tv Bloomberg Markets European Close Bloomberg February 7, 2019 11:00am-12:00pm EST
30 minutes left in the european trading day. vonnie: this is the european close on "bloomberg markets." guy: plenty of moving parts on this side of the pond this afternoon. this,ing to start with what is showing on the fx market. cable rates bouncing back during governor carney's press conference. edove as thes bank cut its forecasts. stocks generally down today by about 1%. the dax is underperforming. one of the reasons is one of its more recent additions, wirecard trading down by more than 15%. we were talking to ed robinson a moment ago about what is happening here. the company is pushing back against ft reporting. this is the btp o.a.t. spread, i.e. italy versus france.
this is a one year chart. thiseason i am showing you is france decided to withdraw their ambassador from rome, a fairly dramatic step, after the french felt the italians were interfering into best of politics by supporting yellow vests protests. wewill hear any moment -- will hear in a moment about cutting the italian growth forecast. also seen a lot of action the past few days in the backend of the btp curve as well. certainly plenty of reasons today. vonnie: huge interest in this massive banking deal here in the united states. banks gettingust together with a new headquarters, and they will be taking share among the top three retail banks when they eventually get together. they will have a different name, dropping both names and both headquarters. it is helping both stocks today,
obviously one more than the other. the s&p 500 is lower, as are indices in general. there are many drags on the s&p 500 today, not least of which is twitter. it is going to stop reporting monthly active users, and that has the stock down a whopping 10% today. but again, there are lots of positive and negative stories as earnings season continues in the united states. guy: european commissioners have cut euro area growth forecasts for this year to 1.3%, down from 1.9%. brexit and china may worsen the outlook. discussed theci slowdown earlier on bloomberg. >> we still have solid growth in europe. we have still growth all over europe in any and each euro zone country come about with a slow down. but we need growth towards a certain situation in italy. as far as growth is concerned,
it is much worse. moscovici speaking to book -- pierre moscovici speaking to bloomberg earlier on. are seeing a significant slowdown in european growth. impact on credit is what? guest: i think it is already starting to get priced into european credit. the thing i look at is comparing the yield credit spread differentials between europe and the u.s., and what has been remarkable is since we've had the rally the beginning of the year, the u.s. has significantly outperformed europe. i thing that is already being priced into a certain extent. guy: is that going to continue? recently showed a significant tightening of lending conditions in the united states. that came was citi out with a report on this that we are going to see a
significant tick up as a result of this in default rates. is this widening going to be sustained? guest: it is interesting about the senior loan officers survey. some people say when you look at that time, there was a lot going on. maybe it was just a temporary pulling back in. i tend to think the numbers are the numbers, and you are right. the survey is something that is a good predictor of future default trends. for me, i like to see another period to see if we have the same reporting in the next survey of the banks, and then i think we will have better clarification on what the future looks like for default rates. vonnie: where are we in the credit cycle? guest: i think we are late cycle. again, focusing on the investment grade market, so many metrics of what we look at, but most particular for me is looking at leverage ratios. the leverage ratios the way we look at them on a median basis, we are back to levels we saw
back in 2002, a very challenging time for corporate credit. when you think about the behavior we've seen for u.s. companies, m&a activity over the last several years, share a buyback with debt issuance. that all speaks to me of late cycle. vonnie: in that situation, do you get out of investment-grade? do you wait for some to get downgraded? do you choose different sectors? guest: you do a lot of bottom-up credit research and a lot of picking through the rubble. the one thing i keep hearing about is what are we going to do with all of the triple be -- the bbb credit, particularly as the economy slows down. i think there are a couple of things to consider. the first is the dovish fed. it has given a little bit of runway to the sector. sick about how some of these companies got to their ratings. we talked about m&a activity.
generally they leverage up the balance sheet, make the acquisition, and slowly deliver over a two to three year time. what the fed has done is giving these more runway to meet leveraging targets. she way i look at it, all bbb are not bad. there are some that will hold their ratings. there will be some at the lower end that most likely come up in the economy does go into that downturn, will cross over into high-yield. guy: central banks around the --ld are how much longer is the cycle going to be as a result of this? guest: i think it buys us a little bit more time. i think there is this recognition that china, what is happening with the trade situation, has had a very depressing effect on the global economy. europe, and particular, is very
sensitive to trade flows. i have to believe that is part of what is going on with this downgrade of the european growth environment. there is an impact being felt. to me, if we can get some type of agreement and china, get global trade back on track again, it may give us a little more time for we enter into a more meaning for downturn. guy: stick around. we need to continue this conversation. lisa coleman joining us from j.p. morgan asset management. vonnie: let's check in on bloomberg first word news. reporter: bb&t has agreed to buy suntrust bank for $20 billion in an all stock deal to create the sixth largest bank in the united states. bb&t shareholders will own 57% of the combined company. both banks have a big presence in the southeastern united states. on capitol hill, representative alexandria ocasio-cortez has unveiled a package of
environmental proposals known as deal.een new the plan envisions shifting away from fossil fuels and other sources of global warming within 10 years and pitch progressive democrats against moderate numbers of the party on how far to go. a new poll indicates an independent presidential campaign by howard schultz would probably help president trump. data science firm optimist found schulz gets twice as much support from democrats as republicans. the leading democratic hopefuls polled worse against trump when schultz is included. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm courtney donohoe. this is bloomberg. vonnie: thank you. let's get a quick check of the markets now. the indices are lower, though off of their lows for the most part. 1%, the cospiwn
markets now. here is abigail doolittle. abigail: we certainly have a bearish day for stocks in the u.s. and europe. take a look at the nasdaq 100 in the u.s., down 1.25%, on pace for its worst day in more than a week. , but the down 1.7% technology sector index is down 1.8%, on track for its worst day in more than a month. -- all of this confirmed by a mild bid for the yen. investors frightened a little by global gross fears. we have some underperformers here. marv l technologies down 4.2%. apparently the demand for storage controllers is a bit weak. aftercroelectronics down
announcing they were acquiring 50% of capital share. micron down 3.9%. it is not clear what is happening here. if we take a look at the chart of the day in the bloomberg, this may help explain it. this is a three-year chart. in white, the memory pricing. flash in blue. out of 2015, both moving the right way. peeking for the stoxx, then both coming down. but take a look at the stoxx, higher above the 200 day moving average. that may just suggest the fundamentals are telling you this index may drop back down. investors perhaps getting a little ahead of themselves. guy: absolutely. getting a bit of breaking news related to the u.k. banking sector. the u.k. is said to be weighing
trimming its $24 billion rbs stake. this after we saw the earnings. remember this is a bank that really got rescued by the u.k., and the u.k. has held it ever since. you can see the impact that will have. a decent sized chunk could be coming onto the market. maybe a short-term hit. abd overhang would be reduced, and in the medium-term it would be more positive. on your bloomberg, you can see the relative holders of these stocks. the united kingdom of great britain holds 60.33% of rbs. let's turn our attention back now to the head of global investment grade corporate credit at j.p. morgan asset management, lisa coleman. do you like bank corporate credit? guest: we do. they've got a lot of capital. the asset quality is good. we don't have to worry about
funding for a lot of the banks. there are a few exceptions. regionally you want to be more careful about italy, particularly on this downgrade to italian growth. nervous of some of the french banks that have investment backing operations. but for the most part, there's a lot to like from a credit investor's perspective. guy: deterrence and story -- the currency story certainly works in their favor. the converse is what is happening on the other side of the atlantic. if you are a european investor invested into u.s. credit, if the dollar turns tail at this point in time, which some institutions are predicting, how much of that money is unhedged, and how much will turn tail if the dollar turns down? guest: great question. when we think about the composition of foreign investors, while european investors have been more adaptive, they've been less of an influence in the recent
period. really it is more the asian investor. think about the taiwanese life insurance companies. best as we can tell, they are unhedged credit investors, and they have been big in the market. you see them coming in heavy in the first quarter, and they have not disappointed us this january. these are investors we have to wonder a little bit if we start to get ethics volatility. does that cause them -- if we get fx volatility. does that cause them some pause? same with the japanese investors. what we saw from 2013 to 2017 were hedged japanese investors. i think why this fed action is so important, for the first time ,n quite some number of years investors now have clarity on the path the fed is going, so it is clear what the cost will be for hedging these back into japanese yen.
vonnie: what is the situation when it comes to currency? it does feel like we are in a period when they are not moving an awful lot even though we are getting a lot of changing of minds. guest: i would have to say i was a little bit surprised when we were talking about the dollar and the nervousness about the u.s. dollar depreciating, and what that would mean for investors that have put money into the u.s. market. yet, it really doesn't seem to be happening. i am a little before told by that, too, so not quite sure what to say to you on that one. i would expect that ultimately we would see the dollar begin to come off, but i'm not sure what to say from here. vonnie: you mentioned the yen. what do you end is a fate for the yen? i've seen -- what do you anticipate for the yen? i've seen all sorts of forecast. guest: what i really think about is less the value of the yen, but with the investors are doing on a hedge basis. when i am thinking about the
relationship of the yen, i am thinking about the differential in short-term yields and what that means for the investors that take about buying u.s. dollar assets on a hedge basis. guy: thank you very much indeed for coming to see us at bloomberg. lisa coleman, head of investment grade corporate credit from jp organ -- from j.p. morgan asset management. coming up next, more details on that rbs story.
the environment is not there. there is not enough feasibility. we have contradictions between regulators regarding what kind of banking model they want for europe. agenda for the next few years is really to deliver the plan. there is so much that we have to do, and if we achieve -- and i am very confident -- such value for our shareholders, this is priority. from there we will see whether european governments will be able to give more visibility to achievement of a banking union, where we will have not just the cost today of these banking unions. do not forget that we pay as a european bank more than 14% of net profit to the resumption fund. we have no benefit today. are we going to get benefits?
it needs to be completed, and before we have more feasibility, you will not see anything like this. reporter: a lot of this consolidation talk comes from germany. you did a market unit deal with commerce bank. do you think you would do anymore mna like that in germany? onst: our forecast is more disposal than acquisition. it was a unique opportunity. [indiscernible] reporter: so it needs to be very unique. guest: yes, in particular when our priority is to build capital. part of the plan just announced roadmap towards the cost ratio. the priority is more than acquisition. again, it was a pretty unique opportunity.
vonnie: that was the society ralerali -- societe gene ceo speaking with bloomberg. guy: rbs shares currently under pressure. the u.k. government is considering trimming stake in -- injected ejected 45 billion pounds into the bank, and as a result currently has a 62% stake in this institution. is the shares are down probably, if they were to be put out to market, would probably be done with some sort of discount. you would have a discount attached to the shares coming to market, and as a result, the market is already starting to price it in. obviously you have brexit coming up and other factors likely to diffuse the situation a little
further. remember, the rbs reports numbers on february 15, so i suspect we will find out more information as a result then. certainly a fascinating story, and having a meaningful impact in the market right now. the british government currently has a 62% stake still in this institution. vonnie: and shares are down 3.6% on that news right now. it is time for the latest bloomberg business flash. tose changes twitter made attract a wider audience do not appear to be taking hold. the social media platform gave a lackluster first quarter sales forecast. shares right now are lower. the turnaround appears to be taking hold at chipotle mexican grill. sales beat estimates in the fourth quarter, as did profits, a sign that delivery is paying off, now 13% of chipotle's
total. -- u.s. advertisers reporting next week, and we will see if they report the same or whether it is a change in market share. that is your latest bloomberg business flash. let's check those u.s. markets now. twitter shares first, a drag on the s&p 500. in trading right now, they are down more than 10%. the s&p down 1.2%. the nasdaq down 1.4%. dow jones industrial average down 1.1%. we are also hearing that senator shelby is meeting president trump at the white house right now over border security talks. could be a sign that sides and congress are at least talking, if not nearing agreement. it is not doing anything for
u.s. stocks right now. guy: let's talk about what we are seeing in europe as we approach the end of regular trading. ftse down a little bit, 1%. take a look at the damage being done to the dax today. that 11,000 mark, the critical neckline on the chart, is just about holding for now. down by 272 points. wirecard a significant factor behind all of this. as well, french banks front and center. the story around the dax is interesting, just at that critical level of 11,000. it will be interesting to see how the next few sessions go. the european close is coming up next. we will count you down. this isn't just any moving day.
this is staying connected with xfinity to make moving... 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. guy: less than 30 seconds until the end of regular trading this afternoon in europe. it is a sea of red. european stocks being battered.
dax is down. the cac 40 is down. and the german dax is down really hard. this is what we have. the ftse 100 is lower. look at the difference, the dax is down by 2.5%. and the cac 40 is trading down as well quite sharply. a negative day. i will show you the volume in a moment. we are floating with key levels. 11,000 is a really big level for the dax. pay attention to that, 39 points away from that. 285 points today. the cac 40 is trading below the 5000 level, which is also significant. on the 11,000vel is a on head and shoulders, definitely worth paying attention to. we have some really big downside moves when it comes to what is happening here in europe. we are down 2.85%, this travel
company, came out with warnings earlier on. and publicist is trading down sharply. ad giant this is the saying u.s. consumer companies are basically cutting spending. that could be a lead indicator in terms of the economic story. remember, high employment in the u.s., the how confident are they feeling right now? 2.18%.rysler is down by that is dragging down the u.s. oil sector, with paying attention to too. and while car is the other story. the volume story is a little on the light side. sorry committee little on the heavy side today. the blue line is where you would expect the market to become a the 30 day average, but as the day has progressed into selling
has become more aggressive, that spread has become wider and wider. and now we see the bulk of the volume here in europe. that is where the liquidity is. that spread has widened out. so as market selling has become more aggressive, the volume has picked up. vonnie: the dollar index is stronger in the u.s., well above 96. downa look at crude oil, back at the $52 handle, $52.30 right now, down in today's trade. and the 10 year yield at 2.66% as well. lower. we are above $1300 an ounce, but nothing like a few weeks ago. and let's look at the global macro movers, see if we can point them out. canada, obviously the oil move is impressing upon canadian investors as well, with the
candidate index also down -- canadian index also down. and you can see the impact on other hydrocarbons like gas and heating oils. guy: let's get back to the european stocks. arescotland rbs shares following. the u.k. trimming their stakes in the bank. nice story, certainly made me stop this afternoon. why is the british government thinking about doing this? presumably, we knew they were going to do this, but it is going to take a big loss. verys, the u.k. is in a interesting position because of brexit. we have the deadline of march coming. now, the bank will release earnings on friday. so before the brexit deadline, we have a window that the u.k. government can use. if you look at the share price
of rbs, it is 12% higher after this last year. this could be a good moment for them. i know it will be a loss, but they will not make profit on rbs. the bank has change over the course of the 10 years, now it is more of a u.k. bank, before it was one of the biggest banks in the world. it is just a different bank. vonnie: take a look at a tenure chart, it is -- ten year chart, it is phenomenal. what happens if the sale goes through? >> this would be the cheapest, this sale would be the cheapest price for the u.k. government. so, again, tough conditions for them. the outlook is not that great. vonnie: does it go back to the taxpayer is my question? what does the government do with the proceeds? >> obviously, it will go back to
the u.k. government, so it will be useful for them i guess. but, it will go back to the public hands. then again, it will be a big loss for them, but i think the target is not actually to make a profit on this, just to exit slowly from the bank and just remember that this bank was very ilede 10 years ago -- was ba out 10 years ago. that is a long time. guy: it is incredible to remember those days when it had to be rescued. thank you very much, stefania. this story has moved the rbs share price this afternoon. now european politics. france is recalling its ambassador to italy. that is after the italian deputy prime minister met with senior figures within the yellow vests movement. milan's bureau chief joins us.
dan, this is incredible. my question is, is this playing into the populists' hands? dan: probably a little bit, sure. they have been in full campaign mode basically since they won the italian election last much. and subsequently formed from the government engine. it is nonstop -- in june. it has been nonstop, the tweeting and facebook posts. this spat with france has been pretty heated since the immigration issue really flared up before christmas. and that involved the interior thester and things -- and head of the right wing leak. uaugue. it kind of calmed down, but then picked up with each side attacking each other on
immigration. macron making comments about the populist wave sweeping through europe. all of which ended up with the situation we are at right now. vonnie: this is hilarious. it is an argument between a certain extent italy does not have a functioning government and france's government is quite on popular these days, so do the people care that the ambassador was recalled? dan: [laughter] um, probably not a lot. but i think that certainly the base of this populist coalition, the league on the one side, five-star on the other, they like the forceful activism on the part of these two leaders. um, you know, whether it is producing results, that remains to be seen. if we look on the economy side, not good news coming out of brussels today in terms of growth. so, whether it is going to boost
them as we go into the european elections remains to be seen. liefgreen.you, dan busy day. vonnie: let's go to the latest on brexit again. the u.k. prime minister speaking in brussels after meeting with eu leaders. >> it is not going to be easy, but the president and i have agreed that talks will now start to find a way through this, to find a way to get this over the line, and deliver on the concerns the parliament has until we get a majority in parliament. vonnie: so we go to brussels. maria, we are concentrating on things like the fact that there was no kiss between the two of them, or the fact that donald tusk came out and made some very fiery comments overnight. because there is nothing else to talk about, the positions are not changing, the actual policy positions -- is that true? maria: that is right.
but thetle has changed, u.k. delegation was. about the comments -- was furious about the comments made yesterday. theresa may did not say a word. the body language said it all and it did not help the case. in public, she was defiant, she said i will deliver brexit and do it on time. no extension of article 50. but we understand she brought up the idea of limiting the backstop, but that is something that the european union will say is simply not possible, it must be in there and it must be no limit on it. so in terms of technicalities, nothing has changed, but they agreed however to meet at the end of february. and they will meet again on a more technical basis next week, but nothing really has changed. guy: maria, given the fact we have had more meetings and an
ongoing lack of progress being made in the process, are we heading for that massive moment, that summit win this all gets decided? is that what brussels is gearing up for now? maria: that is pretty much what i hear, that day in and day out that this will go down to the wire. we are looking at a summit that will take place on march 31. and we will see that breakthrough. but the question is the irish government. and the only tension is, as we get close to that moment of a no a no dealt, almost brexit and by accident will you get countries like germany stepping in to tell the irish, back off, there must be a deal on the backstop. that is not the case. eu unity behind ireland at this point is complete 100%. saide: i spoke with -- who he spoke with the prime minister
about the possibility of a brexit extension. he is in the u.s. to maybe extract some promises from u.s. politicians that there might be difficulty down the road for any u.k.-u.s. trade talks, should there be a border. but let's go to what he said related to an extension. >> ireland has no problem with an extension, as long as it serves a purpose. if we need more time to give reassurances that the u.k. needs in order to ratify the withdrawal agreement, if we need more time to change the future relationship declaration, which is a document that outlines what the u.k. and eu envision as a relationship permanently between the two of them, if that takes more time, so be it. pretty sanguine about the idea on an extension. would the european union agreed to this too? surprised thats
the u.k. has not asked for it. they are confused by the fact that prime minister theresa may says, i will not extend it, i will deliver the brexit on march 20. i would say that this has everybody in brussels, every policymaker discussing, what is the game plan behind the prime minister? vonnie: ok, maria, thank you. we will talk about this again shortly. guy? guy: let's take a look at where the european markets have wrapped up the day. we are now through the auction process. and we have continued south. i want to show you something else as well. it has been a turbulent day for one of europe's biggest tech companies, one of the biggest fin tech companies. it has been absolutely dumped today. and it is pushing back against reporting. but let show you what is happening with the close. the dax has sold off, as has the ftse 100 and cac 40.
dax 22 points above the 11,000 level, down 300 points today. the ftse 100 down by 80 points. and really a decent selloff during the auction process. the cac 40 down 1.84%. much market action to be discussed. we will carry on a conversation at the top of the hour. live on digital radio, "the cable" show will be on the airwaves. jon ferro in new york, i will be joining him in london. this is bloomberg. ♪
till $7 billion worth of art in 2018 with great revenues in the americas and asia. let's try to find exactly what happens next and what kind of the year it was. we are joined by their cpo. i want to start with the big picture. and figure out exactly what is happening. we have spent most of the program talking about the global economy slowing down, it is slowing down in asia and we have seen the reserve bank of india cutting rates, the australian has been into the bank of england was cautious today. and the european commission has cut its growth target for europe. we see how the markets slowing down -- housing market slowing down. but how does that relate into your world, is there a connection or not a connection? walk me through what happens. >> if you look at last year, it was a record year for us.
and we reached the $7 billion mark in dollars, which is a record for christie's, which demonstrates that our market is very resilient and people are looking for unique works of art, independently of the economy context, in some ways. at the same time, it is true that confidence and being in a good mood is something important to us. at the same time we are free of these economy contacts, but we also depend on them. so, that is why we are watching the economic perimeters. guy: how do you see confidence right now? >> i think as far as our business is concerned it is good. salesook at our economic in london this month in march, supply has been a very good. and the response we have some potential bidders and buyers has been good. so we are confident. vonnie: there is continued
global demand, are there regions that are disappointing? >> yes, i think that what we saw last year was a strong and resilient america, as usual, in our field. it is the country where by definition every year on the market we have a huge collection and new collectors. asia has remained strong. at the end of the year, 2018, it was slightly more challenging in hong kong, but probably for specific reasons. so these two regions, america and asia, in terms of buying power, are the leading regions. europe remains very strong as well, but more on the supply side. vonnie: are there markets where you are taking certain types of work, because you know that they will sell better, they may be immune do downturns? are you shifting your mix among
regions in order to better cater for those with wealth in those regions? >> yes, that is a concern for us or a priority for us. we really want to be president where our clients are, and also sometimes precede their taste and try to convince them to purchase new categories. in asia, we have been introducing new categories in western art. that said, yes, there are specializations for each place. new york is the ideal place for impressionist and modern, as well as contemporary. london is strong in impressionist and modern. hong kong for asian art. paris for decorative art. and we also tried to find the niche in each of these locations. guy: auctions are excited to go to. nevertheless, private sales,
what is going on in private sales? presumably, this is a fast-growing part of the business and i'm curious in how this will develop and what it means in terms of the revenues that you generate. >> that produces 10% of our revenue to date and that is a part of our business we try to expand. it is complementary to what we do with auction. our digital sales are up. we are focusing on live auction. but also online sales and private sales. guy: in terms of what you are charging, you have picked that up a little bit. is that something you have been able to do with confidence, talk to me about your relationship with the customers as you are pushing through these auctions. oure have adjusted buyers premium. over the last 10 or 20 years,
our business model has changed. 10 or 15 years ago, we were charging almost equally the sellers and buyers in terms of commission. today, the market has changed, because it is different for us. the competition on the selling side is stronger than ever. but means we have increased our buyers premium, because we need to be more competitive on the selling side. vonnie: how much is digital a part of the business? christie's, it is a well-known for its options and -- auctions. is digital a safe place to invest? are you are also embracing blockchain. >> digital is a strategic aspect of our activity. not such in terms of revenues. it is only 1% of our revenue, so it is not critical. but more than 40% of our new buyers every year come to us
through online sales. so we need to invest in this channel because it is just like development for us, it is investing in new collectors. they go to christie's this way much more than by being in an auction room. we need to be present here. of course, no need to say that the internet and a digital space is also a major segment for us in terms of communication, like marketing through online. it is something that we are investing much in. guy: thank you for coming to see us. the ceo of christie's, thank you very much. vonnie: a look at u.s. markets. we are looking at the selloff deteriorate. the dow jones down 1.4%.
vonnie: it is time for our stock of the hour. chipotle trading above $600. kailey leinz has more. he is doing a good job in his first year. >> they are beating expectations on earnings, margins, you name it, especially comp sales. you can see the chart, this is the sixth quarter in a row that comp sales have grown. this quarter was noteworthy on where the growth came from, they saw an increase in customers. traffic grew 2% in this
quarter, that is a good sign and it is being driven by their efforts and delivery, as well as digital, which grew 66% this quarter, now 13% of the revenue overall. guy: page funds -- hedge funds have been paying attention. what will we learn? >> people will pay attention to the new ceo. he is still the second largest holder. and you also have renaissance capital in hedge funds. so when we get the filings, we will look for any color in hedge fund positioning or changes on chipotle. vonnie: kailey leinz, thank you. and that stock is one of the better performers today. markets in general are lower. the nasdaq is down 1.67%. "balance of power" is next. this is bloomberg. ♪
headquarters in new york, i'm david westin. welcome to "balance of power," where the world of politics meets the world of business. on the brief today, greg on what the president has called ridiculous partisan investigations. from milan, the growing feud between italy and france. and maria in brussels on negotiating brexit down to the wire. greg, there are reports today that there will be further investigations on the president and the president has said that is ridiculous. there was a hearing today, where they say they are going to ask for his tax returns, which they have the right to do. greg: absolutely, this will be the first, not the last brawl between congress and the president. he said two years -- he is not not is to this because he has had two years of republican control. all of the problems with his taxes, that is something that the house understands it will be a big issue. david: