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tv   Bloomberg Markets Americas  Bloomberg  March 5, 2019 1:00pm-2:00pm EST

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youngest victim was six, the oldest, 89. one family lost seven members. the national weather service says the twisters damage path was nearly a mile wide and was strong enough to bend the frame of a car around a tree. a storm packed winds of 170 miles per hour. the afghan television has rejected a proposal that would result in american forces being withdrawn from the war-torn nation in five years. that poses a serious setback to the efforts aimed at ending america's longest war through negotiations. foreignl group wants troops to leave the country within a year, according to two former taliban leaders. in sudan, pressure is mounting on long time autocratic president omar al-bashir to step down. the country has faced more than two months of deadly protests. today, a strike shuttered businesses and empty streets. karthoum.pital of card
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in canada, the crisis engulfing istin trudeau's government getting deeper. the self-avowed feminist prime minister is reeling after high-profile venal supporters jumped ship to the treasury board president and a former attorney general no longer backed government. prime minister trudeau is being criticized for efforts to stuff that corruption charges at a big construction firm. 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 in new york, 6:00 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 on the bloomberg and around the world. an earnings bull's-eye. target reporting strong holiday earnings sale and a rosy full-year outlook. in a moment, we have an interview with chairman and ceo brian cornell. estimating the impact of the fed balance sheet unwind. a fixedspeak with income specialist about what is next for investors. and unloading hurt. carl icahn's splashes his stake in the car rental company. target delivered better-than-expected earnings. emma chandra is standing by with the ceo at investor day. you. thank i'm here with brian cornell, chairman and ceo of target. thank you so much for joining us today.
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as you can tell, i'm a long way from home, but you grew up just over the water in queens, and you brought target back to new york for your financial community meeting after reporting the best for your comparative sales in a decade with a rosy outlook for 2019. t back?rget habits targe i think so. our strategy is starting to mature. two years ago i talked about investing $7 billion in our business, reimagining our stores, brands, and importantly to invest in our team. were a lotnt, there of questions. people were concerned about the direction we were headed, people were closing stores, not opening. today, i think we proved out that strategy is working. we are delivering great sales, in theere up five .3% corner, we grew our digital business by 30%, stores grew 3%.
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2018 was a good year but 2019 will be even better. emma: do you still consider yourself to be in transition? that was something that you set about 2018. mature theave strategy, it is showing it is pretty durable, we are scaling it. next week we will continue to accelerate. we have proven that our strategy is working. next year, we will continue to execute that strategy, grow sales, give our shareholders great returns. emma: last year, he said the consumer environment was one of the strongest you had seen, a lot of economists, analyst worried about headmans in 2019. what is the biggest concern for you? brian: i'm concerned about staying focused on executing our strategy. we cannot change the consumer environment, we cannot impact tariffs. emma: are you worried about those? brian: i'm really not. i'm doing a great job if you
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sure that we are remodeling our stores, opening up new stores in manhattan, continue to build our brand, making target america's easiest place to shop. we focused on making sure are delivering against the plans we put in place and making sure 2019 is even better than 2018. emma: later this week we get the monthly jobs number. we have been looking at a very tight labor market in the u.s. you plan to raise your minimum wage to $15 by the end of next year. do you have concerns about the labor market, but you have to raise that wage higher? brian: there were some questions in the fourth quarter. we talked about hiring over 120,000 team members. we were able to do that because target has become an employer of choice in retail. we are investing in wages, training, giving our career members -- a career target, that is great. we are seeing a great response across the country. i feel good about our opportunities, we continue to hire and attract great talent. the: you mentioned
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comparative sales beat you had in the fourth quarter. there were some concerns about falling gross margin. offered holiday, you to-day free delivery with no minimum spend. would you do that again? a number are offering of fulfilling choices. today you can order online, a couple hours later, pick up in the store. in over 1000 locations, you can place the order, pull into our parking lot, and within a few minutes, we will put it in your trunk. we have personal shoppers through our ship program. thousands across the country. they will bring your order to your home. emma: would you still offer that similar promotion next year? brian: we will have promotion during the holiday to make sure it is easy and convenient for the consumers of the u.s. to shop at target. emma: you also went after the sales that have been left open after the bankruptcy of toys "r" us. you said toys and baby products sold well.
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those are low-margin categories. was it worth and that? brian: it certainly was. with our focus on babies and kids, we are building lifelong relationship with mom, we will be a destination for generations to shop for toys at target. it was a short-term bet that will have long-term benefits. emma: you have also said in the past you regular look at retailers on the rating agencies credit watchlist. any particular that you are looking at the moment where you can pick up sales? brian: we are watching quite a few. you have seen some store closures. many of our peers are closing sees,, downsizing, a grub liquidations. because of our multi-category portfolio, we are an apparel retailer, we sell home products, we sell hard lines, toys, we sell beauty, essentials, in the food and beverage business. as doors close, we have opportunity to pick a market share from a number of different players. emma: the ones that you are most
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excited about? brian: there are about 10 or 20 right now on the modi's watchlist that we are watching closely. , as they close stores, it's an opportunity for us to drive more to traffic to target. emma: you mention food and beverage, an area that you brought some of the leadership of one particular person, whether from supply chain to merchandising. does that make it more operationally individual, would it make sense to partner with another grocer? brian: we think we have a great footprint and grocery. we have brought all the functions together under one leader. food and beverage is a little different. we deal with perishable products, we are buying everything from produce two refrigerated items. the supply chain is different. the store demand are different. bringing it together under one later, we think will provide great benefits in years to come. we have had six great quarters of food and beverage growth, we grew market share in 2018. the best is yet to come. emma: any concerns about amazon
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getting into the grocery space? then: they have been in space for a while through their acquisition of whole foods. we have watched her closely, we will see how their next turn goes. emma: you are not worried? brian: not too much. emma: brian cornell, thank you for joining us. back to you in the studio. vonnie: thank you. wonderful interview. halfway into the trading day. abigail doolittle has the details. abigail: take a look at the fractional gains for the dow, s&p, nasdaq. treadinginvestors water, waiting for more information. if you look at the intraday chart of the s&p 500, after yesterday's reversal from the upside to the downside on perhaps trade deal talks if a deal comes through, we see the volatility earlier today but a small range. down .3% at the lows.
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now fractionally higher. if we put today's move in during april 2 of tremendous volatility, we see just how small the move is. going back to the beginning of october of last year, when we had so much volatility mainly to the downside at that point. the white line represents a 1% move up or down. we see lots of big moves outside of that. smallnow showing how today's move is, you can barely see it. it will be interesting to see whether investors find more conviction or if we have this treading water situation. let's take a look at some of the homebuilders. we have some movement to the downside or some of the big homebuilders. this comes after new home sales beat estimates for the month of december, coming in at 620,000 new homes sold versus the
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estimate of 600,000. november and october were revised down, so some investors may be taking that the hardest. let's take a look at gold. last 10 days, down 4.3%, its worst stretch since 2017, down eight of 10 days. dobably having something the with the dollar strength we have seen recently, but it also tells you investors are not seeking this clause i haven at least for now. vonnie: all right. thank you for all of that. coming up, the federal reserve in focus with a strategic us analyst. as analyst.c us analyst this is bloomberg. ♪
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vonnie: this is "bloomberg markets." i'm vonnie quinn. that officials kept their target rate range on hold in january and essential bank is set to meet at the end of this month. for more on the bed and the path forward, let's welcome strategas'fixed income strategist. you are having your conference at the moment, you have been giving your outlook. what is more important for 2019 in terms of investor list, the balance sheet or the rate hike? right hikely the path. we have noted many times at strategas over the past two years that the fed's balance sheet unwind is a nonevent. the pace at which liquidity is being drained from the balance sheet is exceptionally slow. in contrast, the pace they were projecting rate hikes throughout 2018 and into 2019 was much faster than the market was expecting and was much faster than the market believed was the neutral rate.
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as a consequence, as the fed was protecting those rate hikes higher and higher, the market had to adjust, and was tightening the belly of the curve. the fed has pulled back that hawkish guidance and you have seen the entire belly of the curve ship lower by 25, 30 basis points. it am not to a 30 basis point rate cut. if the fed reverses that later this year, possibly because equity markets continue to rally , and you see a strong labor market, if the fed reverses that, you will see a lot of the risk on move we are seeing now reverse as well. we believe the rate hike path is the most important. vonnie: if you look at the health of the economy, outlook for inflation, market reaction, is this a fair assessment, is the 10-year, the curve the way it is, a fair assessment of what is going on?
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if the fed hikes one more time, it is still too low. two or three more times, it may evolve. it really depends on how fast the fed hikes. the u.s. economy is probably going to begin to build itself out of this slump we have seen in the first half. but if the fed tightens into that, essentially, 10 year yield at 2.70 would prove to be too high because the market will begin to price a recession for 2020. vonnie: what do you see for inflation for the year? 2%.as: somewhere around right now we have core pce below the fed started. around weight growth 3.2%, so that tells us there is some inertia building into the wage price spiral process. unemployment also below 4%. that is probably going to dip lower into 2019. my expectation is we see inflation pushback above 2% this year and probably reach a
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ceiling around 2.2%, which is what gets the fed off the sidelines. the question is does that happen before the end of the year or year?next i think it happened before the end of the year and we get another hike in december. vonnie: i know you think the fed will zero in on the $3.5 trillion mark of the balance sheet. what question does that pose and investors minds? bond market was saying when yellen suggested somewhere around a three chilean dollar balance sheet that this was a nonevent, and was priced in almost immediately. the problem with the equity market, didn't seem to get the message. has delivered his idea that they will stop around 3.5 trillion coming equity market has viewed that as kind of a present, and you see the market reaction that is very much risk on. when the powell fed actually comes out and tells us what the path is, what the process is going toward 3.5, do
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they taper in or stop cold, eventually get a pullback in sentiment as the market realizes this is not all that great, not all that big or liquidity. my expectation is they will deliver some sort of path, formula in march. the market will respond to that by sell the news reaction. that begs a lot of questions, we probably will not get to them, because i want to ask you about europe and how much their past impacts u.s. yield. do they keep them track down? thomas: on the front end, absolutely. because rates are so low in europe, particularly negative on the front end of the current, and you have a fed that is substantially above the rest of g10, you see the fed's ability to tighten on the front end of the curve is limited. in contrast, on the back end of the curve is u.s. yields are actually about 40 basis points
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to low versus germany, versus france, italy, because hedging costs are so high. we actually find that someone buyingthe globe has been exceptional amounts of protection in the treasury market, pushing yields below where they should be, but u.s. yield should be well above german yields on a hedge basis. they are not. discussion of the the global economy, where we are in the cycle, the cielo question comes up. is there a bubble in that market? thomas: difficult to say there is a bubble. you get into trouble not from risky investments infiltrating the market but rather leveraged investors buying those risky investments. we are starting to see now, there has been new stories about this, japanese banks, which are levered, buying clo's. month had asked us six ago, as this process was building, we would say we are not concerned because the structures themselves are well known.
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the problem is, does it begin to build risk into levered institutions around the globe? we think we are stunned to see that now. that is a warning sign and another indication to us that this data rally we have seen across multiple asset classes is starting to fade because we have seen a potential stop in the japanese clo process. vonnie: we will have to have you back for an update on that. strategasfor that, fixed income director. our appreciation. his icahn is disclosing sale of about 5 million shares. that story is next. this is bloomberg. ♪
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vonnie: this is "bloomberg markets." i'm vonnie quinn. to a sudden drop
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in june in shares, down 7.5%. at a jpmorganng conference, talking about the company "embracing our reality." he also said free cash flow and negative territory this year. he calls it a multi-your turnaround in the power unit and says the power unit was slowed to adjust the cost structure amid the slot. the market is not taking this well. shares off their lows, they were down as much as 7.5%, now about 4%. another company experiencing a down 14%,ay, hertz, after call icon disclosed his sale of about 5 million shares of the company. he still holds more than 24 million shares but the street sees the move as a sign that hertz is finding it hard to find a buyer. joining us now is drew singer. tell us about this trade and how we discovered it. sharesou looked at hertz
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after the market yesterday, you would have noticed they started tuesday down the four carl icahn released anything. word was that morgan stanley was shopping around at a discount to yesterday's closing price. this morning we learned it was carl icahn who was the top shareholder selling. vonnie: did not find buyers at the 2% share discount. or did they just add to losses once the word got out? >> we are seeing a reaction after the fact of the sale got up. traders have been speculating about a potential sale in hertz when carl icahn started to build his position. now that he is trimming back, there is speculation that maybe there is no sale at all. to be a considered producer of all of the equity, so there is some speculation that he will not build his position further. vonnie: we should mention this was just trimming his position.
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he still owns a very healthy chunk of hertz. how often do we see these kinds of things, banks and brokers shopping run after the close with major shareholders of a stock? >> this is the perfect time to do that and all of these companies updated their financial results. now is the perfect time for large shareholders to unload a position. , for example, if we look at the one-your chart, was up 27% from the new year. even though shares are way down from when carl icahn started building his shares, lately the conforming well. it is a good opportunity to collect gains. vonnie: earning season coming to an end but not over yet. will we see more of this? >> absolutely. they are tough to track because there is not a press release for these traits, but that is why bloomberg is here. vonnie: computers have to deal with this as well. we see big lots being treated
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because computers are engaged as well? >> that is definitely part of the response and why the stock is having its worst year. once the algorithms get involved, large shoulders are getting out. i say computers, of course i mean algorithmic traders. much appreciated, drew singer. a recap on the action surrounding hertz. reaction to ge shares. they are down 6.5% off of their lows. the ceo speaking at the j.p. morgan conference talking about free cash flow and negative territory this year, alter your turnaround in the power unit, and says the company is embracing our reality. this is bloomberg. ♪ 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'm mark with bloomberg first word news. the u.k. is taking steps to make sure it's ready for a no deal brexit. bank of england governor mark carney took questions from lawmakers today at a hearing at
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the house of lords in westminster. inthere has been progress , and that reduces -- and i would emphasize this -- the level of the economic shock. we do see a potential for material shock. what we can do about that is make sure the financial sector is there to help buffer it. mark: he says if the u.k. leaves the block at the end of the month with no deal in place, it's more likely to be a disorderly about, rather than a disruptive one. a former white house special counsel consider special prosecutor robert mueller "an american hero." attorney ty cobb says he does not share president trump's opinion that mueller probe in russian meddling in the toy 16 election is a witchhunt. he made his comments during and abc podcast that aired today. he says mother is a very justice oriented person. he adds he doesn't believe the
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report will harm president trump politically. chinese tech company huawei today opened a cybersecurity lab in brussels, the heart of the european union, as a tries to win over government leaders and fight back against u.s. allegations that its agreement poses a national security risk. meantime when asked about security concerns, the european commission spokesperson said " the eu is open to all players who fulfill eu rules." >> at the same time, there are legitimate security concerns that need to be addressed, and we have procurement rules in place, we have these proposals to protect european interests. according toe, people familiar with the matter, why way intends to file a lawsuit this week cleaning the u.s. government is overstepping by banning mayor goodman from certain networks. president trump is making another move aimed at what he
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calls unfair trade practices. the president has notified congress he will and key trade preferences for india and turkey . that starts a 60-day countdown before he can take action on his own authority. india says withdrawal of the benefit will not have much impact. 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. shery: 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 bnn bloomberg audiences. here are the stories we are
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following around the world. president trump has new trade war foes, india and turkey. we discussed the consequences. china must prepare for a tough struggle, a warning from the chinese premier after the country announced a range of growth this year between 6% and 6.5%. will the country stimulate too much? city area and new york gearing up to sell $3.3 billion worth of tax-free bonds. will wealthy investors be tempted by the tax haven? shery: let's get started with a quick check on me there and -- on the major averages. u.s. stocks fluctuated between gains and losses, lacking clear direction. another day of been trading. the dow holding steady, losing about 25 points. that after that 200-point hit it had in the last session. boost a little bit of a when they got some positive eco-data. the s&p 500 was lifted higher.
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at the moment falling .2%. of course, we have ongoing growth concerns. china softening its growth target at the national people's congress, which just kicked off this week. the dollar gaining ground for a fifth consecutive session. one stock moving big-time in today's session, ge. at one point, falling more than 7%. falling the most in three months. we have ceo larry culp speaking conferenceorgan and saying free cash flow this year will be in negative territory. we are seeing the stock moving drastically at the moment. amanda: of course, when we talk about the broader economy, we have had a lot of good news for the u.s. i want to show you the lonely got today, we heard from manufacturing last week, still in expansion territory. .onmanufacturing ism, service
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very strong, above expectations. really just reiterating what the latest data shows. the u.s. economy remains very solid, businesses are spending on themselves, plant and equipment, we are seeing big buybacks, a big part of how they money.nding their we see the latest move by president trump, moving on unilateral trade negotiations with india and turkey. ongoing negotiations with china, tariffs that remain in place with canada. the u.s. is strong, so it is hard for anyone to make the argument in the short-term at all of the strait tension and talking tough is hurting the economy. shery: and yet, we have heard from paul krugman that this has really hurt america's reputation. he says in a new op-ed in the we york times that really
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have seen america cannot be trusted, why bother making deals with a country that is willing to slaps sanctions on the best of allies and clearly lie about the reasons? even india and turkey are key allies to the united states. amanda: a lot of complexity here. our senior trade reporter shaun nnan with us.awn do by presidentmade trump on india and turkey was not tied to anything political, reasonable grounds for both, but it speaks to this changed tone around trade, that less trade is the way to go, not more open. how worrisome is it? thing is there is nothing political on the u.s. side but the decision on india political time for the prime minister there, about to go into a national election in april and may, and is getting kind of a slab from a long-standing ally in the u.s.
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also, remember, india is for this administration, for the trump administration, as a china.weight to a rising they announced last year and indo pacific strategy that hinged around strengthening ties as aindia and the u.s. foil to a rising china, turkey important to the syria equation, of course. there is a theme here. trump administration is perhaps turning from its one, big rival in china, negotiations there, where a deal is close, to putting some of the attention on the trade side on allies. we have the eu trade commissioner in town in washington tomorrow, which will reinforce that again. shery: what are we seeing on the u.s. china trade front? we keep on hearing we are nearing a deal, so when could we see the leaders sign an agreement? trade negotiations move
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more slowly sometimes than a new cycle. the point is we are close to a deal. between the u.s. and china. that is likely to be signed in the coming weeks. at the same time, we are hearing some cautious notes from capitol hill and congress, chuck schumer today urging the president to make sure that is a good deal that he does with china. secretary of state mike pompeo in the last way for hours also stressing president trump may be able to walk away or may willing to walk away from the table, if that deal with china is not good enough. this is going to go on for some time. even when we get the deal, that is only been -- the beginning of the process. is, is chination living up to those commitments in the deal, what sort of enforcement moves will we see if they don't? donnan, thank you.
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speaking of china, it lowered its growth targets and announced country'sx cut as the economy continues to slow. the news was released this morning in an annual report to the national people's congress. for more on what we are learning, let's bring in the director of china macroeconomic practice. we have seen growth softened by china, raising their fiscal target. what was interesting to me was ining that 2.2 trillion yuan special government bonds. it seems the chinese policymakers continue to spend. how at risk is the government of this ballooning debt? >> the trump administration has an america first policy and now we see the chinese and ministration has an employment first policy. that was the big emphasis from the report this week. , i think there are a lot of questions on how
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aggressive the government will be with stimulus, lots of concern that they may go overboard this year. i think the message from beijing right now is they are trying to go to significant lengths to avoid that. if you look at the focus of stimulus discussions this year, much more of a focus on policy madeive to decisions they in 15, 2016. preventing financial risks in the limiting risks is still identified as one of the major priorities or this government in 2019, so i don't think we are going back to that crazy, very aggressive monetary stimulus mode of the past. clearly they are worried about growth and we should expect to see more using this year. on that front, preventing financial risk, there are reforms that china had in its sights before it was clear that the economy was going to slow down, turn their attention elsewhere. are they able to do that, especially on the banking and shadow banking pieces of the economy? are we less worried about that
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causing an internal crisis as we were a year or two ago? >> the controls the government has put in place on shadow banking, the efforts they have made to prevent that from blossoming into a bigger problem, we expect to stay in place. i don't think there is much change to that set of policies. where i think there is a bigger question is the broader discussion about economic reform . the national people's congress is the major legislative event for the chinese government every year. certainly in the context of u.s.-china discussions, there is some hope we would see some new reform momentum, new ideas put forward. been somee has positive discussion about foreign investment policy opening up, beyond that, it doesn't look like much new on the reform side. shery: what is clear for the moment is the chinese economy is slowing down. everything points to the fact that they may be growing a little anxious about what is happening domestically. how much political pressure is
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this putting on president xi jinping? >> i think it's a significant concern. remember, the national people's congress is the central government event. over the past few months, each provincial government has had its own people's congress, where they talked extensively about growth realities at the local level. we see a lot of concern. the biggest provinces underperforming growth expectations from last year, a lot of attention from where growth will come from in 2019. the government is certainly feeling some pressure to deliver. one particular focus, something that was interesting last year, the shortage of available financing to the private sector in china. the state owned sector grew impressively last year, private companies had a hard time getting access to capital. that has been a major focus of the deliverables past few days, and i think he will see more from that in the next few days. amanda: nicholas, thank you so much. still ahead, more allegations of
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money laundering are emerging against european banks. details after this. this is bloomberg. ♪
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shery: shares of ge are plunging as ceo larry culp spoke at a conference in the last hour. abigail doolittle has the latest. abigail: take a look at the injured a chart of the shares of ge plunging, falling off of a cliff around 1:00, as ceo larry culp spoke at a jpmorgan conference, initially talking about the power unit. what is really behind this, they now see free cash flow and industrials in negative territory. the reason that is coming as a
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surprise, if we look at the 2016,erg, we see in through 2018, they did put up negative free cash flow. foryst have been estimating positive free cash flow for the 2019, $3.6years in billion. negative free cash flow in opposition to that. that is surprising for two reasons. if you look at this chart of ge since december, take a look at the come back. down on a day but up over 50% in this time period. they put up a decent quarter. if you recall, but we have year is, couple weeks ago, they sold their biofarma unit to data her for $21 million, creating a sense that there that would be reduced and free cash flow would be ok. right now, we have a new headline that they expect to see it in negative territory for 2019. a bit of a surprise.
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amanda: thank you for that, abigail. more european banks are being caught in allegations of money laundering. it started as an allegation that started in don sky and sweet bank, but now has extended to austrian and dutch institutions. ass is one that really feels though, from the outside at least, that the banks should have known more than they did before the investigation got there. are they being tripped up by things that they did not themselves now? unclear atlittle this point. you have a number of reports coming from different countries, media outlets. it is tough to get a handle on what the size of the overall transactions we are talking about, and just which banks knew. there is so much correspondent lending in these regions. a handle buto get
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certainly investors are not waiting around to see the details. they are selling pretty much across the board all the banks involved in this. we have seen dansk lose half of its value since the scandal. they acknowledgment are role in that scandal. how big of an impact could we see for the european banks? some shares down as much as 15% today. certainly across the board, a lot of pain being felt. our columnist pointed out, these were a lot of the northern european banks that have been rated more highly, traded at a bigger ring them to book value. so they have been seen as the safe bets. having something like this really shakes that narrative to its core. how widespread do we think this could go? obviously, this comes on the heels of what reverberates from settlements around banking, tax
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evasion across europe, but especially in switzerland. how bad could this particular issue get for the banks? michael: wide range of potential. the fourth one of these money laundering scandals to come out through this outlet, so certainly, you are seeing it over a number of countries, focused in the baltics, those bank units in that region. certainly, this has wide-ranging impact. it is kind of hard to tell at this point how big it could get. youy: michael moore, thank for the latest on the european banks. breaking news at the moment. eon thatearing from a they are confirming a combination with willis tower. they were considering an offer to buy rival injures brokerage willis towers watson. we do have confirmation, they
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say they're in the early stages of considering willis towers. as sourcesrse coming tell bloomberg the companies have helped luminary talks. no final decision has been made. moveould often not to forward with an offer, according to sources. on confirming they are considering that combination with willis towers watson. plenty more to come. this is bloomberg. ♪ this is bloomberg. ♪
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amanda: this is "bloomberg markets." i'm amanda lang in toronto. i'm shery on in new york. wealthy investors from the big coastal states may find an opportunity for refuge from the tax overhaul. california and new york city will be selling more than $3
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billion in tax bonds. here to discuss the details is amanda albright. the federal tax overhaul has meant a cap on the state and local taxes actions. -- deductions. now we are seeing this crowding into the muni market. >> as soon as the tax law was signed, we saw muni investors waiting for the moment where wealthy people living in high tax states start clamoring for municipal bonds. that is something that in 2019 has been the overarching story. muni mutual funds have attracted $16 billion in cash since the beginning of the year, and we are seeing that demand come in. investors are even saying that the man could increase further as more people do their taxes. amanda: so because of the appeal, we have this demand. what is the doing to the yields on these things, what are they able to do? >> california and new york spreads, which is how investors evaluate von performance, we are seeing those tighten. that is a good sign for
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investors who own new york or california bonds. city andork california, coming to market this week, they could see lower borrowing costs because of this incremental demand for their debt. shery: local governments are taking advantage of this demand out there. what is the supply situation like? >> a lot of people say there is a missed opportunity by states and the government right now because demand is so high but supply is not magic that. shaun carney blackrock, a strategist focused on munis was on today, and he estimates demand is outweighing supply by about four times. if you are a mayor or governor, this is a time for you to sell bonds at attractive levels. all if do we worry at peopl they will issue more debt than they should? anyou are not really seeing governors unveiling major borrowing plans that would
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change the financial picture. you are actually seeing states like connecticut, a high tax state, that is part of this phenomenon, their governor said that they are trying to hold back the amount of borrowing they are doing. it is kind of an interesting moment if you want to buy new york or california, you the chance to this week, but you'll be competing with a lot of people. amanda: amanda albright, thank you. speaking of competing with a lot of people, if you want bugatti's new car design for its 110th anniversary, you need a fair amount of cash. more than $12 million for this custom-designed car. they say they already have a buyer for it, a concept car. i don't know what the concept is other than look at what we can do if we grow enough money at something. shery: very, very expensive. . have to ask why it is not like you can even drive that car around. $12.5 million? what happens if you get into an
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accident? apparently there is a buyer here, speculation that it could be the former vw ceo. the new ceo has been in charge since april and has been trying to revamp the company and rein in spending. toon't know how much is go war plan of reining in spending. amanda: safe to say we are not the target audience. that is for sure. users, a reminder, you can interact with all of the charts you have seen on the bloomberg with g tv . this is bloomberg. ♪
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this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. mark: i am mark crumpton with bloomberg's first word news. president trump is ready to walk away from a trade deal with china. secretary of state mike pompeo
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said in an interview released by the state department "if it does not work, we will keep banging in miami." pompeo says he is confident the two countries will come to an agreement. investigating in indonesia gold mine collapsed a week ago today. authorities are not sure how many people were inside when it caved in because of shifting soil and the large number of mining roles. a large number of trucks fell on the miners. at least 17 people are confirmed dead. more than 30 states want to replace old voting machines before the 20 20th elections, but they do not have the time or money to do so, that is from nyu law school. states received grants from congress last year. experts say that it's just a fraction of what is needed. a london

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