses. key companies i'm looking at, procter & gamble, kimberly-clark -- the earnings are diverging. when we take a look at organic sales growth, procter & gamble is crushing and, looking at getting the organic sales growth of more than 4%. they are able to pass on the higher input costs onto consumers. kimberly clark telling a different story, now revising their sales forecast lower to
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2%. the peer average is right around 2.5%. you are starting to see some differentiating between these come please about who is able to pass on the costs to customers and who is not. that is affecting margins and their performance. gamble the clear leader, up 6-7% year-to-date. turning lower, off by 1%. procter & gamble came out and revised their full year 2019 sales higher. they all broke down, especially today, now off 8% on a year-to-date basis. margin pressures getting hurt and they are getting a lot of commodity and tariff costs that they aren't able to handle.
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armand hammer and oxley clean headed to its worst day in 10 years after giving an optimistic profit outlook. analysts citing margin compression as a concern going forward. facingch & dwight higher commodity costs, higher transportation costs. it showed up in their latest quarter. in earnings that came up short of analyst average estimates. hasn't a company that missed projections and four years. you see what's happened to revenue. the 10% plus figures is what the -- yoution of waterpik
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had four quarters of growth tied to that. now, you are closer to the company projection in terms of organic growth. scarlet: you are right. it'su look through it, amazing how consistent church & dwight has been. -2.4% the most recent quarter. you keep going back and there's a lot of green here to go through. >> this year, they are looking $0.01 lower -- with the track record, it shows up. scarlet: compare and contrast how clorox is able to deal with higher cost versus what church & dwight is able to do. >> it's about how aggressive these companies have been. --rox raising prices
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church & dwight got to that in the fourth quarter. they are looking for more profitability this year in large measure because of those -- you are focusing on gross margin. dollarove $.44 on every of sales. costs leavinger their mark and the company has work to do to counter those increases. much.ne: thank you very coming up, an exclusive interview with the universe investments cio. -- fails to put the right emphasis on market moves. ♪
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scarlet: universal investments
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most famous for its tail hedging strategy -- erik schatzker sat down for an exclusive interview today with the cio. they talked about the volatility in the markets. mark: it remains a complacent environment. the way i see what happened in the market quarter, 's bluff in the fed the market sold it. complacency remained high today. i've been saying this a long time. i don't think the fed is ever going to be able to normalize rates. i think the market was making a huge mistake in thinking central banks will crash this market. the markets will crash but it won't be because of what the
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central banks to, in my opinion. erik: what will it be because of? mark: there's a term called creative destruction. the central fact about capitalism. we still live in a pseudo-capitalism today, we still have this notion of creative destruction that is very different. it is very concentrated in time. accretive destruction is about one business plan destroying another. think of the business plans that are alive today that grew in the last 10 years because of the interventionism. we have $3 trillion in balance sheets here, $5 trillion in corporate debt. this has gone into business plans that survive because of the interest-rate environment. when that changes, it is an enormous problem.
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this is really what crashes are. it will happen on its own, very much on its own. the debt on its own will very much do it. and the balance sheet money that is printed, it is a fiat money. it is not wealth. it is a liability that has been created. liabilities need to get paid off. it doesn't matter what the interest rate is. erik: i will ask you what makes -- when you said the automobile destroyed the horse and buggy business, that is true. it is a question of the moment. i'm not channeling anything personally. will progressive liberalism destroy capitalism? >> we will discuss the euphemism -- wow.
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it could. runoptimistic in the long it certainly could. there are things about capitalism that inherently cause it to destroy itself. things, orre are optics about it that people don't like. erik: you subscribed to the notion that capitalism may not be the best system? mark: sure. i do think it is the best system. it is a natural system. there are things we don't like about evolution. it is the best and most optimal system. erik: last time, we talked about the modern financial system. this point you are making now that the monetary interventions doom us to a never-ending cycle of bubbles and busts.
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now, i want to talk about another modern thing, modern portfolio theory. you are not a big believer in modern portfolio theory. why? mark: modern portfolio theory fails to put the correct emphasis on what matters. what matters is the extreme loss. what we do as investors is try to maximize our rate compounding overtime. what matters is the big losses. not the volatility, not the smaller evan flows in your pmi -- ebbs and flows in your pmi. it takes two years of plus 50% positive returns to get back to zero. that would be a good return. erik: people live through that. mark: they do. modern portfolio doesn't andrstand risk mitigation
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try to correct that. theoryodern portfolio led to portfolio construction, the foundation of what the most sophisticated institutional investors around the world do. they are all wrong? mark: people think risk mitigation is about raising your -- you relative to risk can't eat sharp ratios. when you compound geometric we are focused on this arithmetic space. it's geometric compounding, that's all that matters. caroline: an exclusive interview with the cio of universa investments. amlo plans to announce extorting measures to this extorting measures -- extraordinary measures for pemex.
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they were downgraded to one notch above junk. country's money supply -- that could be a sign that the government has boosted spending to protest sanctions. surprising testimony today in a london courtroom. a former trader says coworkers at barclays would yell and collectively discuss their desire to move the bank's position for their own benefit. wine lovers will have something to say cheers about this year. lower prices. spain andnes from italy will cost less. wines from argentina gotten
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cheaper because of the valuation of its currency. scarlet: cheaper wine is always appreciated around here. we have indexes stabilizing. thes&p held back from losses we are seeing in financial stocks. caroline: currently seeing the etf that tracks bonds up about .4%. once again, we are seeing a more look serious maker defining -- luxurious maker defining consensus on china. ♪ this isn't just any moving day.
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simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. mark: i am mark crumpton with bloomberg's first word news. president trump as his inaugural committee is still reviewing a subpoena for documents from federal prosecutors in new york. a spokesman says the intention
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is to cooperate. the group raised a record $1.7 million to celebrate the inauguration. its donors have potential foreign contributions and that has drawn scrutiny. prime sister shinzo abe and german chancellor angela merkel say they both want to prevent a no deal brexit that could rattle their economies. the two leaders met in tokyo. also told merkel that germany and japan must play a greater role on the world stage when u.k. leaves the european union. the rip city, delivering for a second day the child the infamous mexican drug lord known as el chapo. the 61-year-old is charged with operating a drug smuggling empire that moved hundreds of tons of cocaine north of the u.s. order over the course of two decades. from 14 witnesses that described violence against the cartel classes enemies. the defense says el chapo is a scapegoat.
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pope francis has praised the courage of a young girl who broke through police barricades to hand deliver a letter to him. francis was being driven around the city's sports stadium before mass when the child dashed from the crowd so quickly that police couldn't catch her. francis told reporters the child is the future. i like that. you have to have the courage to do that. he continued and added, dare i say her poor husband. global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪ >> live from bloomberg, i'm
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caroline hyde. scarlet: i am scarlet fu. this is bloomberg markets the close. caroline: president trump's stated union promises drama. fed chair -- at the white house. wrote positive tech earnings yesterday. the attention now turns to media giants with viacom roasting a profit. more disappointing across the pond. brexit uncertainty continues to fester. all that and plenty more is coming up. check ontime to get a the markets with just under an hour to go with the close of the u.s. trading. the dow up .2%. the three major indexes thanks in large part to boeing. caroline: we're suddenly starting to see analysts coming out. we discuss that later. joe wants to be hitting the vixen a little while. we are now significantly lower
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on this 15 handle. scarlet: you do not see a lot of people buying the put option for the downside at least for now. crude was ready to break out but we are right back into the low to mid $50 range of the dollar higher before president trump's state of the union address. the pound lower, what is a very dominant -- gdp getting to a 2.5 low -- in -- a year low in january. another key concern. the panel -- not actually reaching that moving average. >> the bank of america meeting on thursday. let's take a closer look today. watching?hat are you abbeville: i'm looking at the trade war. it is definitely taking a toll on the u.s. and china. whitee're looking at in is the trade data going all the .ay back to 2004 in yellow
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china passes trade export data. strongly correlated into the -- draft in the great recession and financial crisis recovered, trading relatively in tandem. last year, the u.s. i some trade export data hit a relative peak since 2011 and has only been down since then as the trade war really takes its toll on the export data, not surprisingly. back to be a reason we have the s&p 500 stuck in a range. a one year chart, tons of lip saws up and down. an all-time high, and now a bear market. we're in the middle of the range . the s&p 500 up a little more than 3%. and the export data, one of the concerns investors and traders are weighing. >> thanks. a lot of chatter about the proposal pitch by senators chuck schumer and bernie sanders to curb stock buyback. it is interesting to take a look at because think about how much investors have come to rely on the buybacks to boost concerns
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over the years. companies as a whole bought back more than $700 million in shares last year based on a calculation on a decrease of capital stock outstanding. based on that basis, going back to all the data we have, back tonight to 90, that has been unfolding for a while now. $5 million between 2008 and 2018. if you want a comparison, the fed's qe program was $4.5 trillion over the same time. bloomberg intelligence had a breakdown that accounted for the most buybacks. for about 32% of the repurchases last year. a distant second was financials at 20%. you can see the sectors with lowest right back percentages happen to be the sectors with the highest dividend payout ratios and utilities and real estate among those. i should point out that proposal is nowhere near seeing the light of day anytime soon. was enough to lower
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ceo lloyd blankfein back to twitter after a seven-month hiatus where he came out defending by back saying they do help the economy and jobs. lisa: a measured tweet for the first one in seven months. thetaking a look at state-owned oil company. taking a look of the pond searching the most in three months today. the new president came out and said he was willing to support the oil company. take a look at how much debt the company has. more than $100 billion. it is the world's most indebted oil company. it looks even worse when you pair it against just how much the net debt, it is very indebted. to very close to junk. the plan to give a tax figure $3000 in six years, the fact
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they are coming out and saying anything they could potentially be supportive of this company is enough to give a boost of optimism, which is what you are seeing. scarlet: great stuff. as we look at the house performing now, the u.s. market has a five-day rally heading into the interests. the president will talk this up quite a bit in tonight passes dress. caroline: it is notable that it is a five-day long stretch. how long has that been since? actually only a month. is a little more common than we used to at the moment. scarlet: that all goes with the territory. caroline: volatility following today p rome in 15 handle on the of xp hedging needed at the moment. we are getting the volatility slightly in the oil market. second day we, down 1.6%. a little bit of concern going on. scarlet: it is something i
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believe the president will not be mentioning as well. kevin's really chief washington correspondent. as the president gets ready for his state of the in address, talk a little about what he is expected to discuss when it comes to the economy and it just rates, the federal reserve? >> trade policy pity economy is the favorite thing for the administration to talk about. it comes -- look. administration resources say it will be in up lifting kind of speech. but the president will essentially say there are two lanes to choose from. infrastructure, trade policy, pharmaceutical pricing, or they could try to litigate and do investigation spirit will be one or the other. that is according to officials.
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they say late imminent. we can walk and chew gum at the same time to they are skeptical of the president passes policies. in fact, i'm getting some word in my ear it now that the democratic national committee tom perez is ready to go p.m. mr. chairman. thank you for being on bloomberg. see?like to what we look for tonight in the save the in address? can democrats find any common ground with the president? to see him talk about unity but frankly throughout his campaign and president -- presidency, we have seen none of that. it does not give me a lot of hope for that. i think there are areas where we can were together. infrastructure done right can be a win-win for everyone. i do not know why he didn't do that at the outset of his presidency but it has to be done right. what will have a lot of the stretch run for not -- unfortunately, it will be the tea party republicans that are going to get religion on fiscal
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responsibility having advocated that religion during the tax cut debate, they will say we cannot --this unless there is it will be a challenge among republicans. is astructure done right bipartisan issue p why worked bipartisan immigration reform was passed in the senate here we should do that again. --will have to have unfortunately. >> i was begin with a republican from louisiana who is quite candid with me in that he said we want to get the president to build a type of consensus, trying to shake things up so to speak. but i have to be honest. it does not seem at republicans and democrats are anywhere close
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to getting its have of deal. what does the president need to step -- to say tonight to get folks back on the right track and avert another government shutdown? >> this has been a self-inflicted wound from the president you manufactured a crisis at the border in an effort to increase his leverage in conversations about a political promise he made that is become a political trophy for him. if security is your true concern, we can solve the problem. bordert way to solve security is with additional technology to catch bad guys. inmake sure we are investing judges so we can more rapidly adjudicate these cases, to help make sure we are fortifying other areas. roughly two thirds of the folks who are here without documentation did not come at the border. they came through airports. if that were the concern, we could solve the problem.
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the problem is it as a trophy, not really anything else. is on him, not on anyone else. >> you call that a trophy. to some extent playing a game of political semantics? is sayinge president a smart wall or steel slats or -- it is becoming quite a sophomore debate, no? >> this was not a debate the democrats brought on. manufacturedis he in order to try and get leverage. it shouldn't be a debate at all. i thought i heard them say once or twice or perhaps a dozen times, that the mexican government was going to pay for this. here we are. we have a proven track record on the issue of security. ,e should really be talking now tonight, about how we will make
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sure people with pre-existing conditions can keep their insurance. how do we keep down the cost of prescription drugs? the profiteering that is going on is unconscionable. about tradek you policy. semantics aside, the president said they would pay for the wall, but democrats and some in your party are skeptical. do you think democrats will ultimately get on board? what does it still have a long way to go. that is just not the case. the american worker, how do we make sure we are protecting the american worker. that is the most important interest we have to look out for.
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>> is there any bipartisanship for pharmaceutical countries? >> such an important issue. the cost of insulin skyrocket. there are a host of things we can and should do. why doesn't the federal government use purchasing power to negotiate lower prices? that is not spirit of ea does it. it at all to doing be done. the -- dead set against it. we have to put people ahead of pharmaceutical companies on this.
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>> 5:00 p.m. eastern time to preview the state of the union speech. do not miss the special coverage of the state of the union address. it begins at 8:30 p.m. eastern. this is bloomberg. ♪
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scarlet: goldman sachs shrinking his trading group.
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under the new ceo. as one analyst from ubs mentioned today. they are facing fundamental challenges in the trading business. it used to be the adoption of technology, what they call shrinking wallet share. everyone wants to figure out if that is a business that needs to be restructured. goldman sachs has a new management in place. particular attention is being paid because it perhaps needs some work on late hundred 22 main dollars for the quarter. the worst three-month performance in more than 10 years. no surprise management wants to take a hard and long look at that. ramp-up -- they have had a rough life, they have been tarnished significantly for what is going on. they managed to shine a light on the concern. >> they have been docked by questions on controls and
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standards in the last few months, especially with one, but we have a story today that is sort of a case of them going out , within the firm, traitor,out to a financial rules violations saying, you take a settlement just go away. was fired and levels it just leveling allegations. the same person is the one stacked by goldman trying to make sure they reach a settlement with this guy. i says this been addressed at all? >> they have set especially with
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one, that was the work of some employees and not a reflection of the culture. maybe it is still unfair. has all their business, clearly there are some parts of the controls of standards that deserves some more scrutiny. >> perhaps the new ceo's focus more of a predecessor's. you have been hearing they took first -- to social media for rare occasions really. ceo is not afraid of getting into a scrappy and what has he gotten into now? a hot button issue. it has been a long-running tension, what to do with the profit company's generate.
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companies might argue perhaps that is not the best use of money. send it back to investors. he of people like jamie dimon. so they can invest in the high-growth business and companies that need the investment. it is not clear which side to look right. it will become a political issue . bernie sanders are ready lashed out. , there areg back some benefits. this is bloomberg. ♪
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alix: -- abigail: thank you for joining us, mark. if you can believe it, it is the one year anniversary of paul --
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do you think more volatility is to come? periods ofys be some volatility. , of debt you have to go back to 2011. just about every year, there is a six week time where we get a big pop. are we going to see anything like what happened in february last year, probably not the that took structural things. but are we going to see the vix threaten 40 this year, probably. >> colorful language. >> let's talk about why we have the rally now. do you think that is because the fed has caused hiking rates, or trade, earnings, what is going
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on. terrible andis when you expect the worse and you just get kind of that, that allows for a really -- a relief rally. the fed rates is essentially a good thing. we are releasing some issues internationally, not domestically. proms.has real growth about the only source of growth is the united states. that gave the fed the wiggle room to stop raising rates. they hopefully raise rates later in the year because the rest of the world starts to recover. that is actually a bearish sign. the fed comes out and starts pulling rates lower, that is what i will look for, potentially real problems in the stock market. >> an interesting point that if they were to pull back and cut rates, that would be a sign the stock market and perhaps another signal for the volatility are higher the bit -- in the vix. the stock will trade now. on the bullish upside?
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>> yes. i am bullish in the s&p 500 for the next three months. the vix of fix options. it is the cheapest it has been since july 2017 when the vix oh 11. we are month out from the vix being over 20 p reckitt set up a hedge for a long equity portfolio using this option that costs next to nothing and will do an excellent job if we have a nice pop in the next month. april 2025, run by two. selling 120. it is a good hedge. >> alright got to leave it there. take you so much. from new york, this is bloomberg. ♪
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mark: representatives of the taliban and an afghan figures including former president karzai are in moscow for two days of talks. this is seen as another step in the process aimed at the afghanistan 17 year war. ahead of the taliban delegation told reporters the talks were fruitful and noted that 99.9% of afghanistan's population is muslim. classic court into the islamic -- the constitution

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