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tv   Bloomberg Markets Americas  Bloomberg  February 13, 2019 1:30pm-2:00pm EST

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islamabad on february 18. a previously scheduled round of negotiations will take lace the following week in qatar as the u.s. seeks an end to its longest war. acting u.s. defense secretary patrick shanahan met with the nato secretary-general jens stoltenberg in brussels today. they held talked before the start of the nato defense ministers meeting. >> the preparation and what you outline in terms of the inf, burden sharing is important but also the heavy lifting that we plan to do. your amazing leadership, in terms of generating more cash, our real task, now is translating that into results. that theltenberg added burden used to be shared by
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allies and that europe and canada are investing 100 billion u.s. dollars for defense from 2016 through 2020. vice president pence is in poland starting a four-day visit to europe. the vice president will take part in international conferences and visit historical sites, including auschwitz. the vice president met with american and present -- polis troops in a hangar today. his stuff comes as that country lobbies washington for a permanent american base on its soil. president trump says he and his aides will be looking for landmines when they review the final text of a border security agreement. the deal would give the government open but provide a fraction of the money the president has been demanding for his border wall. mr. trump has not indicated whether he plans to back the deal. he made the comments as he olombia's president to the white house. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700
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journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. live from bloomberg world headquarters in new york, i'm shery ahn. amanda: live in toronto, i'm amanda lang. welcome to bloomberg markets. we are joined by our bloomberg and the an end bloomberg audiences -- bnn bloomberg audiences. shery: president trump says he will give the border deal a very serious look. lookresident trump's on trade electric takes a new three wheeler for a ride on the streets of vancouver. let's get you started with a quick check on the major averages.
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u.s. stocks gaining ground with the s&p rising for a fourth consecutive session. energy, financial leading the gains. utilities is the only sector in the red right now. energy stocks being boosted by wti which is now continuing to gain ground in a rebounding from the two week low, really close to that $54 a barrel level, even though we got a report today about u.s. stockpiles rising. we are seeing a broad optimism in the markets, amanda. ianda: despite that optimism, want to drill in on the latest survey from bank of america merrill lynch, representing money managers. what you're looking at is the amount they are allocating to cash. highest in a decade. it raises that question of just where the risk on appetite is. incidentally, it pairs with another piece of the survey that says emerging markets may be coming out of favor. one good question is where the
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cash goes now that it is on the sidelines. shery: one thing i'm looking at right now is what is happening in europe.rowth we have seen those economic numbers out of europe really ly underperforming and missing estimates. that is a concern for global growth. fed and otherhe central banks starting to turn dovish. theda: interesting to see worst of all worlds, as the chief economist at allianz said, if france stop supplying and germany stops producing, you are in trouble. that is what the data is showing. the whole euro could be tracking 41% growth, and that is not enough for the rest of the world, let alone the weaker parts of that economy. shery: those numbers not looking great.
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european growth really at risk of not even barely topping 1% this year. amanda: the cost to consumer goods and services unchanged in the u.s. in january thanks to falling gas prices, another sign inflation is still no threat to the economy here, so how should investors be digesting that news? we have a couple of guests. inflation clearly not a threat. investors?this leave just enough inflation is what you want to signal there is growth and health in the economy. >> i think we have that. you are looking at study inflation trends. you are right, we are focused on inflation breaking to the upside but we also don't want to see inflation weakening below the fed's target level. the main take away from this report, particularly looking at the underlying inflation trend, away from food and energy, you basically continue to see mary study numbers across several key
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categories. you continue to look at numbers that are neither accelerating or decelerating. in some ways it's the best of both worlds for the federal reserve and the markets. headlinespite the soft prince, we see the core cpi annualized rate increase to the fastest rate since march. if this pace continues, will the fed have to reconsider its paws? >> as you said, the fastest increase since march. not a coincidence. but we all recognize that despite these numbers being tend toly adjusted, we see higher inflation prince around the start of the year. so i would very much withhold judgment on the sustainability of that very high frequency growth rate. i
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tend to see higher inflation prince around the start of the year. we could look relatively firm, but beyond that, the numbers will come off. that has been the pattern in the spring. the second thing is with respect to rethinking the fed, i do believe it is premature for the markets to be concluding definitively the fed is done, the hiking cycle is over, the next move is a cut. in general, the data we are seeing in terms of growth and inflation, i think, still leaves an open question about even the direction of the next move, let alone the timing, in the sense that if we see later in the year inflation trends holding steady, wages continuing to firm, and more importantly financial asset prices, financial condition getting very accommodative alongside healthy economic growth, it may certainly be the case that the fed feels it's appropriate to nagy rates higher you just to take it from the low end of neutral into the neutral range. i don't think patient is in any way, precludes the fed taking
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action later this year. some of themention data points that they will watch in this data driven environment. in terms of what would trigger a rate hike -- for some it would surprise. it seems the market is interpreting this as real sidelines language. what is the piece of information that they will be watching closely to say that we are not done yet? >> i want to be clear, i also think the hurdle for the fed to continue raising its high, i think they will be patient for an extended period and assess the impact that all of the rate increases that we have seen over the last two years has on the economy. i don't want to disagree and suggest that what the fed is doing is wrong, but you can certainly envision a scenario where we do see the economy more or less back where it was for most of last year where you have growth at above trend pace, unemployment rate coming down. and again, as inflation is not
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rising, the fed cannot stay on hold based on economic data. but there is the other part of it in terms of financial conditions. the fed is watchful about overheating in the financial markets as they are about an overheating economy. depending on how things go, it certainly could be that later this year the fed feels it is prudent, to prevent the kind of imbalances in the financial sector, for further action on just to get closer to the midpoint of neutral, as opposed to the low end of the range. shery: we heard from the cleveland fed last night, saying that the market volatility we saw in the fourth quarter was independent of the balance sheet, that the runoff has been gradual. what do you think? michelle: i find it difficult to the volatility and particularly the weakness in the equity market on the balance sheet policy. has been, the fed roaming down its balance sheet
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for well over a year, the equity market for most of that has done well. arguably, i raise the point, the focus being on global liquidity. perhaps the markets beginning to look ahead to the ecb, the end of their purchase program, recognizing that other central banks globally may follow the fed. so globally, liquidity concerns some of that late 2008 volatility and markets, but i don't believe the balance sheet policy has really played into the volatility of the equity markets last year. i don't believe it is contributed two problems in terms of the front end of the market. from my standpoint, the fed is right to continue to monitor, believe flexible, but for the moment stick with the plan. shery: you to have you with us, michel gerard. coming up, avoiding the shutdown. will president trump signed the bill? we have more details ahead. this is bloomberg. ♪
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amanda: avoiding another shutdown. president trump is said to be reluctantly prepared to accept the congressional border deal that is proposed, despite the cut in funding for a border wall. he spoke to reporters this morning from the white house. >> we are going to take a look at it when it comes. i don't want to see a shutdown. shutdown would be a terrible thing. the point was made with the last shutdown, people realized how bad the border is, unsafe the border is. a lot of good points were made, but i don't want to see another one. no reason for it. amanda: what does is our bloomberg government reporter jack fitzpatrick. put some context around us.
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obviously, this has become more about symbols and emblems. is it right to say that there has been no border wall built? all of this fighting over the budget but the wall is what it was the day the president took office? the process of building a little bit more from what was appropriated in fiscal 2018. if they are not building already, they have obligated those fund. it is probably more of a pedestrian fencing, no concrete wall. this would add about 55 miles to it in this bill. goes to the campaign promises by president trump, really the goalposts have shifted quite a bit. shery: there have been some rumors that the president could be transferring funds from other programs as well. what comes next if this bill is signed on board security? >> i think he has three potential options. one that lawmakers are talking about, roughly $600 billion available in counter narcotic military funds that they say
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they can use to build extra fencing. they would have to request permission from congress on that . there has been a discussion of a national emergency declaration which would allow him to go to congress. that would be subject to a lawsuit. he can request reprogramming authority from congress. republicans may like that, democrats less likely. those are basically his options after this bill. shery: jack, thank you for joining us. now to trade. president trump indicating he is flexible on the march 1 china bothf deadline as countries continue negotiations this week. earlier today, president trump was optimistic when he address the ongoing talks. >> it is going along well, we will see what happened but i think it is going along well. they are showing us tremendous respect, something that countries didn't used to show the united states, they are showing us respect to now. shery: let's bring in shaun
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donovan in d.c. how close are we to that very enforceable trade deal that the administration wants? i think the president is very keen to continue portraying progress. you have heard that line about the chinese paying respect to the u.s.. that is something that we have heard from him over the last two years that he's been in office, that the chinese have given him more respect than previous occupants of the oval office. when you talk to people who are briefed in the room, in some places people in the room, what we are hearing is there is still a ways to go between the two sides. they are a long way apart on some of the key structural issues that the u.s. is insisting on. that gets into intellectual property, subsidies in china. that is why we are seeing this march 1 deadline slip. a real assumption here in a lot of quarters in washington that these talks will continue well
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into march, certainly. amanda: you have a great story today in the terminal basically comparing son of president trump's policies to that of alexandria ocasio-cortez. more socialist than you would expect. the last weekat and look back at the state of ,he union address last tuesday the president has been stepping up his attack on socialism. there are some people in conservative quarters, libertarian quarters, traditional republicans here in town in washington who look at trump's trade policy and see that as emphasizing a greater role for the state, a much more interventionist trade policy than we have seen in the past. if we were looking at a democratic president in the white house, they would certainly be accusing him of socialist trade policy, trying to direct the free market, rather than letting the free market do its work. shery: you point out it is not
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just within the u.s. at the president is trying to do this, but also tried to do it in china. explain that to us. then: a big component of talks is how to close the trade deficit with china. one of the ways the u.s. is seeking to do that is by getting the chinese to increase their purchases of commodities like soybeans, we have been hearing a lot about that over the last few months of the natural gas, even airplanes. the nature of that request demands a greater role for the state in china. the irony there is that these talks are in part about trying to reduce the role of the state and the chinese economy. trying to get some reforms that drive china tour the market economy. when you are asking them to an increase in purchases, you are asking them to intervene much more and take a bigger role. and it is not just china, we see that in the negotiations with china and mexico, talking about the u.s. pushing the canadians to adopt steel quotas, for
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example, which feels to the canadians as an odd request from a neighbor that has often been a champion of the free market. amanda: sean, great to have you with us. coming up, it is all electric, like a tesla but priced like a ford fiesta. an electric vehicle that you have probably never seen before but one that may define -- redefined the commuter car. this is bloomberg. ♪
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amanda: you have probably never seen a vehicle like the one we are about to show you, but a publicly traded canadian company , if it has its way, it will be long before you see a lot of them. all electric like a tesla, priced like a ford fiesta, and one of the weirdest looking vehicles you have ever seen. introducing the solo. >> a clean energy electric
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vehicle for one person, an opportunity that was too great not to seize. >> the three-we'll ev the country has 20,000 preorders. to meet demand, it will master do an updated model in china. >> the concept was always to have a vehicle that could be assembled quickly, efficiently, and with high quality in under three hours. >> the solo has 100 miles of range and charges in three hours. it is designed with a specific group in mind. >> the company says 83% of north american commuters drive to work alone each day. the question is whether those commuters would be prepared to drive to work in something like this that you can just fit in. company's optimism is not backed up by the numbers. >> seven out of 10 of what the
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consumer is buying is the truck. the idea of a single seater limits to -- you to a very limited user. >> there are some that liberties as more promising. they are looking at car sharing and 711 and dhl are already testing deliveries. >> you don't need to have two seats in a delivery vehicle. investors still need convincing. shares have fallen since the company ipo last august. the ceo says the solo will be profitable. >> 25% growth profit is built into the design of the car. >> the company hopes to deliver in0 china produced solo 2020. longer-term, production could be brought back home. general motors announced in october it was closing its offshore site after manufacturing in canada. they are also eyeing more passengers for the sporty two-seater all electric roadster.
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but can it handle the challenge of meeting billions of dollars of preorders? amanda: shares of a lecture mechanic a are soaring today, gaining 120 percent off of that bloomberg story. bloomberge for the business flash, the biggest stories in the news right now. as many modelng threes to china as it can before the trade war truce with the u.s. expires on march 1. elon musk fears the two countries could ratchet a tariff backup that would make the electric cars more expensive in china and raise the cost of components the people's republic sends to their u.s. plant. levi strauss has filed for an initial public offering. the iconic maker of denim is betting he can overcome growing cap petition the apparel industry. according to a report, the company hopes to raise $600 million to $800 million.
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it intends to use the proceeds in a variety of ways, including for potential acquisitions for other strategic investments. that is your business flash update. remember, sears filing for bankruptcy last year. there is one unexpected person caught up in the middle of this, and that is maroon 5 lead singer adam levine. pays now asking sears to $390,000 to protect his kmart clothing line from potential damage in that bankruptcy but sears seems to be offering less than half of that amount. amanda: a cure payment. they deepened their relationship not long before the bankruptcy court protection. one of the perils of course doing this is with a retailer on the ropes, they need to keep going and hope for the best. you are taking a bit of a risk here. interesting to see this big name brand associated. contract wask that
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extended until 2020 but i have to be honest, i didn't know he had a clothing line. amanda: we may not be the target market. shery: i do shop there, but i noticed. they do say there is a female line. amanda: we look forward to seeing that on you. you can interact with all the charts you have seen on the television at do tv . analysis that goes behind them with all of the data available on your terminal. from toronto and new york, this is bloomberg. ♪ the latest innovation from xfinity
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like never before store. the xfinity store is here. and it's simple, easy, awesome. mark: i am mark crumpton. a u.s. delegation led by robert lighthizer and stephen mnuchin continues the latest round of trade talks.
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chinese negotiators are hoping to stave off president trump's threats to hike tariffs on chinese imports. this is based on the u.s. complains that china steals -- an american service member has for spying on behalf of the iranian government. after she allegedly helped iran target former federal agents. over wants more control usage of facebook's popular messaging service, whatsapp. it's been used to spread violence and pornography throw the country. refused,has


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