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tv   Bloomberg Surveillance  Bloomberg  March 15, 2019 4:00am-7:00am EDT

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crude producers will be meeting over the weekend to talk about cut spirit -- about cuts. weaker, this is after theresa may one a number of unmanned entering 11th hour brinksmanship. this is where futures are stacking up, looking to be a positive start. up a tad opening higher, but relatively flat. we could potentially see markets to the upside after a better positive trading session across asia. futures are pointing to a higher start across the continent. london take center stage this week as theresa may gets the extension of brexit. let's take a look at what is going on across the sector picture. it is looking mostly green. we have financials, energy, health care, staples down to the
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red. minors as well as luxury, given those tax cuts. as technology, we had three big cap earnings out they were probably disappointing in terms of earnings, there may be some read across today. matt: i see 400 stocks gaining today, 171 are down. so it is basically 2-1 to the upside. a look at companies adding the most points, sap is right up there at the top, , i'm sorry, .3 of a point. as well as unilever, nestle, you
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are really seeing these consumer staples gain to the -- gain today. swedbank is one of the biggest losers, ubs also a loser. volkswagen dropping .8%. european equity markets opening higher, the ftse doing a little better than some. this comes as the pound studies after critical votes in parliament. speaking to bloomberg, jamie dimon told us that there is still a 10% chance of a harder it could freeze the markets, at consequences we do not expect today if you close against that, we get to a 24/7 war roomstatus --
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status. something like this will have unintended consequences. anna: that was a jamie dimon speaking to my colleague francine lacqua in paris. joining us from management is mike bell. we heard jamie dimon bucket about the possibility of a kind of hard brexit or even a no deal. that's still in the legislation, until it isn't. give us your range of possible outcomes and attach some probabilities to them. >> i think a no deal brexit is still a possibility, but it is low probability. 5-10%. 10%, i would say ultimately, we have seen parliament show that there is not a majority in favor of a no deal brexit. you are right that unless they can agree on either an extension , which leave the eu to agree, or they approve the deal, and
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that is the default position. but it is quite clear now that parliament does not want a no deal and that, therefore, we live get this deal approved in the next couple of weeks, or likely to end up with a long extension. is there any possibility of brexit in which the u.k. has the sovereignty to negotiate its own trade deals with other nontries, or is that now longer within reach? problem with this negotiation which some have not wanted to own up to is that if you are going to have a situation where you avoid having a border, a key priority for the vast majority thenople in parliament, the problem with that is that
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until there is a technological solution, which does not exist at the moment, you need a customs union. if you have a customs union, then you have to apply the same customs you do with the eu. result, you not be able to strike out and do free trade deals with some other countries. as a failure to recognize that inherent conflict between avoiding a hard border, and therefore the need to have a customs union, which is causing the difficult in parliament. may'sat is not theresa fault, that is in inherent conflict and there's no one in the world who can make that go go away. anna: what do you think the pound is assuming? at 1.32.talled where does it go next week? ultimately, the pound cares
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about a no deal brexit. again, i think that is only a 5-10% outcome. the market is pricing perhaps relatively low probability, but the problem is that in the event of that outcome, the downside to sterling would be very significant. if you applied a low probability outcome to a high potential impact, it weighs on sterling. once you remove that risk, it may be that has stopped get completely taken off the table, but if you saw a long extension you can see the pound rally. approved --e deal approves, the deal it oculd be north of 1.35.
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matt: what does this do to other assets in the u.k.? does this give you more confidence to buy ftse stocks? does this make you want to divest in domestic holdings? how does this change the equity strategy? the economy, if it weren't for uncertainty around brexit, it looks healthy. you got low unemployment and wage growth, what is encouraging is you are seeing wage growth picking up that is helping to support consumption. despite the uncertainty. this cloud of uncertainty hanging over the economy. the uncertainty was removed, or at least diminished by having would extension, then you see a pickup in confidence, a bounce in business investment in
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confidence, and so some of those domestic plays on the u.k. economy, which look quite cheap, could bounce in that scenario sterling would move higher, so some of the international names might not perform as well. anna: thank you very much for your thoughts. mike bell stays with us on set in london. let's bring you up-to-date with one of our developing stories this morning. the latest on the terror attacks in new zealand. lisa said the death toll has now reached 49 after the attacks into mosques in christchurch. leader has described them as carefully planned. police say three men and one woman have been arrested and are in custody. others went on to call it one of new zealand's darkest of days. we will continue to update you,
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let's listen into this briefing by police. i take my hat off to all of my staff, i'm extremely proud of what they have done to date. thank you. why were these people not on a security watchlist? >> very good question. what i want to tell you right : nois that we had no agency agency had any information about these people. and i can tell you that i have been in contact with my australian colleagues, they have no information on them at all either. they are assisting with our inquiries. i can also add that part of our investigation will be to look tok at every possibility lawre that we, in enforcement and security, did not miss any opportunities to prevent this event. >> who carried out the shooting?
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wasn't the same person at both? look, i would love to go into detail, but a person has been charged. for me to now go into details of who did what would not be proper. [inaudible] >> again, i know there is a name within the public domain, but it would be improper for me to confirm it because a person has been charged. threat on a a facebook page made against the community. are you aware of that? aware of that suggestion, which we are working through at the moment. when i have absolute clarity about that, i will be sharing that. i am only aware of the suggestion, not aware of it actually existing.
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anna: welcome back to the european market open, 13 minutes into the trading day. let's get individual stock movers, annmarie hordern has been this morning. is thee: wirecard biggest loser, down nearly seven percentage points. to sellp cut the stock after prolonged uncertainty, saying it will likely take longer to resolve allegations
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than the market is pricing in your volkswagen a touch softer, being sued by the u.s. the theys and exchange alleged -- and they alleged that there commissions did not adhere to standards. french national assembly approved a 70 year concession to the paris airport operator, for sure boosting the stock listed. matt: thank you very much, annmarie hordern there with individual movers. efforts to end the trade war have reportedly been delayed with meetings between president trump and xi jinping likely month at the earliest. are pressinghey for a formal visit rather than a low-key appearance. mike bell, market strategist at jpmorgan is still with us.
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mike, what he think of the state of trade talks and how important is this to your investment strategy? mike: it is key. if you look at the rally so far, in my mind, it has been driven by two factors. the first is hope the trade war will not escalate further. a fair amount of good news on trade or good expectations, at least, has been priced in so far year to date. at least not getting any further escalation in the trade war is important. other thing driving markets is optimism that the fed is going to keep rates at this level for the foreseeable future. those are the key things that have driven markets higher. we need both of them to be delivered upon. anna: let me ask you about the china story, heard from the
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premier overnight about resisting the temptation to engage and large-scale stimulus. we heard about some stimulus, reducing taxes, for example. have they got it right in china? the right level of stimulus for the challenges they face? toe: they will be able stabilize the pace of growth at a level they are happy with, around 6% year on year. they will deliver what they want. what is important to understand is that the magnitude of the stimulus is going to be less than what he saw in the past. in the past. 2016 was the last time we had a slowdown in the global economy. at the time, the fed pause and china stimulated. in some ways, it does look similar, but there are important differences. one of them is that the scale of stimulus is going to be less this time around.
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that is predominantly because you do not see the same degree of weakness in the property market that you had back then. ,hat is obviously a good thing but it does mean stimulus is less likely to be as significant as it was before. in some ways, u.s. for this, but i want to get altogether for the mliv blog. this is the question of the day: how big of a headwind for global equities is a delay in a u.s. china trade deal? mike: what would be a head winds would be to see any escalation in tariffs. a delay that keeps things as they are, i think markets would be fine. what markets don't want to see is an increased threat of further tariffs, and certainly not any implementation of further tariffs. as long as we stick with the status quo, tariff levels at the
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moment, i think the market will be ok. escalation, to see i think that becomes a headwind. quo, talking of the status what do you expect from japan anytime soon? , and onefrom the boj of our colleagues concluded that the weaker global economy is taking its toll on japan, but not enough to change their monetary framework. would you agree? mike: i think they are limited with what they can do. japan, there are headwinds to domestic growth over the coming year or so. rises that the tax are likely to come through. generally, you look at the onographics jack -- drag japan that is likely to take place as the population starts to decrease. when we look at investing in japan, we are for structural growth stories, rather than
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plays on domestic growth. for example, look at the tour is an industry. --the middle class in asian asia rises, japan see a rise in tourists. you've got the rugby world cup, a great showcase for the beauty of that country. the growth stories such as towards him and robotics, one of the attractive opportunities in japan at the moment. matt: mike bell, great to get those insights from you. global market strategist at jpmorgan, he will stay with us. oilext, the focus turns to and the best week we -- weekly rally in a month as oil producers consider output curves. we look ahead to this weekend talks.ks -- weekend's this is bloomberg. ♪
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matt: welcome back to the european open, we are 22 minutes into the trading day in europe. opec and allies will meet this weekend in azerbaijan to decide how much oil to pump in the months ahead. the producer group faces a tightening market with the
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prices rally, including -- for reasons including crisis in venezuela and price cuts. twist, annmarie hordern is here to explain. annmarie: not all oil is created equal, and that could be something working in opec's favor. markets have been flooded by the surge in u.s. shale production, the high-quality oil is thin and easy to refine with a low sulfur content, earning it the name light, sweet, crude. much of opec's production is sour, heavy crude, a different animal. it is harder to refine, though better for making diesel. but the u.s. shale boom is relatively new and refiners who invested millions in processing heavy stuff pay a premium. with much sweet and not enough sour, u.s. oil is far cheaper than dubai's benchmark.
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facing opec isn whether they extend the cuts and tighten an already strained market of a very heavy coming very sour crude. anna: bloomberg's annmarie hordern reporting their. -- there. mike bell from jpmorgan is still with us. what are your expectations? we spoke on the earlier program to a guest about playing this through russian exposure and exposure to shale, what is your strategy? mike: i have been neutral on oil from here obviously, it's got potential that supply tightens would provide upside, and on the other hand, there is weakness in the global manufacturing sector. the oil price of the last two years has been determined almost entirely by supply. so the demand story has been a
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straight line upwards. yes, there have been moments where concern around demand has impacted the price of the actual demand story will be a straight line upwards. the key question for oil, if you take a two-year out of you -- at view is if we will take slowdown or if it will lead to a weaker demand outlook. , and overall, given the two-way factors, i would be neutral on oil. matt: what do you think about electric cars? tesla just unveiled the model y and volkswagen is going to electrify pretty much its entire fleet. going to bring down the demand line so that it is no longer rising straight up? long-term thethat
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answer to that is that it will certainly weigh on demand for oil. that is probably a longer-term near term forthe more about global growth. you are trading the oil outlook on a 10 year view, you need to consider that. if you look on a one-to your outlook, you need to have a good idea about what will happen to the global manufacturing sector. are we going to see an acceleration in manufacturing? which at the moment is pretty weak, perhaps helped by china stimulus. is that chinese stimulus going to help to stabilize growth in china, but not lead to a material pickup in global manufacturing? that's come up to me, is the bigger question in the near term rather than a discussion around electric vehicles. matt: mike, thank you very much. mike will be joining us on bloomberg radio's daybreak carry live on london to
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on the conversation at 8:45 a.m. u.k. time.-- like wehe market, looks are seeing mostly gains. this is bloomberg. ♪
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matt: 30 minutes into the trading day. third time lucky? theresa may keeps her brexit deal in play as she was acting of parliament to seek a delay. plus, extending the ban. be boeing 737 max 8 could grounded until april as new evidence shows the crash plane in ethiopia was configured to drive. -- dive. >> it hits us hard. we lost two of our own people on that flight. safety is of paramount concern for everyone involved. once you have root cause, we
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will work to do whatever we can to address it. : 49 people have been killed in a terror attack on to mosques -- two mosques in new zealand. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more what i0 countries. -- >> can say is that it is clear that this is one of new zealand's darkest days. matt: good morning and welcome to bloomberg markets. this is the european open. : good morning once again. let's talk a little about what has been going on in westminster. yesterday wasn't so bad. theresa may managed to get her motion for a delay to the brexit -- a delay to the exit date, she managed to get that through parliament.
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things not so that there. there were two strands we need to know watch. it seems as she is point to parliament next week for meaningful vote number three. thate is successful, promise a short delay request to june. 27 for the end of the alternative is a plan b, that is what jeremy corbyn and others seem to be working on even the scenes. that is still very much on the table. options, and no deal brexit is still very much on the table. the 29th of march remains in the legislation the date that we do brexit. we will have to wait to see what kind of response the tickets to italy request -- to a delay quest. this week that the parliament doesn't want no deal and wants a delay to the brexit
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date. house that went to go down in brussels? this will be a decision that every eu 27 leaders will have to take into account, it will have to be approved unanimously here in brussels. you have two choices, of no deal that could potentially push the u.k. out, no extension and essentially you take the blame for pushing the eu out. there are many questions they will look to hear answers from before the two to extende it. they would want to hear from the prime minister a new strategy. it is no secret that the eu has said many times that a negotiation is done and dusted. we are not going to go back down to the table. may be attitude here is that you need to look for support from the opposition. minister, to get to
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that point will be to get rid of at least one of her red lines, which is the single market, the customs union or migration. it is more likely if she decides to make those red lines go pink. that they? remains illegal for extension are long extension -- the big question remains do we go for extension or long extension. deal theresa may's stand any chance of passing? anna: we heard from bronwen maddox, she thinks that it does stand a chance. are moving in the right direction for her even though she did lose the second vote by still a substantial margin. we are going to hear a lot more
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over the weekend from the u.k. government about what donald said about the length of that delay. that is something that will be used to put pressure on the dup two fall into line. theresa may also making this offer to the labour party and folks in the more center of her party that march 25 kennedy turnover as a day for parliament to take control of proceedings a little bit. that could be used to put pressure on the erg and dup. if they do fall in line, what kind of price what they put on that support? with they insist on some change of leadership, and then we could be into a home territory, because another leader for the conservative party at a time when they are trying to negotiate future leadership of the certainly disruptive. matt: my coanchor anna edwards there will continue to report
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live from westminster. maria tadeo will continue to report live from brussels. we will follow this developing story as we have every day for the past almost three years. general electric jumped yesterday as its new ceo promised significant improvement in pre-cash flow over the next in 2019. after a reset speaking to bloomberg's david westin, he said that his future 4g's feature -- for ge's future. >> this is going to be a multiyear turnaround. given that the investments we are making are largely at our , we think we are going to see positive cash flow in 2020. the slope of the line is , but thenot straight good news is we do think it is
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northbound. david: what are you looking at? anry: a think it is more of l with a squiggly increase from here. the team understands exactly what they need to do, but it will take time. do you think it is good business given all of the disruption in power around the world? larry: gas is not going away. certainly, we see a t ransition in terms of energy sources. we can benefit from the. deceit benefits -- we see benefits in our renewables business. guess isn't all of what we call power. we have our power portfolio businesses for businesses that have their own set of challenges, which will weigh on our performance both in 2019 and
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2020. david: you mention renewables. at what point is that cash positive for you? inry: it was cash positive 2018. we had a very strong year. in many respects, people would say the age of renewables is now. we saw dramatic increase in demand. we will have double-digit growth in 2019. given the timing of the cash cycle, while last year was quite strong, we are going to see a lot of pressure in renewables. we will probably see about a $2 billion swing. we think over time, renewables will continue to be a strong business and we will see a more normal cash performance there. david: what kind of margins are you looking at? the low single digits, double-digit? we don't the nobles,
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think there's any reason we can't be in line with industry averages, which let's call a high single-digit. we have a lot of work to get there, but there is no reason we shouldn't be south of our competitors and where the industry is. ceo: that was the ge speaking to bloomberg's david westin. authorities confirming a man in his late 20's has been charged with murder in connection with the shooting in christchurch, new zealand that left at least 49 dead. say three men and one woman have been arrested. according to the prime minister, one of those arrested posted a manifesto showing extremist ideology. you may have chosen us, but we utterly condemn you.
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viviana: president donald trump's first veto may be shaping up after the u.s. senate blocked his declaration of a national emergency to pay for a border wall with mexico. 12 gop senators voted to cancel the emergency. the chinese premier saying china will stick to its economic support strategy and not engage in qe or large-scale stimulus. china passed a new foreign investment law. it aims to create a level playing field. the chinese premier saying tax cuts will be implemented on april 1. we plan to engage in large-scale tax reductions and cuts. will make reductions in social insurance contributions. this is a very important pressure encountering the
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downward pressure on the economy. 8viana: the boeing 737 max could remain grounded until the end of april. is screwed like device found in the wreckage of the plane that crashed last sunday in ethiopia is set to indicate it was configured to drive. -- dive. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. matt: thanks very much for the. up next, we are going to bring you some of the stock movers, including h&m, down this morning. this is bloomberg. ♪
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anna: welcome back to the european open. we are 45 minutes into your equities trading day. e: one of the biggest gainers to the upside this -- a swissthat free
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operator of duty-free shops. downside, even though their sales be the highest analyst estimates. rbs is saying that many were expecting a bigger growth for february. those sales numbers didn't quite pleased the market and could generate to the downside. earnings and guidance came in a bit soft. matt: thanks very much. annmarie looking at some of your individual movers. this morning, the sec announced that it is suing the german carmaker. the regulator has accused vw of selling billions of dollars of corporate bonds while concealing its emissions cheating scandal. autosre, our european editor joins us from unit. is are more pain -- from munich.
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to more pain to come from vw? >> absolutely. to diesel fallout continues to rumble on. we are in the fourth year of the scandal now. more lawsuits, more allegations continue to crop up. this week, vw had their annual presser. there, they said the money the earmarked for the scandal has risen by one billion-29 billion euros. from the sec case now, vw also told us about another investigation that has been opened by german prosecutors. is an administrative probe into the ceo and former ceo about allegations of market manipulation that they did until the markets early enough about the diesel impact. this whole thing continues to rumble on and have an impact on
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vw. we continue to watch the diesel scandal. meanwhile, another controversy seems to be growing. the ceo has been forced to issue an apology. th: herbert diesel has landed himself in hot water with remarks that recall some of germany's nazi past. freeid that ebert sets you which is coming -- reminiscent of the saying work sets you free which is emblazoned outside the gates of the auschwitz concentration camp. inissued a remark on linked that the remarks were in poor taste and he did intend to hurt anyone's feelings. elisabeth joining us live out of munich.
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tesla has unveiled its model y crossover which elon musk hopes will play a crucial role in driving future sales. is that the vehicle will be made available from the spring of 2021 the price starting at $39,000. it comes after a rough patch for tesla. february, it announced plans to close nearly all of its stores before partially backtracking a few days later. >> it has the functionality of an suv, but it will rise like a sports car. this thing will be really tight in corners. we expect it will be the safest midsize suv in the world, by far. matt: ed ludlow joins us now from los angeles. what did we learn about the new car? $39,000 carper comes out in the spring of 2021. just like what the model three,
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we're going to get the higher more expensive models first. in 2020, and $47,000 longer-range 300 miles, than an all-wheel-drive version and a performance version, of two $60,000 is the sticker price. as expected, this is a model three size large, 10% larger. it looks very similar to the three.slightly more reminiscent of a standard suv that he might get as opposed to the existing model x which looks nothing like an suv. beyond that, we didn't really care about what the kind of reservations they have. when it launched the model three, they had a running catcher behind him on people that have preserved a model three. we also don't know where they are going to produce it. elon musk teased nevada, but he didn't confirm anything on that front during the and they'll. -- unveil.
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anna: not sure where they are going to sell it perhaps either. why is another suv important to tesla? ed: seven out of 10 of what the u.s. market is buying right now is an suv or track. the model x really hasn't performed. expensive.at as too it has these falcon wings that people see as complicated, unnecessary. it hasn't taken off. if you can buy the model x and model s sales, it is not merely what they have done for the model 3. there is also competition from the market from the likes of audi. it is also an issue of addressable market. it is the story for tesla in 2018 about supply and production. is all about demand in 2019. by bringing this more typical
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suv vehicle. the other big step they took was to bring a $35,000 model 3 into the market which makes evs more accessible for those who simply $60,000-$70,000 that tesla currently charges for its existing line. matt: you really don't need to have an open store. i already put together my tesla order here with the configurator on the website. 80,000 price of euros for mine. you have a chance to put in your payment details here. it is a $2000 deposit, 2000 euro deposit that they say is refundable.how many orders do you think they're going to get , how many $2500 deposits does tesla expect? ed: the principal analyst
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concern here is that basically model y will cannibalize the demand for model 3. it is so far away from going into production and being delivered that customers don't order model 3's. in terms of cash flow, test 130,000 ordersst for the model 3 and the hours immediately following its launch. there could be serious preorders for this model. anna: thank you very much. let's get up-to-date with one of our developing stories overnight and this morning, the terror attacks in new zealand. police say one person has now been charged after the shooting at two mosques in christchurch. the death toll has reached 49 with more than 20 seriously injured. the prime minister says the attacks were carefully planned. 'she called it one of new zealands darkest days. we will keep you updated as we
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get news.
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matt: time now for our battle of the charts. annmar going head to head withie dani berger. annmarie: i am looking at what is going on between venezuela and iran. venezuela see here,
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oil production has jumped by a greater degree by iran or opec. what is straining the market anymore is the electricity crisis we are seeking. a drop of 1.2 500,000 barrels a day. january was one million barrels a day. iran exemptions are coming back in may. two key countries to watch. is a triple witching day which means a bunch of options are going to expire. and looking at the put call open interest on the european stock market. because it is so high right now, what we may see is this affect called pinning down. bullish, son be don't believe all of the action you are seeing today. some of it might be due to this. matt: triple witching day, not as exciting as quadruple witching. i'm going to give it to annmarie.
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i think it is interesting venezuelan production has dropped. thanks everyone, you can see all the charts on the bloomberg terminal. that is it for the european open. surveillance is up next. ♪
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francine: third time lucky. british lawmakers pushed back
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the divorce beyond march 29. that gives theresa may time to talk to get her deal through parliament. ge jumps. the new ceo sees 2019 as the company's chance for a reset. >> the rating agencies certainly have an eye on ge. we are in constant communication with them. we tried to communicate as transparently as we do with the equity markets as to where we are and where we are headed. francine: new zealand's darkest day. 49 are dead after terroris attackst at two mosques. this is "bloomberg surveillance." we of course have to stay on this developing story from new zealand. we also look at the markets in the bigger picture when it comes to trade. of course, it is the end of the national people's conference in china. tour thoughts are of course with
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the lives lost in new zealand. there is news in washington and of course the brexit story, staggering to the weekend as well. let's now bring you up-to-date with more on what happened in new zealand. wellington. joining us now is wellington's bureau chief. what do we know so far? we heard from the prime minister. is always difficult to explain these kind of things, but what is the feeling on the ground? i think just a sense of absolute -- no one here can really understand or comprehend why this would happen in a place like new zealand. how it could happen. as you have just said, the death toll has risen to 49. worst massit the shooting in new zealand in modern times. we haven't had an event like this since something like 1943.
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it is a shocking event for a country like new zealand that price itself on being peaceful and tolerant of all religions and races. it's an event that occurred in christchurch, the country's second largest city on the south island, which is still recovering from a devastating earthquake in 2011 that killed 185 people. i think a real sense of shock here in new zealand that this could even happen here. francine: we understand that 4 people are detained by police. what do we know about the? matthew: the police commissioner says that one of the people arrested has been charged with murder it will appear in court tomorrow. is unclearthers, it if they were involved were not. they were apprehended at the scene and were armed, but the police are now saying they are
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not sure whether they were involved in the shootings. they also won't comment on shootings were conducted by the same person or several people. that remains unclear at this stage. what they are saying is that one person has been charged with murder. tom: every nation has its own social tensions and tensions of migration and immigration. there are some 46,000 muslims in new zealand. how to the muslims of new zealand fit into the fabric of the society? matthew: it is a very accepting society. there are tensions around immigration, the sort you would see in most nations. immigration has been a theme because we have had a lot of immigration in recent years. nothing to suggest that there is a groundswell of hatred or
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intense racism that could lead to anything like this. that is why i think new zealanders are so shocked at this. the prime minister has suggested that perhaps new zealand was targeted precisely because it is such a tolerant and peaceloving nation. there are no radical right wing groups could point to that might be behind something like this. tom: thank you so much from wellington. now, with a news brief, here is video. -- viviana. viviana: theresa may won on a final push for her brexit deal. lawmakers voting to endorse promotion. the alternative is a lengthy delay to brexit the lawmakers are desperate to avoid. korea's kim jong-un is
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apparently having second thoughts about nuclear disarmament talks with the u.s.. he will soon make an announcement as to whether negotiations will continue. the foreign minister saying the country has no intention to make concessions to the u.s.. boeing 737 max 8's may be grounded in the u.s. through april until the planes get updated software. that is according to members of congress who were briefed by regulators. themberg has learned investigation help the u.s. to --und the 737 max 8 rate max. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thanks so much. slow,riday, with the news a surprisingly flat data check. curve going nowhere over the week. euro going nowhere over the week. oil going nowhere.
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the vix as well is just sort of their. i failed at my data check. francine: you didn't fail, that is exactly what is going on. today, the pound trading sideways. people are trying to figure out what the risk of the delay are. first come into the deal is theresa may can push it through parliament or not. i'm also looking at crude oil. the bigwigs in oil exporters will meet this weekend. of course, i'm looking at european stocks gaining. let's go straight to brexit. a lifeline for prime minister theresa may's eu exit plan. she won in her victory with the house of commons voting to request a delay to brexit. the wind allows more time for her deal to get through parliament. joining us now is anna edwards live from westminster. we keep saying this is a win for theresa may. parliament has voted for an extension, but are we absolutely
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certain the eu will grant this extension? anna: no. any extension request would be just that, a request. the ground in brussels reporting some of the divisions that exist within the eu, although there is a sense that you would look favorably on any kind of extension. they may not necessarily offered the duration of extension the eu wants. we will know more next week about how long that will be. our way back to the start, essentially. will we have to ask for a much longer extension and come up with a plan the? tom: and the madness of the week, we thank you so much for your work on the green. one wonderful book did a fabulous summary of anna edwards' insane united kingdom.
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britain famous for its propriety and punctuality is suddenly looking like a banana republic. brexit has always been a solution in search of a problem. virtually every other member country dislike the eu because they see europe as a free market juggernaut. europe would also lose a lot with brexit. it is a superb essay. the upside downness of the united kingdom, what do they do next? what is the tone next monday, next april? i suppose we are going to learn a lot next week as to where the town goes next. there are two grounds of work on the table right now, theresa may's deal. she
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for it, although she didn't manage to get it through parliament on the second attempt with meaningful that number two. that is one strand. the other is what we are seeing from jeremy corbyn and others trying to work on some kind of other plan. at the moment, they just don't seem to have the numbers. we saw banana republic, another colleagues also pointing to monty python metaphors. we really have seen stunning scenes, including the brexit secretary standing up and advocating a plan that he later had to vote against. tom: i know you and our team has had massive coverage. are you going to do team coverage on the separation of the conservatives? can the conservatives survive what we witnessed here? can the conservatives survive as a party? a: what we are going to hear
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and laugh about over the next few days is how long the delay could be if the conservative party doesn't pull together and back this deal that theresa may have on the table. we heard from her deputy this morning saying the eu might offer an extension that is a year or longer. certainly, the erg won't want that. will they be persuaded by theresa may and geoffrey cox to come on board? that is the crucial thing. geoffrey cox has already amended his advice, drawing on the convention of all things to try and suggest the countries can back out of treaties that they sign. it all depends on whether this party stays together and eventually back her because they would prefer her deal to know brexit will. -- to no brexit at all. francine: joining us here in the
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studio is the global head of fx macdonald,'slucy chief investment officer for global equities at allianz. i don't know why we now think she could get it through a third time. the attorney general is unlikely, i matter to change his view on the agreements because nothing has actually changed. we don't think the eu will give anything to theresa may. why with parliament suddenly get together and back her? : geoffrey cox is still looking and seeing if you can clarify his previous advice. as far as whether she can get it through next time, it depends on whether the threat of a longer extension is enough to bring both the dup and the erg onboard. it is going to be a really tough call. it is possible, but it is going to be very close. francine: what does it mean for
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pound? >> i think within all of this madness and the mess we have experienced the past few months, and especially this past week, i think the main takeaway for me is that the tail risk seems to be having a lower and lower probability. you can actually see it. sterling is the best-performing currency against the dollar. i think the market is getting that message and basically pricing the hard brexit premium out of sterling and that is why it is pushing it. nonetheless, volatility is going to stay with us. the ball is going to be into the court to say exactly what they will require from the u.k. in order to grant potentially a prolonged extension. you nailed it,
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which is the idea that we can't do a trade your. we don't have enough information for anybody to do a directional trade on sterling. is that right? vasileios: i think that is right. ready to take a view and wants to some of the volatility, in the end, we are gravitating toward some sort of a soft brexit. to that extent, you are going to get whatever premium is pressed into sterling. that means that sterling, on a medium-term basis is going to go higher. not excessively higher because even a soft brexit is going to put spent limits to the appreciation because of the damage to the economy. other than that, it is trying to take of you on sterling right now on a short-term basis, i think it is a futile game
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because it is politics we are dealing with. francine: thank you so much. news onetting breaking iea. the iea saying that opec cut compliance. that, by opec standards are actually quite high. we know a lot of opec officials will meet over the weekend to discuss possible output cuts. coming up, we speak to the finance minister of ireland. domicile exclusive interview just after 10:00 a.m. london time. this is bloomberg. ♪
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francine: today's i a report seeing a shift in tone. opec and analyze will meet this weekend while president trump has once again called on opec to moderate oil price. coming up is the head of the oil division. if you look at your latest report coupled with what the markets are doing, what you think opec should be doing? place that deal in it agreed in december. it runs through to the middle of the year. there is a meeting this weekend to look at progress on the deal. they will look at numbers quite similar to ours which showed that the compliance by the opec countries, where the deal is about 94%. that is going quite well. opec producers are coming in a
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bit lower, but their compliance rate is increasing also. i think they will look at the markets and think their cuts have been reasonably successful so far. they stabilized oil prices, which have fallen to $50 a barrel before the end of the year. now, in the mid $60 for print. for the producers, they will think that is a fairly satisfactory situation. francine: what do you think we are actually going to hear from them? think they will review the market and think that the cuts are working quite well. don't forget, we are only in mid-march. the deal didn't start until the beginning of january. the deal has been working gradually. i would think that they will review those deals and think that it is still got time to run. they will no progress and get ready for the next meeting. obviously, it is up to them what they finally do, but i think it
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would be quite surprising if they were to make a major change to their strategy at the moment. tom: you guys provide a huge public service, really trying to guesstimate supply and demand. is there a real way to understand or forecast forward to demand? is there really a way to get a handle on where demand is going, or do you just have to wait until you get the data? tomneil: obviously, there is an element of that. what we are seeing at the iea is that demand growth in 2018 was pretty strong. as we backfilled 2018 with real data, we are seeing that that number is roughly the case. as we try and understand what is happening in 2019, what we see is that so far in 2019, average prices are lower than they were in 2018. some of the pressures on developing countries, which were hit during the year, during last
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year by very high crude prices and also currency weakness against the u.s. dollar, those pressures has eased on developing countries. rethink their demand growth is going to be reasonably strong in 2019. that is our view on demand. we think it was solid, last year and will remain solid in 2019 which isn't to say that we are keeping an eye on the economic headwinds, the trade disputes, slowdown in china and various other economic worries that people have. between artalance and science in forecasting demand. we are pretty comfortable with the outlook that we have. tom: thank you so much. neil atkinson with us from the iea. important interview, it is not just about general electric, it is about industrial best practices. our david westin in conversation
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culp.yrical -- larry this is bloomberg. ♪
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>> the rating agencies certainly have an eye on ge.we are in constant communication with them in the type to communicate as thesparently as we do with equity markets as to where we are and where we are headed.
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i think they understand that what we do on both sides of the house puts us on a path to fortify our financials. tom: considering what the stock of ge did today, lawrence culp was announced as the ceo. seeing --his is just yseeing. what the radar you look at in terms of the transactions? how do you handle the egos of ceos trying to do the transactions? lucy: in his judgment we are making it whether to invest into a country or not, looking at the track record of any ceo. what they have been up to in her previous career. you can see the track record of capital allocation, whether the
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mergers they have done have actually added value. if the sizebe that makes a difference, the larger they are the greater risk, where you are in the cycle makes a difference. toward the end of the cycle in valuations are very high, it is more difficult to generate returns. those are the things we are looking at when we are talking. a ceo can really have an impact on the value of a company. tom: that jaded view of an investor over ceo ego. we are going to continue here. much to talk about this morning. of course, new states on the terror in new zealand. coming up later, a good conversation always with jane arden. ♪
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♪ mrs. bloomberg "surveillance," tom and francine from london and new york. the prime minister of new zealand called it one of the darkest days in their history.
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a shooting at two mosques left 49 people dead and scores wounded. one man has been charged with murder and three other armed people were arrested but their roles were unclear. of thelive streamed some attack on social media and the attack appears racial. we will bring you any news as we get it. bombed: israeli aircraft dozens of buildings after palestinian rocket attacks, the ,irst since the gaza strip war and they come less than a month before israel's election. israel intercepted three of the four rockets. ppg fired a top executive after he was charged in the college scam.
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they arelass skin -- allowing investors to withdraw their commitment. president trump is set to offer -- prepared for his first veto. there are not enough votes in either house to override a presidential veto. the senate vote is a disparate -- an embarrassing show of disunity to the president. 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 viviana hurtado. tom: thank you so much. if you go on wikipedia, there is a list of presidential vetoes. the idea that you should get out the veto pen and the mood can change. baker, us now, stephanie bloomberg senior writer with great perspective on the process
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of washington. thank you for your message to me explaining brexit. explain to our global audience the veto process and why it is so unusual to have so many republicans go against their president. is particularly unusual for trump who has controlled the republican party with an iron fist, and they have remained steadfastly loyal. to have a dozen republican senators vote against the president's emergency declaration is incredibly consequential. -- he does notgh have enough -- congress does not have enough votes to override his veto. nonetheless, it is an embarrassment for him, and i think the republicans are concerned about what a democratic president would do with those powers.
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say him out -- invoke and emergency on climate change. tom: more language and stronger language about mr. mueller in a final report, do you have any indication we will see anything from mr. mueller today, and a final report made public or not? atphanie: the rumor was woodland yesterday and it did not appear. the idea that we are suddenly going to get the mueller report in our inbox is false. even if he does issue the report and send it to the attorney general, that does not necessarily mean we will get to see it. could already have the report and is deciding what to do with it. with the vote in the house calling on the attorney general to release the report and make it public, that puts additional
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pressure on the justice department to make it public. i think it is likely if we get a report, it would be heavily ,edacted or at least in part and you would have a fight in congress to try to make it public in its full and entirety. francine: thank you so much, stephanie baker with the latest. let's talk more about the u.s. from a central bank and monetary stance. at dollarook dynamics, does it have to do with monetary policy or global trade issues? >> it has been affected pretty much by both. i have to be honest and say i'm surprised that after the dovish move from the fed, the dollar has not sustained more losses.
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extent, that has to do with lingering concerns about global growth that lead to demand for safe havens such as the dollar. if you look across the g10, the dollar tops the least in terms of the currency because it is suffering the highest kerry. across g10, you will get a perfect correlation between swap rates and different yields in countries, and the performance. potentially the exception is sterling. tom: what does it mean for earnings? i was told -- francine: what does it mean for earnings? i was told the s&p is probably the best indicator rather than inverted yield curves and the like. lucy: the strength in the u.s. relative to the rest of the world has been affected. the fact that you have had better than average u.s.
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corporate earnings has certainly meant you have a slight disconnection between the normal relationship in the u.s. market and elsewhere in the world. we are normalizing that relationship, so as we go on, we have a monetary environment that is generally slightly tightening , but is very slow. you have an interest rate environment which has tightened a bit and is on hold for the foreseeable future. much more now down to what the earnings present, which will be a more normal level of single digits. that is the sort of environment we think we will get in market, low-ishe returns -- returns. tom: this is the vix, the
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standard way we look at volatility. andave the ugly december, down we go to the quiet the lassitude that we see, and we see a way away from equities. we see it in foreign exchange. what is that dampening the quiet that lucy talks about, what does it signal? in termsou are getting of having volatility drifting even lower, i think it is largely has to do with the fact that you are getting monetary policy being communicated as longer than initially expected. you have the dovish view by the fed in february, followed by the bank of canada and the ecb, which took me by surprise. the down growth and fork --
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surprise.as a liquidity that was there before and was about to be taken out will still remain for longer, and therefore you are getting this decrease in volatility. tom: i am going into the weekend and do not know what to do with my money. what has been allianz's distinction? lucy: a big thing we have been doing is investing more in china and china related. that has been the focus. that is where we are seeing the current real efforts by the onhorities in china come fiscal, monetary, infrastructure spending, everything being thrown to stabilize the economy. that we think will have an impact toward the end of the year. demand looks ok in china.
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supply and production is still weaker, but we think as we get through the year, that will begin to stabilize. that is important obviously for things like european earnings and the economy, as well as for china. francine: thank you both. we are just getting some headlines from the irish finance mr. -- minister, he is saying parliamentf vote in are significant and is suggesting the u.k. take a look back to look at brexit. i think he is hinting at the red lines theresa may imposed on herself. we will be speaking to the finance minister of ireland in the next hour. this is bloomberg. ♪
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♪ countries will demand that work be done. you risk credit order compliance. regulators will sit there. it changes the forecast. it will be not quite what it is today. that was jamie dimon, chief executive of jpmorgan speaking to us yesterday. tom and francine from london and new york. theng to figure out implications of brexit for the financial city and we have spin this we have been speaking to a number of breaks -- banks. let's talk about the ecb, president mario draghi set in place conditions to keep the eurozone in easing mode until he
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leaves office. this saves his successor from having to restart stimulus decline.e economy us as francesco papadia. thank you for joining us. when you look at the latest stimulus extensions, what are the risks? francesco: i am not sure there is a lot of risk. the measures that have taken this series are relative unit with respect to what they did in the past. i am more impressed by the revision of the forecast then by the measure. the measures were expected. they came a bit earlier than people thought.
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way,are not extreme in a so i don't think there are many over there. francine: if you are extended for a long period, is there more risk you will not be able to pull it back? francesco: the risk is about financial stability. keeping interest rates so low for so long is a risk for financial stability. mr. draghi, like ms. yellen used to say, it is macro prudential measures that should take care of that. taking macros are prudential measures. it is unclear whether generalized financial stability could be dealt with by macro financial measures. tom: i have a pretty good understanding of what greece needed from germany in the heat of the greek crisis.
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i lost track of what italy and other southern nations need from germany. what does italy need right now from the leadership of germany? francesco: italy needs leadership from italy, not from germany. there is not much but countries outside of italy can do. italy needs to think hard about what it is doing and try to remedy the mistakes the current government has done. if things move in the way i think they will move, in the way economics tell us they will move , they will have to rethink what they are doing. and i look at the europe the path forward for italy, there seems to be a bit of upset. what is your best outcome for the leadership of italy? francesco: i am not a political theyt, however what
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promised is unlikely to come true. public opinion well sooner -- will sooner or later understand that italy is on the wrong track. and somehow, the direction will be changed. i don't know how. if the force of public opinion is there for a change, there will be a change. the question is when and after how much damage? francine: you are not a political expert -- which not many people are when it comes to these new coalitions. will they have to change their budget because of revised gdp growth lower? francesco: it is not only the budget. the big problem for the last 30 years is that italy is not growing. negativeity is zero or in italy for a decade and there
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is nothing this government has done to remedy. you do not remedy that in a quarter or a year, but you have to start doing that. ,taly cannot keep not growing especially at the gdp ratio of 130%. the priority is not in the fiscal domain, at least in terms of fiscal deficit. it is in the growth demand. mean for what does it the rest of europe? as we see european elections, if you look at the path for the euro, well we have a sense of whether there is support for this currency after the elections in a couple months? francesco: so far, italy has not been a big problem for europe. turnurse, things seem to in a negative way when the government initially presented a budget that looked like a challenge to europe.
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attitude,anged its more than the policy it changed the attitude. no more confrontations with europe, and this is limiting the impact of italy on europe and european elections, which of course we have many more important issues to look at. tom: thank you so much. coming up, we look at solvency and liquidity. only jerome schneider of pimco can do that with us. he is truly expert in the short-term fixed income space. we need an update on that with the low volatility we see. ♪
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♪ this is bloomberg "surveillance." next week is the start of march bestss in the u.s., the
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three weeks of the year for college basketball fans and those who bet on the games. we look at a digital media startup that hopes to cash in. 68 teams will begin the journey next week. four will make it to the ncaa finals, but the number that is billion.resting -- $10 that is how much money will be wagered on march madness come up most of it illegally. they hope to cash in by becoming the go to situation for those gamblers through a subscription-based service. you can buy expert picks and analysis for eight dollars in a month. spend $250 a month, you will get a lot more, including where money is flowing through legal sports books. a new group of investors including team owners just
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invested $17.5 million in the action network. you can read the entire story on the new bloomberg businessweek on newsstands right now. that is your bloomberg business flash. tom: we will speak to the finance minister of ireland who is speaking now. he has important headlines out on how london needs to get its act together. we have francesco papadia with us. what can the ecb do, what can the next draghi due to provide stability within this political tumult? the ability of the ecb to deal with political issues is limited. of course, the impression that central banks gave during the great recession is that they could deal with everything.
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indeed, they went out of their , inin europe, in the u.k. the u.s., in japan and switzerland, you name it, to deal with economic problems. their ability to deal with political issues is limited. i am not saying the ecb could -- do more if they were more there were more economic problems. against political issues, politicians have to take care of it. francine: if you look at the ecb and the tools left, what will they do first? will they not go through more qe? francesco: they could. i think there is more room in qe then cutting interest rates. we know now that zero is not the limit. points, 75 basis points in switzerland seems to be the limit.
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there is not much the ecb could do. , but they have shown a lot of ingenuity to deal problem.scarcity if they decided to do it, i think they could. francine: we talk every day about mna in the banking sector &a in the banking sector. francesco: this is a controversial issue. the effect of low interest rates as there is little to be made from lending long and borrowing short. that is a clear problem for banks, especially for banks in germany. however, if one looks more deeply at the consequences of a central-bank action and is convinced that this avoided a bigger crisis, or is avoiding
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less activity, then this helps banks through the nonperforming loans. francine: thank you so much, francesco papadia. tom: we have much more to talk about through the morning, huge news in the united kingdom, in the united states, and the terror of new zealand. we will have further reports on that. an important conversation driving forward the brexit debate, we will speak with the irish finance minister, paschal donohoe. we will do that in the 6:00 hour. york, this, from new is bloomberg "surveillance: ♪
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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. ♪ tom: this morning, get out the veto pen as president trump will not let gop seven there's
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nullify his national -- senators nullify his national emergency. the presidential relationship with vice president pence, has it then damaged? a meaningful week in parliament as prime minister may wins a third meaningful vote. silence from brussels. terrorzealand, there is and a 74 page manifesto. we will have much more on this developing story. this is bloomberg "surveillance," live from our headquarters in new york. francine,eene and horror for new zealand. .rancine: horror and terror the prime minister calls it one of the darkest days in their history. a shooting at two mosques led to
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49 people being killed. arrestedn his 20's was and three others are being questioned. the man live streamed some of the attack on social media and the motive appears racial. managingrd johnson as editor for australia and new zealand. i think we are up to speed on the terror of it, the sadness of it, and the political responses. what is the nature went authorities say, this guy is from australia? what does it signal in new zealand or for that matter, in australia that one of the shooters is "from australia"? edward: this really has triggered shock from both sides of the ditch, which is a stretch
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of water that separates these two incredibly close allies and countries that regard each other as close cousins. prime minister scott morrison was quick to come out to confirm that the alleged shooter was australian, and also to condemn this attack is a vile and terrible act of terrorism, in the strongest possible terms. the prime minister picks up on that as well and said such acts of extreme violence and such vital ideology have no place in new zealand and the world. tom: the distance of australia and new zealand, there is such a history and linkage to it as act together, or is new zealand separate and alone as they deal with the
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societal impacts? there willnticipate be shared information between intelligence agencies. australia has said they will be conducting their own investigation to see if there are linkages here. new zealand will obviously be looking for any help in intelligence gathering they can receive from any quarters. it is interesting, police have said this evening, none of the people detained were on the radar of any of the intelligence agencies, and they will be looking back closely to see if vital warning signs had been missed to see if these attacks could have been averted. francine: what do we know about the attackers and how they operated? edward: very little, very little detail has emerged. i have to state that given one of the suspects has now been
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charged, the man in his late 20's, we have to be careful around speculation for legal reasons as that man is due to appear in court tomorrow. it is interesting that any one person has been charged. four people were picked up. police have been a little bit cory around this. this. around three other armed people were picked up in the facility, that they -- vicinity, but they have not fully linked whether they were associated with this attack. we do not know if it is a lone wolf attacker or if he had accomplices. francine: edward johnson, thank you so much. let's get straight to the bloomberg first word news. viviana: more time for british prime minister theresa may, she
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won it on a push for her .ejected brexit deal lawmakers voting to endorse her motion gives her time to persuade doubters in her party to back the proposal. the alternative is a lengthy delay to brexit that lawmakers are desperate to avoid. tim john kuhn is having second thoughts about nuclear disarmament talks with the u.s. is having second thoughts about nuclear disarmament talks with the u.s. jets may's -- 737 max be grounded until april until they get updated software. a piece of wreckage from the ethiopia crash indicates the plane was configured to dive. that helped convince the u.s. to ground the 737 max 8. 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. hurtado.ana
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this is bloomberg. tom: a quiet friday, quick they do check, not much going on -- quick data check, not much going on. 13.13., a stunning what is sterling doing? francine: it is moving sideways and we saw quite a bit of volatility this week as people tried to figure out whether the e.u. grants the u.k. this extension, and whether it will be short or long. stocks pretty much unchanged. tom: i want to take a look at the bloomberg. ,his is a quiet in the market setting you up on global wall street for your weekend. here is the ugly december and down we go, getting back to the 2018 quiet and not quite to the 2017 quiet. francine: our top story,
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lifeline for prime minister's exit, they's e.u. house of commons voting 412-212 to request a delay. this allows more time for her deal to get through parliament. joining us is anna edwards live from westminster. what needs to happen for the deal to go through parliament the third time? it looks like the e.u. will not give anything back to the u.k. is it boiled down to whether the attorney general can get a different reaction than this week? general, whenrney he was not able to change his legal advice around brexit this week, that led to the second attempt to get the deal through wasing, because the dup reliant on the view of the attorney general. if he can be persuasive and of a them in the direction
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lateral climbed down, that will change the dynamics and perhaps change the math significantly to get her deal through. we can expect to hear lots of words next few days designed to make them come around and suggesting if they do not come around, what lies ahead could be possibly no brexit and a long way ahead. from somei have heard european quarters they do not want a long delay because it could be the u.k. pressures them into negotiating their future agreement at the same time as the withdrawal. do we have any insight into what the e.u. wants? always beenu. has very certain to point out the sequencing that they want to do withdrawal and then future trade. it does not seem as if they are entirely on the same page. up until now they have been
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united, but there seems to be a bit of division, whether france is on the same page of willingness to give a delay. delay, you, the long take it at face value. maybe they are open to a different kind of brexit without the red lines, or maybe they are trying to apply more pressure on around and erg to come to theresa may's deal. tom: thank you so much for your coverage from westminster. , he isschneider of pimco truly expert in short-term fixed income, which means he is expert in the nuances of liquidity and solvency. the background is how wonderful everything is, except maybe not. saying great efforts
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are needed. you hold the hands of the thermometer. what does it tell you? jerome: that thermometer, barometer, liquidity -- tom: barometer, i like that better. jerome: it may be the transition from winter to spring, but it will be a rough transition. it focuses on the change of capital -- change in the cost of capital. people clearly rationalized in the first quarter -- fourth quarter of last year. capital will continue to increase and as risk-free rates at 2.4% get put in place with , cfos,sets, investors treasurers will figure out how to make proper allocations. tom: you are saying lawrence bmw or ge, or the guy at
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name the company, it is back to the real world? with the overlaying complexity of politics and fiscal policy over the next few years. it is a lot more complicated world and while monetary policy will likely provide some type of warm blanket to extend the runway of economic factors, the reality is investors need to be prepared for more volatility. simply put, even though you just pointed to the vix back to the lows from the peaks in 2014, there could be many bouts of illiquidity that could translate -- mini bouts of illiquidity that could translate to problems for investors. francine: how long has the fed is elongated the cycle in the u.s. and what does that mean to start normalizing?
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lower for longer, does it make it much more difficult to get out of? jerome: ultimately we will get more clarity with the fed meeting next week. we will stay between 2.25% and 2.5%. the fed has preserved optionality for themselves, creating a reaction function whereby there is more cemetery to the inflation -- symmetry to the inflation. they do not necessarily need to react when inflation starts moving higher. potentialtory for rate hikes is elongated as well. think of it as a healing process. the fed is allowing the financial conditions from last year to heal, so we will have an elongated, passive function from the fed that emphasizes patience. it is important to look at
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underlying tones and recognize this transition from monetary policy to reducing the balance sheet will not be so smooth. do not confuse the patient's by the fed is being complacency -- iemce -- patients. -- jerome: the two-year yield is probably slightly higher. cut, we do not think that is necessarily the right trajectory. inbe agnostic of flatlining the next six to 12 months. a rate cut in the market does not seem a logical response. slightly higher from where we are. thank you so much, jerome schneider of pimco is staying with us. coming up, our exclusive
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conversation with the irish finance minister, paschal donohoe. we will talk about brexit and the irish backstop. this is bloomberg. ♪
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♪ good morning, everyone, bloomberg "surveillance." i am tom keene in new york, francine the clot in london, and we are following -- francine lacqua in london, and we are following this terror out of new zealand. our chief washington correspondent kevin cirilli has been out counting gop senators. what is the distinction of a
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senator from maine or alaska saying no to the president versus the 12 who said no? kevin: they are all different types of republicans. the bottom line is whether it is rand paul, a more libertarian leaning, or susan collins, a questioningey are the national emergency. the president tweeting out that he will veto this. it is the first time he will use a veto. mass isom line is, the not there for the republicans to override that v -- veto. tom: the schoolhouse rock days were like the stones and the beatles. with the president and the challenges he have -- has had, and the ballet of all manafort this week, and after the federal
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action, the state goes after him. is that a precursor for the president if we end the mueller analysis that he will go to other legal issues? court --s, and the message coming from the new york court is the president would not be able to pardon paul manafort because he cannot pardon crimes committed through the state. the other big vote yesterday was 420-0 in the house of representatives when the publicans -- republicans joined with every democrat to say they want the mueller investigation fully released to the public. francine: talk to me about trade. meet withpresident xi president trump? kevin: no one knows. there were a couple of key hearings this week with bob
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lighthizer and steve mnuchin. the bottom-line is there is still some distance between the u.s. and china, and that has softened the expectations that there will be a key meeting the between president xi and president trump in the short term, and we do not know when. there are major issues remaining outstanding in these talks. do we have any idea what they are? kevin: enforcement mechanisms are a key one. the business community wants to know that whatever type of agreement is reached, how will it be enforced? that is something republicans and democrats have a lot of questions on, particularly pertaining to intellectual property. francine: our chief washington correspondent kevin cirilli.
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interviewur exclusive with paschal donohoe, the irish foreign minister. this is bloomberg. ♪
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♪ this is bloomberg "surveillance," comment francine from london and new york. theresa may is still fighting to get her brexit deal through british parliament. lawmakers voted to request a delay from the e.u..
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theresa may says of her deal the u.k. will be forced to extend their membership for over a year. the e.u.onohoe says has no intent to trap the u.k. and the so-called backstop. what do you think are the actual chances of this deal getting through u.k. parliament next week? mr. donohoe: that would only become clearer as prime minister may decides -- when she decides to hold a further vote. what is important to us and the european union is that if we get into a decision whether a further extension is needed, that we are clear what that is for. the availability of that does not tighten the economic risk -- heighten the economic risk we are looking at avoiding. francine: have you spoken to the
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dup going forward? mr. donohoe: they are engage laying intense -- engaging and michel barnier and the european commission are most interested. francine: do you think relations are improving? you must be briefed about this. we donohoe: precisely what are trying to avoid is becoming collateral damage. of course, we are aware of the levels of contact going on with the dup and the engagement that has taken place with them from the british government. we continue to abide by the principles of respect for understanding the needs and concerns of unionism, but we strongly believe backstop is only an insurance policy, and having that is in the best interest of everyone. .om: you are living this
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i find it interesting that you have your own family redline and your wife is british. it must've been something about your citizenship ceremony you had for your wife. give us an idea of how silly a or northis in the sea of dublin? mr. donohoe: what you have highlighted is from an irish perspective, our identities are intertwined with that of the u.k. the reference that you made our references that hundreds of thousands of irish people would have and stretches back many generations in terms of our relationship with the u.k. we are looking to avoid the concept of borders. i believe the future discussions that will take place regarding the new relationship between the u.k. and e.u., that arrangements can be made about how we can
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have good trade between the u.k. and e.u. wethat were not to happen, need to have a policy in place to ensure we do not destabilize what everybody on our island and the british government have been able to achieve. tom: what we have seen in the last few weeks to a foreigner like me is extraordinary, and it seems like the serious conversations always end with the worry of scotland and others leaving the united kingdom. do you fear that if london gets this wrong we could see the united kingdom become fewer entities? mr. donohoe: obviously, that is a key concern to the british government, which we understand and respect what prime minister has -- prime minister may has said, that she is willing to preserve the union and she means england, scotland, wales, and northern ireland.
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--s is we're we pare back this is where we pare back into the good friday agreement that makes any changes to northern ireland can only happen on the basis of consent, and all governments respect that and .ill root -- abide by that i believe the value of this is fully appreciated by theresa may. francine: is a long extension better than a three month extension? mr. donohoe: that is a decision the british government has to to beand this will have decided on the basis of unanimity within the european union. --this point, it is clear important that we are clear what the extension is for. if -- the island would respond back very generously. francine: the u.k. goes to the e.u. and says, this is the
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extension, and the e.u. votes on it. what is the irish perspective? mr. donohoe: you are asking me to give a perspective on a decision that has not been made. the irish government has participants in this process and we have to allow the political process to reach a decision in relation to this. that is the secret. tot i would like to indicate your viewers is that the irish government will look to be helpful and generous in responding back. thecine: what do you think chances of a no deal brexit are? mr. donohoe: i think the no deal scenario is still there. clearly the decision that happened last night where we saw a motion passed in the house of commons with the amendment that ruled out the possibility of no deal in any scenario, is significant.
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what you saw in the house of commons with the articulation of a political view, we need to hear them articulate how they will realize that and avoid that happening. i am sure this is something the political -- british government is reflecting on. tom: your thoughts on all that we have seen over the past few months, and who knows what the path is forward in london and onssels, give us an update the reunification of the island of ireland. i understand it is not one year out, but is that part of this calculus five years out or 50 years out? mr. donohoe: from our perspective, the only prism through which we are involved is looking to protect our economic and political interests. have in view we relation to northern ireland is governed by the good friday
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agreement. we do not believe it would be appropriate to consider a border poll. we believe it would have significant consequences on our island. we believe our political energy is better used navigating our way through this current phase and looking to what phase two will hold, what is the relationship between the u.k. and european union? thecine: paschal donohoe, finance minister of ireland joining us for an exclusive conversation. let's get to the bloomberg first word news. viviana: the prime minister of new zealand calls it a well-planned terrorist attack. shootings at two mosques left at least 49 people dead and scores wounded. a man in his late 20's was charged with murder and three others were arrested, but it is unclear what their roles work.
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the motivation appears to be racial. presidentted states, trump is prepared to issue his first veto. the senate joining the house to block his declaration of a national emergency to pay for a wall at the mexican border. there are not enough votes in the house to override the veto and the senate vote is an embarrassing show of disunity with the president. u.s.-china tensions and pressures on prices in europe. returns falling from 9.2% to 7.2%. 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. hurtado.ana this is bloomberg. tom: it is time for a reset. you do that at 12:31 of whatever year-- 12/31 of whatever
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in with the s&p up 12.30% 2018, let us reset in the bond space. we have to get back to first rinse of all's, liquidity and solvency. what is the difference between liquidity and solvency, and why are people afraid? jerome: liquidity is focused on the short-term needs to have a lifeblood of meeting obligations . solvency is more equity-based and driven. in times of distress, they can be very disconnected. as we sort of get an evolved past in the financial crisis and into a new neutral area, we need to focus on the tolerance for volatility and how that equates to a liquidity in the marketplace -- illiquidity in the marketplace.
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it is that investors do not like the price of liquidity, so for us, the price of liquidity is something we need to think about ,n times of stress and normalcy as we rebound out of the disastrous fourth quarter. tom: the disastrous fourth quarter, february of x months ago and the fourth quarter leading into that extraordinary december, was that a liquidity event of a rigged market? jerome: i think it was a rational response to a growing sentiment that the cost of capital is increasing. we had nine rate increases whereby risk assets at not repriced to take into account the higher risk free rate. investors realized with the fed we had thisat ability to focus on the higher rates and ultimately that meant
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risk returns should come lower, simply a recalibration of rate expectations higher than risk assets and repriced lower. going forward, the cost of capital going higher is now relatively important to take into account. it will impact volatility and liquidity. investors should be poised to manage that liquidity in terms of risk adjusted returns. they will be gravitating toward lower volatility asset classes, including bonds, and thinking of ways to articulate income within that construct. it is offering a lot lower volatility than one might assume , then the broader marketplace. francine: wendy you think that china or japan will buy less -- when do you think that china or japan will buy less treasuries?
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-- some of that has come from the relative stability and rate expectations. we have an overwhelming mark -- amount of supply. we have a trillion dollars of incremental supply in 2019, so the ultimate question for investors and the shape of the yield curve -- who will buy this later into this year and into next year? considering the negative term premiums in the 10 year space and 30 year bonds, it is saying where will it be most attractive? we are not quite there for the foreign investors to come back. francine: would china have a weaponize treasury bank? if there is a risk that goes bad , could they use this as a tool to put pressure on the u.s.? jerome: unlikely, but there is always a fear that that would be
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a negative left tail event. we see this continued evolution, not dissimilar to the monetary policy runway that has been extended. a continued partnership is not asy -- always friendly but to get to a mutual common denominator that is beneficial. the runway with regard to this relationship experience -- appears to be extended. francine: jerome schneider from pimco. we have breaking news out of hungary. tom: this speaks to each nation having its own sense of inpulism, mr. or been -- orb has a unique voice and european empire, he calls for free nations, the empire of europe. back tocle may hearken
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the 19th century with a chancellor of germany over the next coming days. this is bloomberg. ♪
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♪ renewables business was cash positive in 2018, so we had a very strong year. many would say the age of renewables is now, on the back of the ptc cycle in the u.s. we saw a dramatic increase in
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demand and we will have double-digit growth in 2019. the rating agencies certainly .ave an eye on ge we are in constant communication with them and we try to communicate as transparently as we do with the equity markets, where we are and where we are headed. i think they have understood what we have done on both sides of the house. tom: lawrence culp of general electric, there will be much more of his conversation with david westin in the next coming hours. an important conversation on ge and industrial america. i want to point out the back-and-forth of the xi and trump, with the secretary of state telling fox they "might meet in mid april or later." this is an immense joy.
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as i have said many times on this show, no one links advertising into the technology of social like brian wieser, who was pivotal in some historic and courageous calls on the back-and-forth of social media. said, come over to the dark side, and he has, where he is the global business intelligence president. what is it like to enter the death star of advertising? brian: it is fantastic. i spent a good chunk of my career in the agency world. tom: it is a different world. it is not the world you knew years ago. can advertising recalibrate devon the dominance of google and facebook?
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brian: absolutely. no better way to add value than with good intelligence, good planning. clearly gave will spending money on media and use agencies to support that spending. tom: the new facebook with key executives exiting, is the new facebook of facebook advertising likes or is there nostalgia? brian: clearly, facebook is one of the most important advertisers best platforms for advertisers. they have to consider the risks with the rewards. the new facebook, evolving facebook, it will still be an important platform. still expecting pretty solid growth. in terms of advertising business with facebook and the
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allocation google, the pressures of other parts of the ad business and the pressure to participate in march madness, how do you fold in facebook with traditional advertising entities? brian: last time i went from wall street to madison avenue was 2009, and advertisers were freaking out about how dependent they were on television and how they needed alternatives. the same is true now. large advertisers do not like being dependent on any small number -- tom: but they are dependent on facebook and google. how do they extricate themselves to a better profitability? brian: from the marketers perspective, they should always be thinking of alternatives for any given media. they should always have that negotiation to an agreement.
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media owners also up their game. they have established streaming services and more opportunities. the facebook and googles of the world can always improve their offerings and be part of a broader mix. one of the things about leadership and trying to encourage where we should go, think about adobe and salesforce , think about marketers spending thoseon advertising -- thinking differently will allow them to keep growing and meeting their objectives and control their costs. agencies will find ways to support services whatever the the market thinks best. francine: give me a sense of whether a lot of these big tech companies will be broken up. there is more demand in europe. this is on data privacy and
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things like that. in three years, will facebook or google look like it looks now? brian: that is something we have to watch. if you look at the regulatory environment in europe, there is pressure for that happening. from a marketers or advertisers perspective, you can be somewhat indifferent about whether a seller or supplier of inventory is consolidated or not. the chances are good that there will be more regulatory action rather than less, in the future. francine: what does it mean for u.s. regulators? are they just trying to catch up with european ones? brian: it is the case that the europeans are taking the lead. australia and india and other countries around the world -- and to be clear, we are looking at the world of advertising globally because we play in every market.
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the u.s. is not leading in a way other markets are. tom: streaming, you mentioned it. is that where we will all be? brian: i cannot tell you the volume of questions i'm getting. tom: what do you think? brian: 15% of consumption is on connected devices using traditional tv sets. there is nothing slowing them down. it is not clear that those businesses could be anywhere near as profitable as traditional services. are you are expert, what the microeconomics of francine and lending choosing seven over-the-top 12 streaming services? appetite forr multiple services versus comcast? brian: i get to put on my old cable analyst pat.
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-- pat. -- hat. the increase in consumer spending is about 2% over the last eight years. that is not a lot. when we think about all these new services coming up, you can assume there is some erosion from traditional comcast, spectrum, etc., and there is a few million dollars it frees up. you get maybe 5 billion dollars of annual spending available for new services per year. it is like 25 million subunits across the services and not a whole lot of extra money. there were probably not be a lot of profitable businesses. is a difficult question, but social media platforms are facing harsh scrutiny this morning after a shooter accused of killing
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people in new zealand live streamed the murders. how does facebook address the concerns? point clearly, it is a where advertisers have to be concerned about whether or not their association with lot forms present -- platforms presents brand risk. facebook and its own commercial interest, absolutely needs to be doing as much as it can and arguably more with making sure they have a brand safe environment for advertisers. from the consumer perspective, societal perspective, obviously the regulatory is more in europe than the u.s. they are trying to encourage facebook down a certain path and that is what happens. tom: brian wieser, thank you so much. a slow news flow this morning. little newscity, a
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flow having to do with geography . after a decade of development, hudson yards begins. it is a rainy new york city, but to the south asked the chrysler building and the empire state building, over to the right is the next big development. we will talk hudson yards with 70's. -- sotheby's. ♪
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♪ "surveillance," we are thrilled you are with us. we are looking at all the news this morning, and good conversations, david westin with lawrence culp, look for that in a few minutes. a quick discussion with sotheby's international chief executive philip white. we are glad he could join us. island was going to die down, and then there was the plane of hudson yards. all of a sudden, hudson yards has a vibrancy. what will be the vibrancy in five and 10 years?
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philip: we call it the hudson yards utopia, and it is a new destination in manhattan. , ais very exciting combination of public and private coming together to create something fabulous in the world's most fabulous city. tom: they have got a real history of getting these things right. what do you see as a luxury pro that gives you confidence hudson yards can get it right? is it good schools, good stores? philip: i think it is all things coming together. they are creating a 750 seat marcusof shops, neiman and other boutique stores. it is bringing all of this to one location. the office buildings are attracting the best and the brightest in the business, and
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some are choosing to live there as well. francine: who is buying? is it foreigners? is it americans? philip: it is a combination of international buyers and american. it is the younger, high tech person looking to live and work in the same destination. , even at the that high price points they are asking. francine: do you have an idea of where the foreigners come from? is there a brexit link that people do not want to be in the u and are looking at new york? -- in the u k and are looking at new york? philip: we are hearing that anecdotally, and the chinese have a great appetite for american real estate. back on the u.k., some americans are buying in london given the
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currency change with the british pound. we are seeing that with some projects in london. noticed your oak hill avenue listing in hempstead, wonderful. philip white with us of subsidies international -- sotheby's. , jordi ownerberg of bloomberg tv, played a role -- majority owner of bloomberg tv, played a role in the development of the hudson river project. an extraordinary week for bloomberg "surveillance." 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. all of you. how you live, what you love. that's what inspired us to create america's most advanced internet. internet that puts you in charge. that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. >> this is going to be a multiyear turn around. the slope of the lines probably not straight.
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it's squiggly. the good news is we think it's northbound. alix: it's a squiggly line. recovery and power unit will be l shaped and multiyear effort. a message to china, i got your back. the chinese leader stands firm behind the efforts to o support the real economy with record tax cuts without relying on monetarypolicy. third time's a charm, theresa may still looking for the brexit deal. if it fails they could be forced to stay in the e.u. for more than a year. david: welcome to bloomberg daybreak on this friday. a very sad day. a terrible incident in new zealand. 49 people dead. 20 people severely injured and two different mosques. it appears to be a coordinated terrorist attack. it is a terrible situation down there. alix: the national security level has been lifted to high from low. they don't have a reason to believe other suspects are at

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