tv Bloomberg Markets Americas Bloomberg March 26, 2019 10:00am-11:00am EDT
new york and london -- in new york. bloomberg:e to markets. vonnie: we have some economic data for new consumer confidence. we were disappointed with how things started with the s&p core log in -- logic. the consumer conference port number is also disappointing, 124.1 is the reading in the market was looking for 132.5. is the consumer confidence index. we are a little down from last month, and expectations are a little lower at 99.8, pricking the 100 there. it's a little disappointing for the data. let's take a look at markets, the s&p 500 is up one full percentage point today, a little rebound, a few stocks to watch, may be should not have
time for judgment because information has not made public and so analyst are trying to remodel their forecast, they are up 2% after yesterday's extravaganza. crude oil is up at most 2.5%. the priceconcerns as of the barrel of dub uti is higher. i wanted to point out the storyh lira, that continues, it's almost impossible to short the lira. at one point it was costing 300 sense to borrow lira in the last day or so. this could be one of the reasons why gold is higher as well. inversion, what yield curve inversion? european stocks are big, you mention what happened with crude stocks, this is one factor as to why europe is trading high, health care as well. europe is trading higher and the pound is big this afternoon.
and the leader of the brexiteer cop bigs -- caucus was talking about the fact that may be voting for theresa may's withdrawal agreement could be forward or we may breakup -- end up with no brexit. tone inally a risk on the market. butterfly in the ointment is what is going on with the shanghai markets -- but a fly in the ointment is what's going on with the shanghai markets. we have an interesting corporate story worth focusing on this part of the atlantic. there's an internal investigation by a legal team into their accounting practice, which exonerated wirecard. it's being investigated by the singaporean authorities, which has yet to reach a conclusion. the market is reacting positively for the company. we were looking to find out why was there in addition -- a difference between the initial
and final reports. the stock is trading higher at 26%. vonnie: let's get more on the markets and the impacts of the inverted yield curve. not the whole curve is inverted. this is something we will talk kathy from the schwab center. this has inverted in one spot, why has it inverted in that spot? >> i think what has happened in the last couple of weeks is the slow down in the global economy, it's pulled down the rates pretty substantially. when the fed signaled that they were pivoting to a table small -- policy stance for the time being, it revives concerns that perhaps the economy is slower than people anticipated and the next move will be a cut. which we think is likely. vonnie: let's look at the terminal, we have the fed near-term spread. you can see over the last six
months or a year, it has come all the way down to -29 basis points. let me swap that out to my terminal. the point being, we are in the negative here. what does that tell you as a market watcher? kathy: this is something the fed wrote about last year, they introduce this near-term forward spread which they thought was more accurate than the two-year 10 year the market had to watch. this tells you where short-term rates are expected to be. you can see it's a negative territory, it's there in january and it continues to be low. it does signify the expectation of leaving the market that we will see the next -- the next cut. guy: what is the gap between rates inverting the curve, the
curve inverting, and the point on which you want to start selling equities? whole cropon't go one direction or the other. we came into this year with a cautious stance. our view was that we are getting late in the cycle. we would see a slowdown in the economic growth and some of the fundamentals of supporting the market were softening. our view is defensive across the board with fixed income and equities. guy: if we were to get a recession in the next 18 months, that would put a slat bag in the middle of the electoral cycle. the president would find it more difficult to be reelected were he to find himself with a recession. do you think we will see more fiscal stimulus? more pressure on the fed to keep the sugar high going? kathy: i don't know about the fed yielding to any pressure, i think they will wash the economic data. my guess is that sometime later this year we could see them move
towards a cut. the fiscal policy is anyone's guess. i imagine that the slow down might have some pressure. itnie: when do you think will become necessary for the fed to cut? kathy: later this year. everyone is anticipating and talking about how the beginning of the year will be slow but we will have a soft landing. but the indicators are not pointing in that direction. there are consumer expectations we have a sharp decline in manufacturing activity around the globe, particularly in europe. we have negative bond yields to the tune of $10 trillion. it is hard for me to see the fed -- and changes quickly that the fed would not have to cut rates at the beginning of the year. guy: earnings revisions continue to pile up on the downside. why are stocks so buoyant at
this point? you have an inverted curve, the earning story is starting to get more negative. do you think equity markets looked hoppy -- toppy? we favor large-cap over small-cap, and we are under weighing emerging-market equities because of the risk factor. i think our view is cautious. vonnie: where does this leave you fixed income-wise. where are you investing in what would your concerns be if people came to you for advice? that everyone is rolling over short-term and avoiding longer-term bonds. they are missing out on the benefit that you get from the diversification into high-quality long-term bonds when markets do shift. as they appear to be shifting now. if you want to favor a barbell strategy, there is a duration in the middle where you can avoid the dip around the five to seven
year area. we also suggest moving up in credit quality, because the corporate credit spread is narrowing to for going into a slow down we don't have much room for spreads to give you more improvement in terms of return. you are just counting on the income. we like moving up with credit quality. for joining usou today. the first wordon news, here's kailey leinz. the pentagon has notified congress that they have offered $1 million for funding a wall. the associated press reports that patrick shanahan directed the army corps of engineers to plan and build 57 miles of an 18 hut fight -- high fencing in arizona and texas. has -- -- suspended cool -- school activities due to power outages.
the lights are just now coming back on, it's the second major power outage this month. the minister blaming the opponents from the maduro -- of the maduro regime. issued an air warning to the boeing 737 jet. daypotential hit comes a after china awarded a $35 billion order to the airbus -- to airbus, one of boeing's biggest rivals. removeebook is set to hundreds of pages connected to iran. -- this is the latest step in the social media company's investigation into coordinated behavior linked to iran. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists in more than 120 countries.
up 1%, there's a big help there. the following gains for the german dax. we did not have a risk rally. take a look at china, one of the markets down in asia. even despite some economic data missing, investors seem to be looking past some of the global glut -- global growth. there are interesting diversion. take a look at this. this is the s&p 500. also has the s&p 500. optimismve a little here. they are trying to take control of that range. the dax is not above that 200 day moving average since the last all-time high. it will be interesting to see which of these equities proves to be right over the long term. a look at apple and nvidia.
are somewhat optimistic about the new services strategy. the analysts are liking this, the valuation is attractive. and take a look at these energy movers. let's take a look at oil, it's joining in on today's risk rally up 2.1%. this is outperforming european crude. the fact that we have oil trading higher tells us that investors are looking past those global growth slowing fears that we have been contending with. . guy: let's take a look at what's happening with brexit. the parliament trying to take control of the brexit process from theresa may. they will hold a vote tomorrow, with a series of votes and the pound is trading higher. from the headnts of the hard brexit group,
pointing to the fact that theresa may's deal has a shot. joining us now is our guest to give us a sense of what's going on. let's start up with the pound rallying with some points early on with indications that the erg is potentially at the point where they will blink. >> it's possible. it's hard to predict. they have not done it before, the big question is --, and they are much harder not to track -- the army beld brought in, they all need to be on board. had they decided that they are not backing the deal, i'm sorry, i interrupted. >> i think they are absolutely critical to this.
and parliament could be more important. --: vonnie: is it possible that a second referendum is back on the table. and leaving without a deal. we are going -- are we going to see a rainbow of votes? >> all of those are possible. to try to predict how we would get out of this mess would be a fools errand. these are uncharted waters. what is a sounding out of parliament can get behind. range of options, this could go from theresa may to the customs union to the second referendum. the big hang up as that may be the only thing that can fix the fed is the general election, which is what so many of the tories want to avoid. guy: who was the prime minister at the moment? is it theresa may? -- someone else's
calling the shots. he's a fascinating creature, he used to be a minister under cameron and a lot of people will be asking who he is. he has definitely moved into the forefront. vonnie: could somebody take the trust and do something with it, is there any trust in the conservative party right now. -- now? >> trust has been completely broken. and however we emerge from the wreckage, real damage has been done. what about the labour party? they's very clear that want the general election. but the big question is what brexit policy is. thank you for giving us the latest on brexit. vonnie: still ahead, we are talking tech.
live from new york, i am vonnie quinn. guy: i'm guy, this is bloomberg markets. vonnie: samsung issuing a rare profit warning. they say this is short of estimates. the stock is slightly lower in korean trading. joining us now is our guest from bloomberg intelligence. how serious is this? in the u.s. chipmakers have been on a roll. does this put a dent in the performance?
>> i think under pressure is the manufacturer today. company, it'se somecult to figure out -- people are feeling comfortable. there is clearing production which is slowing down. 2019, the pressure should be used, and the big question is whether there is a demand for chips and screens will start to increase. this is really brought in some fresh growth. let's say things bounce back, how aggressive would history dictate that the bounce back could be? think every cycle is different.
i think we see this in the next round of smartphones. that willthe things really drive demand. thing ishe interesting that we are struggling with 5g. in 2020, we see a flurry. this is back together with all of the ai. and this could all drive the cloud side of it. we see this double whammy coming together. be a powerful round. if those things come together in a good way. one company dealing with this in a different way is apple and mac. analysts are saying, we don't really know how this is going to look revenue wise. >> that's right.
bit -- there is not enough hard information around pricing or the specific packages that will be coming out. people are looking for a clear judgment about how successful this could be. i think investor analysts have nothing to do. except to keep pushing the pen on the paper. we are trying to wait to see some of this come through. i think there is a great track record of delivering products with an edge. they have 1.4 billion customers. i think this is going to be successful. i think we have tens of millions of customers pushing into hundreds of millions plus. one of the things that has concerned analysts regarding apple is the lack of visibility. we don't have transparency. more ande progresses more into the services side of
things, do you see visibility increasing. value, and is a lack of transparency causing things to dissipate? you could argue that we are entering another cycle of uncertainty. i think what they are trying to of oneis have this space .4 billion customers. stable tolatively work with. and on the services side the question is what will happen to the margins. this is just above 60%. they are going to put a huge amount of money into the original content project. the question is going to be how much of a squeeze there will be on those services over the next two years. vonnie: the other big tech news is the confirmation this morning that uber is buying korean is 3.1 billionre
dollars of cash in stock. how much of the game changes this for uber, given that lyft is lifting this friday. ? >> i don't think it's a game changer but it's an important acquisition. they were direct competitors, i is haveat this does do the positioning set for a global player. it's different for lift. and it removes some competition and a key market for them. they are pitching those two inductors and -- investors and we could see concerns about pricing pressure in their key markets. this could be great in the coming years. it's an important acquisition. how does this change the investment landscape around tech in the middle east? it is an interesting
acquisition. i think it helps that there is a dotform where the u.s. can what seems like good deals with local companies. they are being backed by local investors. and a lot of investors will be pleased that these can be done. but we have to wait to make sure that this can be -- this could be a platform for things to come. guy: thank you. gdpme bring you some more, -- we just got some news, a 5g security bill looks bad for huawei. this is bloomberg. ♪
the green new deal to a vote. he is hoping to expose divisions among democrats and the first 2020 presidential candidates to take a stand. the gop has rallied against it .s it was rolled up by congress a vote could come at the end of today. mike pompeo is expanding a vague to groups that provide abortions. secretary pompeo said the trump administration will not allow american taxpayer money to pay facts --he called " backdoor funding schemes. " the house of commons will have to decide what comes next with brexit. one conservative says that he believes the prime minister is out. >> people are asking me how long is she going to be -- not only
do i not think she will not be switching on the christmas lights at number 10, but i doubt she will be giving away easter eggs. parliament will vote on an alternative brexit deal tomorrow. they are discussing a no deal exit, a second referendum, or canceling brexit altogether. and benjamin netanyahu cut his visit to washington short, returning home today after a night of heavy fire. israeli aircraft bombed gaza targets while weapons were fired into israel. he says he will take all necessary steps to ensure israel's security and he is up for reelection next month. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists in more than 120 countries. i'm kailey leinz, this is bloomberg. thank you.
global trade in focus in washington and paris today, we have a report from the white house and paris. let's start with the log house. -- the white house. what do we know about what's happening with the trade negotiations? the usmca congressional task force is set to meet here at the white house with president trump in the coming hours. the administration is doing the as oneation of nafta 2.0 of their key policy initiatives that they would like to see happen in the next couple of months. but on the democratic side there is division. some within the caucus are saying this deal does not go far enough, and it is not progressive enough. it is a debate that will shape not just congressional fodder but reelection fodder. guy: thank you.
let's turn to maria, joining us from paris, where the chinese leaders speaking today. over the last few minutes a french lawmaker has indicated the new french 5g security bill will not span huawei. can we consider that usually chinese- that the president has scored a significant success? >> i would say it's a mixed bag for the chinese leader. on the one hand, he does have those comments and he came out yesterday with a huge contract, but the timing on this is interesting. the french have tried to get this contractor year ago. billion, which is twice the amount that macron was hoping for. but some of the wording today from micron and angela merkel has made it clear that the
perception when it comes to chinese money has changed. the european union will now tell you that we have to be careful and strategic about the use of chinese money and chinese investment. they branded china a systemic rival to the e.u.. this is very tough language. but they are taking a step back and realizing that maybe we need to be more careful on this. but while way was not on the agenda, which may speak to the comments that -- while way -- huawei was not on the agenda. vonnie: thank you. one stock catching the eye, bed bath & beyond is up 26%. there is a campaign to replace the entire board. a retails now is analyst.
how successful might they be combined at doing something at bed bath & beyond? >> i think it's a good step, they've had the same management team for a long time with many initiatives, none of which have proved successful to the point where operating margins have fallen over 600 basis points. ifhink that would be great they were able to at least get a few board seats. i don't know if they will get the whole board. but i do think that even with the initiated they have planned, it would be hard for them to completely turn bed bath & beyond around, given that it is far behind its competitors. >> what do they want? >> what they really want is to remove the board, bring in their own ceo, who has been there for a number of years and heavily compensated and has not fulfilled any of the initiatives that they have set over many calls. i think they would like to bring
in a new ceo, expand the private label and improve the supply change so they can lift gross margins, limit the couponing which has weighed on the margins, and overall, manage the business more efficiently. there are smaller online businesses that are distracting. i think they just want to clean up the organization. vonnie: they've all collaborated with other activists in the past. to this no strangers kind of campaign. how come others are not jumping on board if this is such a great idea? >> part of it might just be the difficulty of turning around a business like this. it's very large. it has been really declining over the last six years, and all of their investments have been destructive. the not just a change in ceo, but it's definitely the right step. >> what does their balance sheet
look like? >> they do have debt that they are generating cash and they have been buying back at a rapid clip. this is really how they have been seeing this in the last two years. the margins have come in. vonnie: so there are 16 potential board members, it's difficult to find a good board member, let alone a ceo. this keeps getting rehashed. so what is he doing so badly wrong that he has not been replaced already? he has not been focused. they are trying to invest in technology with online players similar to walmart. there's just no strategy. they have many small brands that they have owned and you may not know it. a lot of them are consumables, which is lower margin. there are many different things they tried to do with no consistency and they have not seen any success. there has been no boost in sales
or margins in the last three years. in terms of what they will find, i think it will be difficult. many companies are also looking for ceos. many someone who is a good operator but out of the retail industry. vonnie: we can't wait to see who they propose. you.tock is up 26%, thank this is bloomberg. ♪
a key player in that business. it's about big oil meeting new energies, and at the crux of that is bp. i'm here with the head of bps operations. thank you for being here. there is talk among oil traders in london, talking about where oil will go. they say 60 to 80 is the range, what do you see? third,es are up about a and that's down to a couple of factors. there's a lot of geopolitical risks out there. if you break it down, and you look at demand, this remains a strong and we are above the 10 year average. prices are less where they were last year. demand is strong. on the supply side, the u.s. shale machine keeps going. real growth there. compliance.easing
russia is coming out of winter and it's easier for them to comply. saudi arabia is certainly doing a lot. venezuela,politics, humanitarian crisis, what will happen with sanctions in iran? it's uncertain. >> [indiscernible] think it's reasonable for consumers and producers. we try not to spend our time about what it is we really concentrate on the things we can control. they said that the bases going to be the biggest oilfield in the world. bp has key interest in that, it's relatively small. what are your plans? >> we took over assets on the first of march. it is relatively fresh for us. there. 88,000 acres we are in a -- position. we have three areas we are focused on. we will probably start off with a majority of the investment in --.
and the bottleneck unleash will --. spending 22s billion. how do you compete? how do you scale up when big guys are doubling the amount? >> we are trying to rebalance our portfolio in the united states. we are 85% gas and we produce 10,000 barrels a day of liquid. what we are doing with this transaction is going through the business. to a business that in the mid-20 20's would be between 150 and $200,000 a day. >> what will be the future for you there? use thatnology can you the other guys have tried and they have set of common not doing that. >> the technology for us is what the team is doing around --. digital operations, digitizing people in the field. i think there's extraordinary opportunity right across the
portfolio, from production improvements, cost improvements, or environmental improvements. we are getting people in from other sectors. it's why we base our headquarter is in denver -- headquarters in denver. >> are you going to take your time? >> we are going to grow the business. we are going to generate close to a billion dollars of cash flow from that business in 2021. is the onshoret area. i know libya has production coming back on and they are counting you got -- on you guys. --nie: >> we are at >> we are in libya with an offshore position. we are working with partners there. i think the real uncertainty is a whole number of factors around venezuela, iranian sanctions, what happens in libya and iran. libya is a part of the equation.
that? do you reconcile you're going to put money into things like shale, that will come online quickly and you will have the positive cash flow and then oil prices will go down because you're spending so much. how do you deal with that? even,focus on the break where trying to have a flexible portfolio, which we've improved. we have a diversified position. we are in the jungle. we are in the deepwater. we are in the desert. we are in the arctic. we do a lot of different things. we believe it's the diversity is how we thrive. >> and new energies. sachs says this is the time for oil majors. they are finally back on top. but it is strategically imperative for these companies to show they can reduce their carbon intensity. where are you?
>> we are doing well. we had accelerating .nergy transition frameworks to reduce our own omissions, to improve our products, and create low carbon businesses. on the reduce we set three targets, methane intensity, emissions reductions, growth. we are making great progress on those. met our methane intensity target in 2018. we grew our business last year but we shrunk our overall emissions and we are doing well. employees and we are announcing a hundred million dollars in carbon funds to come up with new ideas on how we can go further. >> [indiscernible] >> it's in addition to. >> is that going to be enough? [indiscernible] >> on the admissions, we've done
a lot already. our teams are absolutely engaged and this is overwhelming. , also $100ng to -- million in the way of separating them. we find we can do a lot with what we've got. this is a way of earning more. >> what do shareholders say when it's hard to get the return right away? two they have to be patient quest -- do they have to be patient? >> we would say they have to be progressive and pragmatic. there's a real need in the world to reduce carbon emissions. that's clear. and the world needs more energy. planetthe people on the have never flown on an aircraft. a hundred million people every year a going to take a flight for the first time for the next several years. we have to drive omissions down and drive energy up because that's what the world wants, and we have to make sure we do it in a way that creates value for shareholders. >> thank you.
back to you. vonnie: wonderful stuff. our thanks to alix steel. and a ahead scratcher bloomberg exclusive. last week the treasury known sanctions on two chinese shippers. one helps north korea evade u.s. sanctions for the next day president trump tried to reverse the sanctions, there is a tweet announcing that he has ordered the withdrawal of additional large-scale sanctions against north korea. the president was persuaded to back off, and they devised a misleading explanation on the vague tweets. our guest is here to ask why and what happened. what happened? >> the tweet was actually pretty specific. what happened was that once the president tweeted that, everyone started asking the administration what did he mean? does that mean the thursday
sanctions on the chinese companies were reversed? it took several hours before reporters heard anything back. at that time they came out with a comment saying the president was not referring to the thursday sanctions that had but twobeen unrolled, additional sanctions that the administration was considering and decided not to do. which is an odd thing to happen. usually sanctions are not telegraphed, because you have asset flight and sanctions are not as impactful. what we learned today and last night was that it turns out that the hours later explanation of the tweet was inaccurate. to theas referring thursday sanctions, but in the hours of silence the administration officials were coming up with a cover story, a way to save face, to say that he was referring to something else. keyhrows at sanctions as a
foreign policy tool in the trump administration into chaos. is advising the president on foreign policy? it seems as if there is something of a gap between the white house and the state? it's a secretary of state pompeo. he has john bolton, the head of the nfc, and other advisors. when it comes to sanctions the actual tool that needs to be apply economic pressure is secretary mnuchin. it's a team of people involved. i'm sure there are more people involved. i'm sure there's more of a strategy but right now it's unclear what it was that prompted president trump to tweet that on friday, and whether he knew about the thursday sanctions before they were released. vonnie: it's a great story. .hank you this is bloomberg. ♪
for futures in focus, joining us as -- scott bauer -- joining us is a scott bauer. we have oil at $60 a barrel, will it stay there for the session? api think so we will get numbers later today. i think we will see some big resistance around 61. we do have some tailwind. and the selloff coincided with the overall market sentiment and the fears of the economic slowdown across the world. we had -- vonnie: we have some data, it was weak today, can you confirm that? >> yes, if we continue this rally we will see sellers coming in. i think the short-term tailwind and the longer-term trend has definite headwinds.
i would not be surprised to see 55 again in the next three to four weeks. you.e: thank stock of thern to hour. a food delivery company is that stock. and good news from down under. high asre on a record the company gains a foothold in australia. theas a cracking year for stock. emma chandra is here with more. year toup 66% this date, a deal with australia's second largest supermarket chain. -- there are two fiscal incentives and the company says they will be earning negative for this year but analysts are positive because they like this spending to create growth. take a look at the bloomberg.
we have a nice chart showing how analysts have average down on the price target really trading at the share. vonnie: part of the strategy seems to become a full-fledged tech company and to help after brexit. vonnie: this is certainly is -- >> this is certainly a strategy to become a fully formed company technology. on deals withocus licensing as warehouse technology. they have obviously done this with australia, they are also doing it in the u.s. with kroger with 20 u.s. fulfillment centers. there's a lot of analysts really liking this. this has a bit of an impact on the earnings to see this coming down with margins being pressed by all of this investment money.
guy: thank you. they did have a big fire recently in the u.k.. i hope they have a better spring. vonnie: coming up balance of power, kevin brady will join, also ben carson. that's coming up in the next hour. right now stocks are higher, each index we are watching up more than 1%. the dow up 1%, nasdaq up 1.25%. today, followed by oil companies. this is bloomberg. ♪ so with xfinity mobile
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headquarters, i'm jason kelly. welcome to "balance of power" on bloomberg television. thehe brave today -- on brave today, raising obamacare. and we talk about parliament arresting control of brexit from theresa may. and maria on china's president meeting with european leaders. jason: a lot to get to. we will start in washington. pur, the president wasting no time trying to spend some political capital he has coming out of the weekend, going back after obamacare. what is the latest? >> it comes on the heels of a big victory for president trump, where he was vindicated on corruption and coordination with russia as it pertains to the 2016 eight election, by robert mueller. but now th