tv Bloomberg Markets Americas Bloomberg March 27, 2019 1:30pm-2:00pm EDT
removal of president nicolas maduro. united states was the first nation to recognize him as interim president, asserting reelection last year was illegitimate and have stepped-up sanctions and other diplomatic measures in hopes of forcing him to give up our. she told reporters in the white house today, in venezuela it is freedom or dictatorship, life or death. it is the children who are paying the price. another massive nationwide blackout struck venezuela early today. outage comes as service was gradually being restored from two days of intermittent service. an estimated 91% of the country has lost connection to the internet. president nicolas maduro says the u.s. and local oppositions are responsible. industry experts believe it is due to poor maintenance. prosecutors say a grand jury investigation begun by special counsel robert mueller is continuing robustly. davidant u.s. attorney
could have, today at a court hearing where a judge is way too released the identity of a foreign owned company that refused to comply with a .ubpoena from mueller while mueller has delivered his report on russian meddling in the 2016 election, the grand jury has until july to gather evidence. education secretary betsy devos is facing sharp push back over her proposal to eliminate funding to the special olympics. celebrities, politicians, and activists have taken to social media to criticize the secretary for her plan. the organization receives $17.6 million from the education shertment this year, but says it should be supported through philanthropy. in a budget hearing yesterday, barbara lee called the cut "appalling." global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg.
shery: live from bloomberg world headquarters in new york, i'm shery ahn. amanda: in toronto, i'm amanda lang. welcome to "bloomberg markets." by our bloomberg and the bnn bloomberg audiences. shery: breaking news regarding brexit. the u.k. prime minister theresa may saying she will step down once brexit is delivered. she plansold tories to leave before the second stage of brexit. reserveive federal nominee stephen moore thinks the central bank should cut interest rates by half a percentage point, a position well out of line with other policymakers. with aet you started quick check on the major averages.
we see u.s. stocks under pressure, treasury yields under pressure. of course concerns over the economic outlook. the dow reversing two sessions of losses to 5.3%. every sector on the s&p 500 is in the red. %. losses to 0.3 euro-dollar unchanged but we are seeing pressure for the british pound as -- not pressure but upside for the british pound, up .2%, especially after we got the latest headlines that prime minister may is planning to step down before the second stage of brexit. amanda: of course, other boats still to come in the u.k. parliament that will be market moving lightly as well. we will watch all of that. something in the next for the treasury market, talking about inversion this week, what that signals. take a look at this in the terminal, showing you the degree of volatility in treasuries
relative to equities. that spike in the white line is your treasury volatility come outpacing equities. some of that, it was noted today by our colleagues, has to do with the amount of activities in treasuries in the derivatives market. lots of position changing in the last few days. fatheads potential talking about a different view of where rate hikes should or should not go, that may also way on where the volatility goes next. shery: we are seeing bond yields racing to the bottom, traders and team their bets on the federal reserve to cut interest rates this year. on top of that, we have all the news regarding brexit with prime minister theresa may saying she will step down once brexit is delivered. joining me now is mike regan here on the new york set. we also have our bloomberg
opinion therese raphael joining us from london to talk more about what's happening on brexit on the political front. therese, let me start with you. prime minister may saying she will step down. is this a concession to brexit hardliners for them to back her deal that will get a third vote now? therese: it is the last card to reason they has left to play, her deal has been rejected twice by parliament. the speaker of the house adicated it cannot go for third vote unless she substantially changes it, so she is still troubling to test struggling to find a way to get into the house for a vote. and she is struggling to get enough votes to make it worth putting to parliament again. her meeting today with conservative ventures was a final attempt one might say to persuade them to come to her side. it looks like she has offered to step down as soon as that is done. that is not a huge surprise.
question whether it will be enough at this stage for her to get enough votes for her deal . that is certainly not clear that it will be. as we noted,urse, a small reaction in the pound. in terms of how much reaction we expect to get from markets over not just this piece of news but what may come next, some important votes ahead, what are we looking for with volatility? a lot of waiting to see how things shake out? mike: i think so. the pound may be coming off of its high of the day after this news. you are right, the upcoming votes are much more important. for all the uncertainty, the pound has been stably volatile, the way to put it, i guess. it has not really dropped out of any other ranges it has been in. up, ise votes coming that a risk?
possibly, but we will have to see when it comes. shery: of course, this comes at a time when the ecb president mario draghi says and accommodative monetary stance is needed. fallinglso seeing bunds deeper into negative territory. this vibe around the world that central banks are getting more dovish. omearly catching se people by surprise. interesting turn of events, for sure. amanda: therese, obviously a lot ahead, we are hearing there could be mass ministerial resignations in theresa may's caucus. what are you watching most closely now? any of the options being voted on now garners enough support where parliament can say it has more support than
theresa may's deal. for example, one of the options that we will be looking at particularly closely is the idea of a permanent customs union with the eu. that would solve the irish border problem, was been -- which has been extreme the controversial. it would provide another route through brexit that is not theresa may's deal. otherwise, i'm not expecting any real clarity tonight. this is the process that will run for the next few days. amanda: where is the european -- shery: where is the european union in all of this? we have seen them upping their contingency preparations for a no deal brexit. isrese: the european union very concerned about a new deal brexit, they want to avoid that at all costs. the second thing they want to avoid is blame for the fallout from brexit, so they are trying to be accommodating, extending the march 29 deadline already wants. indications also that if parliament preferred a customs
union style brexit, that could be negotiated in fairly short order, so it would not require a long extension. at the same time, the european council president donald tusk has been saying parliament should give a hearing to those who signed a petition to revoke article 50, should let people vote. there are still some in the european union that are hoping maybe the whole thing can be canceled but i think that is probably very unlikely at this point. shery: thank you so much, therese raphael, from london. mike regan in new york. amanda: let's get more market reaction from the senior portfolio manager at wells fargo asset management. obviously, a lot of risks that you identify. macro risks. this is one of them and we continue to watch the fallout and volatility from brexit. we also have the fed at the top of the headlines again. in terms of how investors should look through those risks, what are you advising?
anne: we are trying to stay focused on the fundamentals and it is hard when you have headline news everyday related to macro issues. fundamental still matter. as a fundamental manager, that is what i'm paying attention to. one of the other things to really remember as an investor is that company values and underlying cash flow streams of companies do not change and are not as volatile as stock prices are. so when we are looking to invest in companies and we are trying to pay attention to those that have more control over their own destiny even with macro uncertainty. shery: what companies are you looking at when you look at good fundamentals, do you see any value out there? >> we do. even in places like energy perhaps, which most people would say with all of the global risk of the energy seems like an area not to play in, i think there is still some attractive opportunity. .or example, noble energy
that is a company that has been investing heavily in the eastern mediterranean, in a natural gas field. they are starting to cut back on the bend and the free cash flow will start to accelerate into 2020, expecting more than 500 million in free cash flow to come on board. so you are going from a spending cycle that is coming undone into a free cash flow cycle that will come on. natural gas prices are much higher in that area of the market, so it will be rewarding, and i think hard for the market to ignore that name. shery: last time the yield curve inverted in 2006-2007, we saw a boost to global it equities, e.m. is that what you're looking at as well looking at u.s. stocks against global stocks? ann: certainly, i'm more focused on a domestic market, but you can see the global economy is bleeding into the u.s. and the
inversion has happened, is creating some uncertainty for us here domestically, across the markets. but there could be dislocations happening because there is more than $10 trillion globally in a negative rate environment. so those distortions might be occurring. we know history suggests. but it may not mean that the future will be the same as the past. so again, for a fundamental manager, the best me can do is focus on more of the microlevel things we see at individual companies, making sure we focus on companies that have more control of their own destiny. amanda: i want to turn your attention to a chart in your the latebecause at stage of any cycle, market participants are the least likely to say it is a last stage , the equivalent of yelling fire in a crowded theater.
what do you think of this spread between the s&p 500 earnings yield, and treasuries? it is signaling bullishness, if you believe this to be true. it has been true going back since 1962. this would say stocks have room to run. our valuation model suggest there is room for the market to move up as well. therey, there is risk out , and we are not ignoring those risks. certainly, the yield curve is one thing we are watching, and macro issues to play a role. we are just looking for the best risk reward, but our models suggest there is upside. some of these macro events that we are concerned about could inflect any positive way. if the brexit deal is worked out better than planned, that could get some confidence to the european market. if we get a trade deal with china, that could give confident more globally as well, and could set the stage for the next run in the economy, and in the stock market. amanda: great to have you with
us, ann miletti of wells fargo. shery: breaking news on johnson and johnson. chey have settled their tal cancer case after winning a case in new jersey. a woman blaming her rare cancer on this in johnson & johnson baby powder. that case has been settled in oklahoma. we saw a brief spike in johnson & johnson, paring back from those gains. up .2% at the moment. this is bloomberg. ♪
theresa may speaking about plans to leave after brexit. she is saying she is stepping down, telling tories she plans to leave before the second stage of brexit, saying she will step down once brexit is delivered. she is telling tory mps that she ays got the message and that m is now emotional at a meeting of rank-and-file members. now getting the latest on the u.k. brexit plan as they head toward those indicative votes later on today. amanda: the business of inequality summit is underway. 's co-ceo spoke with our own jason kelly with his reaction to the college admissions scandal. >> a couple weeks ago when this news first broke, it was, as you might imagine, pretty shocking. this was something that we had no knowledge of, had no idea this was happening. something like this
happens, it takes your breath away for a minute. we reacted as you described, we tried to react in a pretty focused way and one of the things that we felt was really important to do was to make sure that we were communicating. so we went out to our stakeholders -- and by the way, that is both externally come in terms of our investors, and internally -- because this is important internally as well with all of our people. but our investors i would say overall our number one very supportive. they obviously understood the billxt that unfortunately, was engaged in this scheme on a personal basis. so our investors were supportive, understand what we are trying to accomplish with respect to the firm that bill was a part of, our impact franchise, which has a lot to do
.ith why we are here today but naturally, a lot of questions. so what we have committed to our investors is that we have undertaken an investigation internally to make sure that none of the things that bill was engaged in our in any way, shape, or form bleeding into the business. we owe that to our investors and are working on that. we will go back to them and give them a read on when we are done. when we are finished with our work. importantly also, i think our investors understand our growth and rise impact franchise, we are talking about 100-plus people. we have a deep, broad team. our impact fund has now made close to 30 investments over $1 billion in capital. so when you look at the companies we have invested in and the work they are doing, i
think they all realize there is something bigger here than just one individual. so they are very constructive. you referenced allowing them to take their money back. in process, we were beginning to raise the second fund, so we had done a first close. we went back to our investors and set of course course you'll have the opportunity to reevaluate. coarse everybody is couple of where we are right now. we will have a readout ultimately of our internal work. then we will go forward from there. tpg co-ceo jons winkelried. time for the business flash, the biggest stories in the news right now. a record deal in the middle east. saudi aramco will buy a majority stake in saudi basic industries for just over $59 billion. aramco will acquire 71% from the sovereign wealth fund as the
world's biggest oil firm turned its attention to petrochemicals. reported onloomberg a deep-seated culture of sexual misconduct at lloyd's of london. in an interview, the ceo tells bloomberg the company will take decisive action against inappropriate behavior. impose itsyers will own sanctions on culprits up to and including lifetime bans. whether these instances that you reported record 10 days ago or 10 years ago, i don't care. it is something not accessible in this day and age that any woman should not feel safe. shery: the morning comes on the same day lloyds released its annual results insurer reported losses of $1.3 billion in 2018, largely due to a string of natural disasters, including those deadly california wildfires. agreed to byrs managed care provider will care
for more than $15 billion. both have built significant businesses around u.s. government health programs. 17 already has roughly 14 million members and is focused on medicaid and affordable care act markets. the acquisition will take place as governments debate. u.s.g up, yields on the 10-year at its lowest level since 2017. that conversation is next. this is bloomberg. ♪
shery: any and that of your negative -- negative yielding debt has grown to $10 trillion. amid the sea of negative yields, investors see junk bonds as a source of solid returns. our next guest cautions about that. he writes for bloomberg opinion and joins me in the new york studio. this chart on the bloomberg show you exactly where we are when it comes to global negative
yielding debt, at levels we have not seen six tony 16. what lessons have we learned since then? -- 2016. are negativelds now, japanese yields have been negative for a while. we are sort of reaching this point now where people are starting to question, do we need to reach for yield elsewhere in order to capture returns? it is anyone's guess at this point because there are these economic concerned that we may be heading into some sort of global slowdown. in that case, john wants and equities will not outperform. amanda: where is duration falling into the mix? is the same happening in the corporate market that we see in treasuries? >> duration grabs are everywhere right now. you are seeing mortgage bond sudden,s, all of a yields are falling, prepayments will go up, and you are seeing a grab for duration in swaps anywhere you can get it.
it is really trickling across markets right now. the question going forward is is this just a phenomenon concentrated right after the fed , we have quarter and, month and coming up, but is this something broader that will last for the weeks and months to come. shery: after three weeks of stability in bond yields. where should investors go if you look at past six. since? right now the key is to play it somewhat safe. if you are looking for more yield, it may make sense to go into high-quality corporate bonds. amanda: brian chappatta, thank you. this is bloomberg. ♪
pre-brexit lawmakers had called on me to set a date for her to torture as a way of securing support for her brexit deal. on is aiming for a revote her brexit deal this week with friday the likeliest day while her team says it will not happen unless she has a good chance of winning, speaker john burke our reiterated today it can only come back if it is substantially changed. top lawmakers are criticizing the trump administration proposal to slash funding for the state department and u.s. agency for international development. secretary of state mike pompeo testified today on capitol hill about the plan to cut his he says budget by 23% difficult choices were made when crafting the 2020 per basel but argues the funding is enough to achieve the administrations foreign-policy goals. house appropriations committee chairwoman nita lowey disagreed. >> our national security is