tv Bloomberg Markets Americas Bloomberg February 25, 2019 1:00pm-2:00pm EST
bogota, colombia today following a weekend of violent clashes in venezuela over blocked humanitarian aid. he told venezuelan juan guaido and colombian president ivan do care efforts by president nicolas maduro to block the aid has only "steeled the resolve of the u.s. against the regime." president trump oil prices are getting too high. in a tweet, he told opec to "relax and take it easy." he added the world cannot take a price hike. the price of oil is near a three-month high. goldman sachs said crude could in the near future. a former worker of president trump's 2016 campaign has filed a federal lawsuit claiming mr. trump abruptly grabbed her and kissed her. she says the encounter happened during a campaign meeting in august of 2016 in tampa, florida. the lawsuit first reported by the washington post, she -- the
allegations quoting here absurd. hitting an all-time low. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. >> it is 1:00 p.m. in new york, 6:00 p.m. in london, on vonnie quinn. welcome to "bloomberg markets." ♪ vonnie: from bloomberg world
headquarters in new york, here are the stories on the bloomberg and around the world we are following. u.s. stocks are higher. the s&p 500 is sitting highest since november as president trump says he is postponing the date for boosting tariffs on chinese imports. relief, a cell that -- for $21 billion. deutsche bank chief international economist is here with us as three headwinds for the global economy this half hour. let's get to those markets. halfway into the training -- trading day come abigail doolittle is with us. abigail: lots of green on the screen. take a look at the dow and s&p 500, nasdaq, solid gains. higher. investors paring the games to some degree. over the last couple of days and weeks, very strong for the nasdaq. days.over the last 11 investors climbing the wall of
worry. ronnie was talking about the ge, up 8.9%. the ceo making good on his promise to help turnaround this company he has known for doing that thing through deals, which seems to be the case. on the air, -- on the year, look at these gains. on pays forup 19%, its best start for a year since 1987. overly what happened in 1987 later in the year doesn't happen. the russell 2000 really a performing up 26% during those stocks are seen as a buffer around trade tensions. speaking of china and trade tensions, let's take a look at these indexes to helping into the bloomberg on the. going back to the december low. if you recall on the day before christmas, we had a selloff in the u.s. then it was off to the races. in the blue, s&p 500. in white, shanghai composite,
which was staying negative for the end of the year into the early year. in yellow, the all world index. we see the s&p 500 in the all world index really climbing up 15% and 19% respectively. up until last week when there was more hope around trade. on this possibility of a deal current session, overnight, having its best day 500 in the all world index really climbing up since 2015. let's see if it sticks around. some are talking about if night -- if a deal comes through, it could be a sell the news type of event. let's look at the retailers. we have strength ahead of macy's reporting tomorrow. they pre-announced that quarter. the stock up and down. investors wanting to know what the guidance for 2019 will look like. kohl's andinfluence nordstrom which will be reporting this week and next week. vonnie: looking forward to those earnings. president donald trump's decision to extend the deadline on tariffs on chinese goods is being welcomed by equity
investors. but also by economists. biggestses one of the risks hanging over global trade investment and sentiment. ,et's get thoughts from torsten economy -- economist at deutsche bank and use of the global growth was deteriorating. does this help this extension of the deadline? torsten: it definitely helps. some of the challenges we are facing, some of them are temporary. the trade war, as much as it may have a long-term consequence, at least the solution to getting some clarity about what will happen is at least having a feel that it will be temporary. the trade war, as much asother . things that we have a harder time changing and dealing with. economy looks good. there are risks to the downside that are more structural in nature. the trade war is certainly something that will be good news. temporary.is only if you are in business and trying to make decisions, do you decide that now i can make those decisions because there is a three-month reprieve?
economists believe by 2021, 70 5% of them will see a recession. --sten: the risk is that is that this is longer lasting. it is a difficult guessing game. is this it? or is this the beginning? to see morehave demands from the administration for the chinese or the chinese deliver. it basically remains open. markets,it basically remains op. markets, particularly today, see this as temporary. that is likely to be, at least for now, providing more clarity. vonnie: how has the high-frequency data for you been? to me it seems like it is confusing. upgot wholesale inventories, 1%. there were other high-frequency data points that were not healthy looking. torsten: a little bit tricky. three things we worry about. the rest of the world is not doing well. beentunately, europe has deteriorating, germany included. that is an interesting thing for the u.s. because so far it has not had a drag on u.s. growth.
that is something we are worrying about. will that go away or be a permanent problem? slowing down to read the global factors have been important. the second factor has been domestic issues. the trade war, the shutdown, ceiling, it has provided uncertainty. sentiment indicators, small business sentiment has started the main conclusion is him of these things are making a difficult point to figure out whether these risks are something that are headwinds temporarily or whether this is something that is more permanent. vonnie: student debt. torsten: in particular for the housing market, that is important. is critical for whether
people can get credit for mortgage. vonnie: speaking of the fed, it begins the review process of the monetary policy framework. we did hear something interesting on friday from mary daly and john williams, perhaps attached to this emphasis go fed. this idea of average inflation targeting. what is different about this? torsten: normally, they say you need to have an inflation target of below twoi. -- wtwo. now that the dollar has been opened here, for a long time, the fed has been undershooting the target. the fomc members, including daily and liens, are talking about maybe we should allow overshooting and may be one way to do that is to talk about average inflation targeting. not targeting to research, but if it is over a longer time frame, it could be fun. vonnie: is in the idea of it being average for a certain period of time in the either?
-- ether. torsten: absolutely. that is been the understanding. we should never expect inflation to go up two and then go sideways. it is always the case that we fluctuate around that we have not been above two for a number of reasons. we haven't had enough demand. we haven't been close to full capacity. it is notanswer is too different from the framework they have today but the idea is that they want to open up their idea to say maybe we should allow osu. if it comes, it is ok. we don't need to aggressively raise interest rates because we are allowing overshooting as long as the average inflation rate is around two. vonnie: dawn of the other things that caught my eye is mary daly said it matters more than now. more than one? -- when? torsten: you have inflation expectations, the outwork. think about what is the
importance of these variables. the most important variable has been inflation expectations. that is nothing new. inflation expectations measure on your bloomberg terminal have been drifting lower. there are some worries when you look at the professional forecasters, that inflation in the long run had come down. but the big picture is that inflation expectations are critical for keeping inflation anchored around 2%. if anything, they are drifting to the downside rather than the upside. vonnie: what is your prognosis for the economy? do we head into recession? can the fed stage that off? torsten: plea don't think we will go into recession. we think the three worries, external growth, domestic issues, and the late cycle features, those things are holding things back. on friday, we will see how it is rolling over. that is the most important leading indicator for gdp.
if the labor market holds up, then the fed will feel vindicated that this will be going with rate hikes. the big issue is there a leading indicator for the rollo and sentiment, both from small businesses and from isn and from consumer sentiment? housing data that you mentioned earlier is also beginning to show signs of weaker growth. not a recession, but generally grinding lower. a little worrying in the bigger scheme of things. vonnie: briefly, your gdp forecast? torsten: we have gdp declining a bit from q4 two q1 to we think it will rebound. this will depend on what you are thinking in terms of whether these headwinds are temporary or whether these headwinds are more permanent. vonnie: torsten slok, thank you for joining us. chief economist at deutsche bank. firms accountable for their performance and we look next at a unique barometer tracking of it, middle market companies.
more in money -- more money goes into equity, is value being harder to find? the lifeblood of private equity portfolios can be hard to value as an investment class. their middle market index talks over market companies. joining us on set is ron can come managing director at lincoln international. and anchored jason kelly joining as well. >> hi. vonnie: let's get to run. define middle-market private equity first? ron: we define it as companies than $100less million. there are all kinds of
definitions. the more classic is 50 million for the index purpose. it was $100 million. as it turns out, the average index is around $30 million. jason: this is like gold to investors. these companies are hard to value. unlike a public stock which we can go and look at any day of the week. these are closely held companies. often owned by private equity firms. theyet your index shows are growing in value faster than some of the public counterparts. ron: they are we have the ability to get the financial information on 1500 privately held companies to most which are owned by private equity firms are because we have this incredible amount of information, we teamed up with professors at the university of chicago, steve kaplan, one of the experts. jason: yes. ron: professor of accounting, they helped us create this index. vonnie: one of the evaluate --
what are the valuations showing you of their growth and the different sectors? theseirst of all, companies have done extremely well. over the last five years, we started the index for q1 2014 and since it's inception, it is five years old, the index has s&pn 10% as compared to the which is around 6%. almost 50% increase. and returns from these private companies compared to the public on -- public company counterparts. jason: what is driving that value? there is a coming from? are there specific sectors that are doing better, what of the levers that they are pulling to make these more valuable? findbecause the index to it as enterprise values, we are able to look at the multiple and the earning. interestingly, it is the performance driving the growth more than the multiple which is a good thing. talking about sectors, technology has been on fire. that has consistently done well. well until have done
the fourth quarter. that came down a little bit. energy lags. energy has been the laggard of the sectors. vonnie: we will get back to that in a second. i wanted to mention this morning, i was speaking to an accompanist who said he is worried about private equities. he is not sure if it will impact other asset classes or other pools of money if something happens. what are you seeing from your vantage point? ron: i think so far things look well. purchase multiples are on the higher side. i think the average multiple around 10%, 11% are not uncommon for companies to go for 12%, 13%, 14%. leverages are also high. the average leverage for the portfolio companies we are valuing is around 5% to 6%. you are seeing them valued at seven times. they are leveraged. they are hanging in there. they are doing just fine. have saidrything you would beg the question, are we moving into more of a sellers
market than buyers market for private equity at this point? do you get the sense that the sponsors are wanting to get out of some of these fast depreciating assets? been in a we have sellers market for the last two years. most equity groups would like to sell their portfolio companies at these high multiples. they also have cash to deploy, so they do need to buy companies. a lot of times you will see them do add-ons to be able to figure out a better way to blend of the multiple. vonnie: where does it end? it does feel like there is a lot of money and a lot of new funds -- maybe not the spectrum of industries but certain industries in particular. ron: where it will end, i think everyone is scratching their head. i will say the lenders and in equities in five years. there is a good chance they will be holding it during a recession. equities know that if
they buy a company today, there is a chance that there will be a there are some companies that are doing well. otto, building products companies, which you know will have problems in a downturn. they are going at a slower multiple. jason: what is the biggest worry in get from the companies the valuations? what are you worried about in 2019 looking at this data? ron: the one thing that is interesting about this stuff is pro forma adjustments. that seems to be the norm. when these come in his report. it happens with public companies as well. we value 1500 portfolio companies. some a 5% have pro forma adjustments. vonnie: is that a trend? ron: yes. vonnie: what i mean is pro forma adjustments, what do they put -- what do they typically account for? ron: sometimes they are for valid things that they will shut down a factory, playoff people. sometimes -- lay off people. sometimes it helps justify the higher purchase prices. jason: so fascinating.
love that. vonnie: we will have to come back to this topic. thank you for joining us today. jason kelly, thank you. quick programming note. this become a jason will be at the international conference. he is going to berlin and speaking with top names including brookfield asset manager, and carlyle group's david rubenstein. that starts wednesday. on markets, ge is selling its farm operations to dan her. keeping the rest of its health care division. we will dive into what it means for ge's bottom line. this is bloomberg. ♪ ♪
turnaround to orchestrate something. to walk us through what this means for the balance sheets and their aggressive recovery, our bloomberg opinion columnist joins a spirit you have to imagine 20 plus billion dollars is a nice out. but is it enough for the longer-term book? >> $21 billion is a lot of cash. i think this does go a long way in terms of resolving ge's balance sheet issues. they laid out 50 billion that they are going to need to bring in to resolve their overall debt issues. getting some cash from the resolution of the merger with their transportation unit. as you remember, the original that debt andve pension liability on to that. that plan has been shelved. you are still keeping that pension and death liability in the fold. getting the cash flow from the health care business. i think this is obviously a significant step forward. there are still a lot of issues.
the fact that they are looking to keep the cash flow from health care the fold tells me that the challenges are probably running fairly the. vonnie: yeah, pretty interesting of this segment of health care. obviously, it will not do the other company any harm. that stock is also higher today. what does ge end up looking like? about thens talked fact that there were so things to work out for ge. it has a lot of wood to chop, was have put it. brooke: i definitely think that is true. danaher shares are up because us is a fabulous deal for them. this is a great business. about the factthe market likes the price t was paid. i think obviously this is exactly what danaher does. they buy businesses, bring them danaherold, apply the business system to that and improves margins. as far as ge, i would agree they have a lot of would left to chop and that would is in the power unit.
we still do not have a lot of details as far as what to expect in either of those businesses we should get those in rather rapid succession. expectednies filings to come sometime this week. they should provide more details on their long-term care insurance liabilities and what they are expecting going forward. they are also planning to give a to find call in march really get some parameters on what they are expecting as far as 2019. if you remember when they held their fourth order earnings call, they declined to give parameters around guidance because they needed to do more work on the power unit. i think there is more wood to chop. far so good. investors giving larry, a grade a for today's deal. shares have traded half of their 50% losses. ofnks to brooke sutherland bloomberg opinion. it is time for the bloomberg business flash, it look at the stories in the news. they are betting $4.8 billion on
the future of jean there p. to buygmaker has agreed another company. for a patient's defective gene. the price represents the 122% premium spark. set up its campaign to shake up the board of telecopier the french company is the largest hell -- largest shareholder. they have been battling over the future of the company for almost a year. that is the latest on the bloomberg business flash. embassies are still higher by one third of 1%. the nasdaq up .5%. more markets next. this is bloomberg. ♪ you.
this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. mark: i am mark crumpton. in vietnam officials are scrambling to finish preparations for a summit between north korean leader kim jong and i'm president trump. officials say they had 10 days to prepare for the summit, much
less than the two months singapore was given for the first meeting last year. they are promising to provide airtight security for the leaders. the egyptian president defended his country's widely criticized human rights record and warned europe not to lecture the arab world. he made comments after a meeting today. the president said you are not going to teach us about humanity. he added on issues whether there should be a death penalty, european and arab nations had difficult ethical approaches. the european council president disagreed, saying under no circumstances would he give up on freedom and democracy. >> insisted that our summit
declaration should include our commitment, common commitment from both sides to the upholding of international human rights law. mark: european union leaders avoided publicly criticizing egypt despite an unprecedented crackdown on dissent and a recent spike in executions. e.u. officials maintain they did raise human rights during private discussions. the united nations secretary said human rights are losing ground around the world. what he called a groundswell of xenophobia, racism and intolerance. he expressed alarm and increased attacks against journalists and activists. 600,000 homes from michigan to virginia are in the dark after fierce wind storms brought 75 mile-per-hour gusts.
they toppled power lines and grounded hundreds of flights. 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 am mark crumpton. this is bloomberg. >> from bloomberg world headquarters, i am taylor riggs in for shery ahn. very welcomea lang to bloomberg markets. we are joined by our audiences and here are the top stories from around the world. coming together on trade, president trump expresses a tariffs deadline and says he would have a signing summit with president xi. taking on opec, president trump
they had defaulted on their debt, finally getting confirmation of the news. amanda: that is a dramatic decline in the share price on a day when the averages are tracking higher. we have lots of trade optimism including president trump occluding -- appearing to relax his view on where terrorists need to kick in. you can see gains across the leading,dustrials are materials, general electric is a standout. we are seeing every trade related name, including caterpillar also gaining their it you can see the financials pushing the broader markets higher but it is worth noting in terms of streaks, this is the ninth week of gains if we finish with gains. for theks to the upside nasdaq, this is the longest of
street since 1996 for the russell 2000 and 1995 for the dow. taylor: you mentioned the outperformance, 18% best massive run-up in, going back to the u.s. on, we got a survey from the national association of business economics, 75% of economists think we will have recession by 2021. we are going back to the highest since 2008. themichaels said because of march 1 terrorists have been delayed that would otherwise have pushed up the recession, so for now some of these recessions might be pushed out further, maybe 2021. i want to flip it over from the ,.s., going over to vietnam
very interesting story in the last few hours. president trump and north , we spokeader meeting earlier with jane harman of the woodrow wilson international center for scholars. moreaid we need to get information about aspirations about denuclearization. we need to hear some of the u.s. concessions, a lot of training exercises. comparing it to the iran nuclear deal. compared toweekend that to really make some big togress -- we can compare that to really make some big progress. amanda: the question is if we see any relaxation of sanctions, important to north korea. less important globally in terms there isic effect but a original importance, it is important. importance.
it is important. i talked earlier to the future maps founder and author of the book "the future is asian" and asked how to get positive developments out of the chinese talks near term. sounds like we are already there in the sense of the signals have been sent there will be some kind of agreement. trump in his fashion is using grandiose superlative language around a great deal, big breakthrough. they will be suspending the march one deadline and the hike. everyone would like to know, what are the details of that. what constitutes the issue or what is the resolution around china increasing imports with certain american goods and products. another issue is around ip protection and forced technology
transfer and these kinds of things. there are four or five buckets. documented,ny clear verified kind of language around those buckets. in the next week obviously that is what we are looking for. amanda: we are all focused on this negative implication for trade that was created by this administration, the threat of terrorists, trade tensions. if we were first those, we are two yearsere we were ago. how is the trade relationship even in the absence of all this created tension between the u.s. and china? a good point.s it just restores the status quo with the hope that on ip protection and forced technology transfer where there is resolution, because the goal is from the u.s. standpoint to move
towards a larger volume of exports. ipre is less risk of the theft. for the longer term picture, it is the lesson china has taken away from this what i call the permanence substitution. the record that there is no political risk introduced into the trade relationship by the trump administration, right or wrong because there is a lot of concerns around the ip issues oft are valid and complains chinese trade practices, china's lesson is how do we make sure we do not depend on american suppliers for critical technology? is a short-term solution and long-term reality where the to make ahope strategy to import less. amanda: the author of the future is asian. taylor: i want to turn back to today's market moves and welcome
ben kirby, thornburgh portfolio manager. talk to us about the risk on rally in china. of this wondering if it is from the delay of march 1 deadlines, or if there is something more fundamental going on wrapping up earnings season. things are not as bad as we thought. >> you hit it right on the head. early in the year the market priced in a fed pause. that has been priced in, that has happened. the odds of a fed rate increase are not being priced iv market at -- by the market increased above 0%. we are pricing in better trade relations. last night we had incrementally positive news. let's wait and see how that unfolds. the bigger picture is the economy is slowing.
the u.s. is at full employment. there is a number of secular contracts that are going to offset some of these news driven cyclical tailwinds in the last few weeks. amanda: we are focused on the resolution of this manufactured problem between china and the u.s., their fear is once the chinese situation has calmed down the u.s. will turn trade tension attention elsewhere. how do you factor that into your investing decisions? factor. annexed the u.s. hike -- it is an x factor. the u.s.-china trade relationship needed to be revisited. let's see if it gets more fair. but republicans want to get reelected and the 2020 election is not far away.
perhaps they would like the stock market to be doing ok with that time comes and the economy. maybe we will see that the last few years have exhibited market , perhaps nearing the next election, there will be more stimulus, more physical push to improve the republican'' odds of being reelected. taylor: you mentioned margins. what i'm showing here is gross margins are fine. companies able to pass on the cost of goods sold to consumers. operating margins are in trouble very what is your concern about operating margins? able to companies not get through that is putting pressure on margins as we have seen in earnings season? >> workers are getting more raises and that will pressure margins in that environment
where you have pressures. years,k the next 3, 5 stocks could be lower than the past 10 years. in that environment of lower price appreciation, we really like companies to pay dividends, companies that can return the cash to shareholders. if you can start with companies that hire -- have higher dividend yields, you will be in a better position for attractive total return. kirby, all right, ben thank you. bloomberg can confirm the u.s. seeking a meeting of un's security council as soon as tomorrow. they will include a resolution on free and fair elections in venezuela. russia has proposed a rival draft, the two are at loggerheads over venezuela.
oil took a hit this morning falling as much as 3.8% on choice words from president trump. he has never been shy about expressing his displeasure with prices. he said oil prices getting too high, opec, take it easy. the world cannot take a price hike, fragile. let's bring in jessica summers. i want to ask, the market seems to be thinking saudi arabia will listen to the president. how are the markets reacting?
jessica: it has been quite interesting. we saw wti brent tumble. the last time he tweeted to opec was the day before its policy meeting in december but opec ended up not listening to him and cut output. we will see if they do listen. the question is where they are with their output. how much control does opec have over its measures -- its members ? are they adhering to the proposed cuts? jessica: they seem to be. they are showing commitment to the deal especially saudi arabia , cutting crude exports, sending record low oil shipments to the u.s., signaling it is going above and beyond what it pledged it would do. we will have a meeting in march and the official meeting in april and see if this trump tweet makes a difference. taylor: i wonder how u.s. producers react because they are
more profitable when oil is at $100 a barrel. do they see pressure cutting back on supply? producinghe u.s. is 12 million barrels a day. they want to see high oil prices. producers love high oil prices. we will see how they react going forward. right now doesn't seem like anyone is taking it amanda: seriously. jessica summers, thank you for that. barrett gold is going hostile. it is a $17.8 billion stock offer. they are waging the potential for a fight between the biggest gold miners. daniel boko is joining us from hollywood, florida. so many personalities in the mix, the reaction we have had from newmont doesn't suggest it will be easy to push through. danielle: it has been
interesting because jerry goldberg is normally understated, but you can tell this has gone under his skin. i spoke to the ceo's of both companies starting with mark bristol who doesn't lack confidence. he said outright he can do a better job running newmont'ds assets. he made the case for why he thinks of barrick newmont makes sense. >> this is a carefully considered process. we have been working on it for a long time and we have engaged before hand. it is something, not just one meeting. you have to convince the shareholders this deal is better than the proposed newmont goldcorp deal. goldcorps covering the deal, that is correct. further complicating this is the hostile bid from
barrick for newmont, but they are trying to buy out goldcorp. how does this change the situation? danielle: essentially shareholders will have to decide which of the two bids they like better. it makes sense to have a zero -- orm bid that these would they rather see the original $10 billion for goldcorp? a bunch oft pushes stuff in place. i asked whether or not barry goldberg would continue his own run at barrick as a defensive move now with a partner or loan. he said all options are on the table. be further for m&a in the sector. it will be acrimonious. neither ceo has much respect. there are a lot of assets in play.
evolution said to us they seem interested in newmont's australian assets. taylor: we know newmont and barrick have operations adjacent in nevada and the have talked over time about putting them together, cost savings. breakhe $600 million , credit swapk fee the cost of walking away from the deal for newmont? danielle: it depends on which ceo you talk to. $7 billion worth of synergies in varying ways p or gory goldberg has taken -- varying ways. gary goldberg mentioned different things. as we get more details, we will learn more. but this started back at the denver gold conference would barrick made its play for randgold. we are seeing the extension of that chain reaction.
seeing the mid-two years come now, what assets come onto the market as a result of that, you have goldcorp that could be stranded on the sidelines. who knows what happens. does it become more vulnerable? this will be fodder for m&a and the entire sector for months. taylor: thank you. sincehan a decade past americans faced debt at the current level. why it is surpassing $1 trillion. this is bloomberg. ♪
for smart phones is slowing. up pelletise start gun has chosen goldman sachs and j.p. morgan chase to lead its ipo. offering could value the company at $8 billion. they sell exercise bikes and stuff that streamline fitness classes. that is your business flash update. heart,ry, close to your -- [speaking simultaneously] millennials at the end of last year have $1 trillion in debt. a lot of it is student loans. that kind of debt changes spending habits and we can't afford to have them spend less. >> you want to talk about changing spending habits, it comes down to how it is translating into the mortgage or
housing issue here in the u.s. i read a study for the first time in a long time you have kids making about $100,000 renting more than they are buying. they can't afford mortgages. these are tied to student loans. it is investing actually the broader housing market as well. we will see policy issues aimed at us including forgiven debt which could be the way to go. . bloomberg users can interact with all the charts you see, check in on analysis. from toronto and new york, this is bloomberg. ♪ bloomberg. ♪
same time he said there's also a chance it will not happen. the president has delayed the deadline to increase tariffs on to it billion dollars worth of chinese goods. in nigeria, supporters of the president and his main challenger claimed early successes in the general election, results are coming out today. the vote was marred by delays, technical glitches and violence. four years ago the president became the first opposition candidate ever elected to the presidency. thousands more civilians are fleeing syria, evacuating from the territory held by islamic state. the standoff continues between the militants and the u.s. backed forces besieging them, and estimated 300 militants are in a small village near the iraqi border, trapped by the euphrates river and to the u.s. backed syrian democratic forces.