tv Bloomberg Daybreak Americas Bloomberg April 3, 2019 7:00am-9:00am EDT
o.d don't forget your fom our earnings fears finally overblown? and u.k. prime minister theresa may blows through her redline to try and team up with jeremy corbyn's labour party to get a deal done. david: welcome to "bloomberg daybreak." i'm david westin. delighted to say back with alix steel. it's been too long. let's start off with boeing. a florida repair shop that works on a sensor that may have caused the crash in indonesia. alix: but they don't have that for indonesia. david: in the meantime, boeing has other problems as well. depending on says they are not cold to take anymore of your tankers because you have problems with that. and yet, the stock in premarket
is up today. incomehe question be where does that leave boeing liability. bloomberg intelligence puts potentially $1 billion in assets for the law sets. david: and that is just for the wrongful death lawsuit. are stillmax 8's sitting on the ground. alix: definitely a story we are going to be watching for the next couple of hours. in the markets, we are looking at a really solid risk on rally here. that is the big take away. european stocks sitting at a six-month high. you have selling off in the bond market. commodities rallying, brent above the 200 day moving average. on declines.
-- on rise after declines. over the weekend, people were really anxious about the economic data coming out, and it seems like we are off to the races this week. it is time now for bloomberg first take. we are joined by, o'brien -- by emma o'brien and sarah ponczek. let's start with the china/u.s. trade talks. i will start with you, emma. there are a couple of little problems, like to the tariffs come off or not, or do we have some automatic right to punish china if they don't comply. emma: we haven't heard enough from either side about some of the substantive issues that include forced technology transfer, rival technologies.
there's been a lot of tinkering around the edges, talk about the process, but i don't think we've heard enough about substantive issues, which indicates we are not quite there yet. alix: sarah, in december this would have been a deal in any capacity is not priced in. now we have seen upside. what happens if there is some kind of vague deal? have: one camp says we seen this baked into markets. the best-performing markets this manyare the two areas that say are really tied into the trade goings-on. however, i also speak with a lot of investors who still believe there is upside from here. many people are looking at the markets saying, where is the catalyst? what is the next catalyst that allows us to climb higher than we are now? many people are still pointing to trade, saying if we get a substantial deal, if the tariffs come off, we could get a boost higher. david: we necessarily think
about it from a u.s. point of view. take us over to china. what is the upside for china? how much pressure is there on president xi? emma: i don't think he has anticipated it would go this far. ist they are trying to get giveaway is much as they have to without throwing the baby out with the bathwater. i think there will be some sacred cows they won't give into, and those will become sticking points. alix: come inside the bloomberg. this is the nfci bloomberg -- i.e msc fomo, or some thing else? sarah: hedge fund exposure is still near multi-year lows.
you look at the investor sentiment survey, and fund managers have also lowered their exposure to the market. interestingly enough, people are calling this an unloved rally. even though we are nearing bull , i keep askingy people, if hedge funds and mutual managers aren't in this, what is driving this rally? still, people say it is getting to the point where we could run even further because those who weren't in the market are going to be forced back in. david: is there something besides fear of missing out? we did get some encouraging numbers out of china over the weekend. what is the situation with asia in terms of economic growth that would justify some good numbers? emma: i think you are seeing genuinely good numbers out of china taylor: the pmi -- out of china. the pmi number was a pleasant surprise. i think that is bolstering
things for those concerned about the slowdown there. so i do think there is some genuine fundamentals there. david: there is a third little story called brexit. there's yet another day of dispute in brexit. meantime, yesterday theresa said to jeremy corbyn, her opponent, we would like your help on brexit. would you come along with us? in the past he's had some things to say about ms. may. pm may: what he wants to do is bring down the government, create uncertainty, so division, and crash our economy. this pm hasn, mp: driven our country into chaos. all we have is a shambolic a created that they
cannot get themselves out of. if the prime minister can't lead, she should leave. david: they say politics makes strange bedfellows. listening to the two of them right there didn't sound like they are going to get together. it is really interesting trying to interpret that one. it is either a desperate attempt to try and move this forward, or it is a masterstroke because she is bringing her enemy into the fold. this could be really risky for him. if he is seen to be enabling brexit, what does that say to his supporters? what does that say to his party? if she gets this across the line, it could be a masterstroke. david: i think we are watching live some of the discussion right now which we are monitoring for any news. one of the things that stick for mr. corbin is whether he gets another election and may be prime minister.
sarah: absolutely. this is difficult for him. if you look at his base, if there are any signs he is going along with brexit, that could put his election at risk, but i just find it so amazing we continue to see the pound climb higher. you look at strategists here, they are still higher. it is as if no one really cares, but everyone assumes this is going to come out with a positive outcome. alix: there's a second referendum now percolating towards the forefront. party half of the labour doesn't like it, have the conservative party doesn't like it. alix: nobody likes it. thank you guys very much. you can find all of the charts we used and more on gdb go -- on . coming up, more on the fear of
♪ ford unveils its latest attempt to overhaul its money-losing business in europe. it is a move to gain market share. car sales are plummeting in europe and rules are getting tighter. pulling ahead of rival mercedes-benz to be the top-selling luxury car in the u.s. bmw sales rising on most 3% in march because of surging demand for compact crossovers. in the first quarter, mercedes
sales were down more than 9%. , mercedeshree years has been the best-selling luxury carmaker in the u.s. that is your bloomberg business flash. alix: thank you so much. christine lagarde says global growth has lost momentum since the start of the year, leaving the world economy in a precarious position. speaking in washington, she gave this morning. >> we do not see a recession in the near term. in fact, we expect some pickup in growth in the second half of 2019 and into 2020. you see now what i mean by , thetled, and indeed global economy is at a
delicate moment. alix: joining us now is eric eedman, u.s. bank wealth management cio. whose side do you get on? guest: it is a great dilemma for investors. think there is certainly some weakness in global economic growth, but we would agree with dr. lagarde that there is probably some degree of hope for recovery in the second half. however, right now it is a delicate moment. about half of the data points we look at -- we track about 710 data points globally -- about half of those are at are close to recessionary levels. we agree there is probably not going to be a recession anytime soon, helped by consumer momentum, but we have more of a balanced perspective right now. waitinginto 2018 with
to see what our data shows us. this is more of a balanced perspective for investors right now. david: as you say, your indicators are pointing to a slow down, but maybe not recession. i will put a chart up here that board,across the indications are down in terms of leading indicators. how do we know it is going to go down, but not too far down into recession? eric: that is the key variable. right now we don't know if that will be the case. the reason we have more of that balanced perspective is that should we either have a lackluster deal out of china, ongoing weakness in europe, as well as a potential for a slowdown in the u.s., that is where we could see data rollover from here. on the others of that is should we get ongoing stimulus from
china? should we see momentum from the u.s. economy pickup? that is where things can get better. right now things are still tipping towards the side of a prolonged slow down, not really at recessionary levels, but i think the balance of the data right now suggests there is a degree of slow down, but not yet at dire levels. alix: i feel like we don't have to worry about two-handed economists anymore. well, it is bad, but maybe not as bad. how do you invest when you are teetering on this seesaw. eric: it's a great question. neutral for us relative to our benchmarks is where we have been clients. it is a bit like surfing. right now we are still more in paddle mode, which means we are adopting more of a long-term allocation. the time to be risk on an
bullish was probably a year and a half ago when there was a lot more concerns about the pace of global growth. we were still seeing positives in our data. right now it is still a mixed picture. you have to think about the balance of taking on too much risk, but also not having the data to support it. right now we are really in that period where ongoing data assessment is really essential, so keech and -- so keeping long-term assessment is really essential for us. stocks down 14% this year, but many managers are underexposed, meaning if they come and you are going to see much more rally that you would miss out on. eric: it is a great point. one of the big questions for us as investors is as we get closer to the highs of last year, will we see that ball underwater phenomenon where you see people
pile into risk assets. we don't think that is the case because the tone of data remains quite weak. certainly lots of speculation about will we get up another 3%, 4%. we think stocks can rally another 5% this year, but the data doesn't support a massive rally. really overstepping into more of that risk area until we see a confluence of better data to really guide us. david: that is within stocks in general. t breaking down stocks individually? do you think that is likely to continue? have we seen the end of that? eric: we think there is probably a stall out in the interest rate sensitive stocks. those have risen dramatically because of the massive compression in bond yields.
should we see bond yields hover around current levels, the it -- that is reassuring for earnings growth and long-term demographic and productivity gains. we are very bullish over time in respect to tech and health care. there's an ongoing bid for those spaces based on productivity issues, et cetera. that is the spot where we still think investors can make money. a lot of those yield sensitive names have really risen because of that massive compression of the 10 year rate and below. an will be eric freedm staying with us. coming up, prime minister may's plea to jeremy corbyn. you are looking live at prime minister's questions underway in parliament, and what it means for the economy.
♪ david: british prime minister theresa may is back in parliament today, meeting with labor leader jeremy corbyn -- with labour leader jeremy corbyn, who she now wants to work with on a solution to brexit. we welcome and now bloomberg's european editor. we are now waiting to see if jeremy corbyn will except the invitation, right? reporter: i thing he has accepted that he will hold talks with may. what we are waiting for is how serious those talks will be both on the labour and conservative side. this is not the first time she has reached out to say let's form a consensus, but there is a sense that this is a much more serious overture to the opposition, an admission that
her party cannot unite behind a solution that would get through the house of commons and get a majority in parliament. therefore, this has put real leader'sthe labour hands. the problem is a lot of people on his bench think this is a trap. he will have to put forth a solution that will be acceptable rs.his mp's and labour vote mpsver, many labour represent leave voting constituencies, so it is a very fine line to walk. david: does jeremy corbyn want to have an orderly brexit, or to become prime minister? i think for a long time the problem has been anbyn has seen brexit as obstacle to his main goal of becoming prime minister and
instituting the policies of his party platform. i think he has realized know there is no route to that goal that does not go through brexit. may having made this overture puts corbyn in the position of being able to put forth some demands. however, if he is seen as obstructionist, he will have to share ownership. labour voters away, so this is a pivotal moment for corbyn. alix: very appreciate your time. thank you very much, teresa rafael of bloomberg opinion. another headline here that theresa may looks for cooperative areas of agreement on brexit. david: it seems right now, looking through a distance, the area of agreement is customs union. that seems to be more or less what the labour party would want
, something theresa may has said she is adamantly opposed to, but can agree on a customs union? alix: theresa may playing it othersaying i speak to leaders all the time. , u.s. bank wealth management cio, is still with us. what is your base case for brexit? eric: as an investor, we think it is more a micro issue for the u.k. for a u.s.-based investor, it will have very limited effects. the biggest issue back in june 2016 was would brexit be the tug on the fiber of the european union. clearedw that is this is not the case. we think it will have limited economic and portfolio impacts for clients.
david: what does it mean for europe more broadly? if we go back to a world pre-brexit come up would have been stronger as an economy if they had been united with the u.k.? eric: absolutely. , if thething for eric u.k. were in a currency union come of benefits greatly by having its currency denomination, it would likely be much higher than where it is right now. when you have a very vibrant, dynamic economy like the u.k. with lots of technology, lots of really solid service sector perceptive patient -- service sector per dissipation, but as you migrate north to south,
particularly in some of these southern european colonies that have issues structurally we think are going to be very slow to repair. the european union is much stronger with then without. alix: i think the question is what does mna look like, but if it stabilizes? david: sooner or later it all comes back to china. alix: speaking of, u.s./china trade talks are back in washington. we will talk about the deal and want to convene for the global markets. this is bloomberg. ♪
european stocks highest level in six months. italian equities almost enable market, never mind those nonperforming lows. it is fine. euro-dollar also breaking a six-day losing streak. part of that is composite pmi, not as bad as what expected. you also have bitcoin rallying. then you notice something going on there. david: and no one knows why. alix: nobody knows why. on a fundamental level, you are seeing bonds hold off a little commodities consistently rallying as well. if that is more fundamental, is there something more fundamental behind the equity or alley -- the equity rally? david: ok. now it's time to find out what is going on outside the business world. for that we turn to viviana hurtado with the first word news. an olive branch for a
potential deal on brexit. theresa may has reached out to oppositional labour party leader to rescue her brexit proposal. the prime minister taking questions in parliament right now. she faces jeremy corbyn during the weekly t.r.y. ministers -- the weekly prime minister's questions session. back on today in washington, u.s./china trade talks, both presidents warning a number of sticky points remain. among them, protection for any intellectual property and how to enforce an agreement. standing up we are to china's chronic trading abuses and theft of intellectual properties and so many other things they've done to us.
i don't know how you people allowed this to happen for so many years. you've been doing it longer than me. viviana: president trump's relationship with fed chairman jerome powell reportedly isn't getting any better. in the last week, trump blasted powell at three meetings and blames the fed for holding back the economy instead of the stock market. he reportedly told powell "i guess i'm stuck with you." 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. i'm viviana hurtado. this is bloomberg. alix: theresa may is speaking in prime minister's questions, talking very heatedly yet again against the public wanting a cross party solution. david: you have to feel a little
bit sorry for her, but she is saying she once a deal. she doesn't want to leave without a deal. she wants a cross party solution. she wants all these things, but no one wants to give them to her. [laughter] it is a tough position. alix: it really is. going to come back to washington now and the trade talks resuming between the west and china, with reports that the -- with us now is bloomberg's michael mckee. it was just like you were saying about theresa may. donald trump once a lot things, but will the chinese give it to him?
in ave narrowed the gap lot of areas, particularly the bilateral trade deficit. china has promised to buy a lot more things. they've said they would lower 2024.ficit to zero by the question is, how do they deal with intellectual property, technology transfer? they've passed a law in theory to make those things illegal, but in negotiations is how do you enforce that. promises are one thing, but no matter what you think of the president's position, the rest of world wants to cracked on him . has a bob lighthizer history. he is pretty tough on this. he wouldel:
like to keep them in place until we can say at some point in the future the chinese are complying. hours on them, and you go into negotiation like that and it is going to be difficult to persuade the other side. david: the question was whether this was an agreement to have further negotiations because basically it will go on and on. to be thehat seems fallback position, to kick the can down the road if china stimulus can boost the party enough to keep the rest of the world floating, why are you arguing about this? alix: thank you very much for joining us. take a look at the wto and what they are looking at in terms of the forecast on trade, lowering their overall growth forecast about 3.9%. for this year they are
predicting 3.7%. general of the wto talked about that yesterday. the downwardion of trend is due to increased certainties in the market. the biggest chunk of uncertainty in the market drawing china's attention. still with us, eric freedman of u.s. bank wealth management. is it healthy enough to's estate a trade war? -- to reinstate a trade war? where would it matter? >> if you go to the next iteration where we continue to raise tariffs, at some point it will have an effect, but we are
not there yet, obviously. david: there's also the fundamental underlying economy in china. right now, to oversimplify by the stimulus that seems to be coming on the line? >> things are starting to look like the economy is still pretty -- still pretty heavy on investment. purchases nowome are second or tertiary purchases , so that does kind of lead to some concerns longer-term. has the market done rallying into this? this is the emerging market etf's in the u.s. white line is the performance and the greenline are the inflow was. it feels like there's a position overhang now. how doesget a deal
that change? eric, i think you are relatively neutral. is that right? eric: we have been. we prefer the mastic equities is a preference. if you look at that chart, i think it really tells that hill. we really have stalled out. we have not been able to break a pretty important level on the upside. so i would agree with brian, this is a case where we think the chinese stimulus that is happening, if we have a trade deal plus ongoing chinese stimulus, that will be an important sediment driver that could certainly prepare us higher. you have to believe
in a second-half type of recovery for em and china right now. we are not yet seeing that we believe it. there has been so much overbuilding in china, this really gradual transition to more of a consumer economy, is going to take some time. we think there would be a short-term pop should we see a chinese trade deal, rumbly notthing that for us, is immediately attractive to us. david: are there any opportunities based on valuation? recently we seen brazil do pretty well. i think it is more on a stock by stock than a country by country basis. there's a lot of companies that are in emerging markets, but
they are definitely not emerging market companies in terms of how they operate in the quality of management. alix: are they do mastic or international place? >> these are definitely more domestic plays when you don't have to worry about international trade flows outside of transitional effects. you have the big tech giants that can tend -- that can tend , not just very well in china, but in emerging markets david: thank you both -- emerging markets. david: thank you both very much for being with us. low level employees at deutsche have sounded alarms about suspicious transactions, but we
are told these employees were told to move on by higher-ups. in the meantime, we continue to -- we continue to monitor theresa may's brexit plan in london. she once of agreement before she leaves, and wants to work with jeremy corbyn i'm bringing get about. shethinks the agreement know go sheet it was a good deal, and bb we should get in line. york and from london, this is bloomberg. ♪
hour, tim boyle, columbia sportswear ceo. ♪ alix: we turn now to wall street beat. first up, flagging deutsche's shady billions as regulators probe what may be one of the biggest money laundering scandals years ago. street heads back to saudi arabia. -- goldmanhs' ced eo visits saudi arabia once again. and blackrock ceo announcing a massive firm to the company shifts for accurate leaders beyond will u.s. david: we have peggy collins here. i thought this was a fascinating
story. there's this unit of deutsche bank in jacksonville, florida saying there's an awful lot of money going into this small place that over ends up altering estates. it sounds like the interviewed 10 or 20 employees, appeary found that these to have flagged there was about $150 billion in questionable transactions. if you were going into estonia, you might ask why. they have not commented specifically to the allegations, but have said they take investigations very seriously and are working with negotiators, but it certainly seemed like they flagged that there were potential issues. alix: good point, but this goes to your tease. even if they flagged, no matter
how urgently and when, we just keep working. but don't look behind the line. david: every time something goes up they say they don't have written responsibility in the united states. we don't have any authority at all to do anything. alix: was it a coast? or did something come back to them? reporter: some people were saying this seems off. our second story is about big banks finally going back to saudi arabia. goingo of goldman sachs in his first trip. reporter: right. it appears he is one of the first wall street bankers to head back and have a meeting .ith them
you know, the country is a huge dealmaker that continues to be on the radar for a lot of banks, and they are really potentially moving back into get local talent, as well as dollars. david: it also raises the larger question of whoever was in saudi arabia who decided to do this horrible thing to mr. khashoggi, maybe they were right that people would ignore it over time. no matter how bad it was, people will get over it, business will go back to usual, and we will go on with our lives. i say that sadly, but you wonder. peggy: money talks. it remains to be seen whether there will be holdouts or not, but there was a time many people who said, after all the headlines stayed away, that money may move people back there. alix: it wasn't like all of the
sudden the bank pulled everything. david: and we do have saudi aramco coming out. this internal memo. we have a better sense of where the leadership at blackrock is trying to take this. peggy: it seems like one of the biggest thing to take away is that they are really trying to go more local. they are decentralizing some of the way, particularly with their institutional clients, and pushing some of the power meant down to people in individual regions. they really want to grow outside of the u.s. i thought that was interesting as well. david: it is actually a fairly standard moving u.s. corporations. alix: that was my take away.
you've gotten so big that where else do you have to go in order to be able to stand anymore. david: many thanks to bloomberg's-- two peggy collins. alix: taylor riggs monitoring market reactions on headlines. taylor: we got some disappointing data which showed investors are starting to see that brexit is hitting the economy of a little bit. u.k. services pmi dropped below 48.9. the composite pmi as well dropping below 15 at expectations of 50.1. corbyn,resa may facing i wanted to see how traders are positioning into this. sterling now declining, the fewest net shorts since 2018,
which means traders really think the pound might start to strengthen. pound may strengthen as we start to get a little bit of clarity and see if this deal can get saved, but not all news is good news because another indicator we are looking at is the twos 10 curve in the u.k. now the flattest going basis since 2008 david: thanks so much to taylor riggs. coming up, but i'm watching, or rather what i'm drinking. [laughter] david: we will talk with starbucks' ceo in seattle. that is coming up next. --s is bloomberg ♪ bloomberg. ♪
david: there's no doubt that starbucks has brought premium coffee to the maxes, currently more than 30000 and counting. i recently visited the headquarters to speak with the ceo. before we sat down talk him he -- set down, he took us through the bursary on the ground floor. >> this is the starbucks reserve roastery.y -- the reserve store is about 6500 square feet, larger than a standard starbucks store. there's an italian bakery, full-service bar, cold brews, siphons, for in prices, and espresso machines. david: you told me about this, an ice cold brew. >> let's go have one. the cold brew itself brews for 22 to 24 hours in cold water
instead of hot water. nitrogen infused cold brew. try.is the one you want to david: so it really is different. it is not like a iced coffee. >> not at all. denatured and makes a little more creamy, you end up with a note in the beverage. david: it is actually quite good, and i don't like iced coffee. it tastes a little bit like guinness, believe it or not. alix: that last bit you had kind of looked like beer. david: it is quite good. this is part of their overall effort to expand their sales across the u.s. thed: the national -- alix:
national coffee association says 57% of coffee is specialty coffee in the u.s., so it is definitely growing. david: it is up to now 50% of what they sell is cold, not hot. it is not just expanding their menu. listen to what their analysis says. >> we view analytics and data to help us better understand where to build new stores in the u.s.. that is showing us throughout the sun belt, there's many parts of the united states that are still underpenetrated. that's why many of the new stores we are building might be in suburban areas with drive-through's. --se stores are preferring are performing at higher volume than other stores. we have to complement building new stores in the u.s. with in our existing stores. alix: so you drink some cold
brew, then you walked around. then you jammed out. [laughter] david: his son is a professional musician, and he keeps a gibson and we played a little bit. we did a little blues. that something you may not know in david's man cave is the studio set up. david: coming up here, nancy joins us to discuss brexit, global growth, and trade. live from new york, this is bloomberg. ♪ want more from your entertainment experience?
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absolutely staying true to are the most important things come of the mission and the culture of this company. sits downbucks' ceo to talk about the potential of expanding in china and the risks facing them. stillesident donald trump threatens to shut the border between the resident ed u.s., .hrowing industry don't forget your fomo. is it the fear of missing out, or a global growth and earnings fears finally overgrown. i'm david westin, back with alix steel. welcome to "bloomberg daybreak." in london we have prime minister's questions going on. alix: they are still trying to find a brexit deal. david: she is explaining exactly what she wants out of parliament. listen to some of what she said today. pm may: every member of this house is involved in brexit.
i want to deliver brexit in an orderly way. i want to do it as soon as possible. i want to do us without us having to fight your appeal elections. david: there you have it. all of you are involved. alix: and you've told me three times you don't like my deal. i refuse to listen to you. [laughter] alix: it is like my toddler. blackstone set to raise its largest buyout fund at $22 billion, the largest in its firm's history, and it is still raking and some cash for it also. david: it looks like they are on their way. one of the questions for me, what does that say about people wanting to put money to work? that they can raise this money this quickly? alix: they raised like $432 billion last year. if there is a downdraft in the
out pay market or bond market, will be selloff not be as bad because you have all this waiting to step in at some point? david: it just creates bargains. alix: that makes me think of fomo, fear of missing out. david: that is your term of the morning. alix: it is. that is what i am looking at in the equity market. not a lot of news. the euro breaking out after six days of decline. deposit pmi not terrible. ofde even stronger, and all this points to a risk on day. is it something to consider, or is it just i don't want to be left out? david: in the meantime, the markets started this week eager to find data showing whether we were growing or slowing down. thus far, they seem to be encouraged. here to give us a market report is taylor riggs. taylor: you are absolutely right.
the key indicator of this is the 10 year yield. we have come for circle from 253 going all the way down to 237, and then right back up to where we were at 250 few this morning. off the lows in the last five days, you are now up 15 basis points. if you take a look in the last five days, you have a classic trade where industrials, materials, and financials have really outperformed. industrials and materials are getting a boost from global growth, and financials benefiting from higher rates. the s&p 500 underperforming, classically what we would expect. oil is up 5.5% in the last few days. the last five starting to go higher, and monday after the china pmi data came out better than expected,
you had a crude rally 2.5% on monday. finally, as we take a look at the trade talks going on today, some companies that have exposure to china are getting a big boost. we are taking a look at the stocks in chipmakers relative to the s&p 500, up 24% relative to the s&p. alix: thank you so much. so what do you believe? do you believe all of that market action? the whiteoking at lines, emerging-market gdp, versus the red, which is developed economies' real gdp. joining us is brian levitt and nancy tendler. nancy, do you believe the rally is in the equity market, or do you believe the data? nancy: i believe the data is looking backward somewhat. we've been anticipating growth in china just based on the
massive easing that has gone on in beijing and around the country. we are pretty optimistic for the cyclical sectors, and we've been increasing our weighting since last fall. david: in the meantime, some numbers have been disappointing, such as retail sales. does that give you some pause? nancy: the data are mixed. goods orders were terrible, but the manufacturing pmi and nonmatching firing -- nonmanufacturing were good. it is hard to make any sense out of the numbers in the near term. you really have to normalize and look out over the long term. david: how much of this is fundamental economic driving? >> let me first say investors should have fomo because these markets are likely to go higher. microenvironment is slowing. that is good news.
last year we had multiple rate hikes and a move in the 10 year. the stimulus is fading. the fed rate hikes took a large bite to u.s. economic activity. slower growth and a fed that has backed off is actually a really good environment for equity markets. alix: both of you are liking equity markets, but do you like it in part because some of the data is stabilizing, and you like it because it looks bad? brian: i wouldn't call it bad. i would call it slow, and the fed has backed off. alix: at some point you both can't have your own way. brian: i think we are both kind of saying the same thing. there's a mixed economic picture, but the u.s. economy does not have a severe economic disruption.
we don't have that right now. the fed is on the sideline. ifn in valuations, even notings are $160, which is that high in a 2.5% interest rate world, that suggests equities are going higher. david: i don't want to rain on anybody's parade, but i want to make sure i understand what is going on. leading indicators, across-the-board heading south. should we feel good if what has happened is the underlying economy is not doing well, but the central banks are pumping in liquidity? is that really good growth? nancy: no, as you phrase it. i think what we need to see is a resurgence in ceo confidence so capex spending will increase. that is my biggest worry right now. it doesn't seem what washington is too concerned about that. they are going for the deal they
want to go for with china, but it has caused capex spending too slow and ceo confidence to wane. if that doesn't change, i think we are in a situation where we are propped up by the central bank, and that is not a good place to be. alix: as we get into first-quarter earnings, do you expect things to get better, or do you expect it to sort of a firm low bond yields, things aren't great> -- aren't great? nancy: isaac markets are anticipating things not being that good. that is what we are looking at, and we think we will see that in the coming months as we begin to see the fruits of the easing in china. david: brian, how close did you monitor capital investment? where are we right now, as you assess it, and should we be concerned there's not enough? had good growth that
started to fade amid all of this policy uncertainty. you had it with the fed, with brexit, and with the trade deal. in my view, brexit is going to be with us for a while. i think we will continue to kick that can down the road. with regards to trade, you have a president who wants to win reelection in 18 months. it will be very hard to do that if markets are selling off. this president ran in 2016 on i make great deals. we are likely to get a deal that will lift business confidence, but the key point for investors to remember is trend growth in the united states is around 2.5%. growth. need above 3% we are a modestly aging population in a dare we say lationary role.
that is very good for financial markets because it is not particularly disruptive. you don't feel excess, and there is no need to end the cycle. david: you will be staying with us. coming up, u.s. and china trade negotiators are meeting in washington today with hopes about a possible deal. we talked to senator david perdue of georgia about the prospects, and what it could mean for u.s. business and the economy. that is coming up next. this is bloomberg. ♪
things they've done to us. i don't know how you people are allowed this to happen for so many years. you've been here longer than me. david: that was president trump speaking last night at the annual spring dinner of the national republican congressional committee in washington, blaming his party for a lot of the problems there ahead of the trade talks happening today. still with us are brian levitt of oppenheimer fun and nancy tengler. you mentioned before how important this is to financial markets antibusiness economy overall. brian: that's right. wall oflike to climb a worry, so i am not overly concerned. where i would be concerned is the transmission mechanism through the u.s. dollar. every time we had disruptions in has beentivity, it preceded by a big move higher in the u.s. dollar.
we saw it in the fall and winter of last year. to the extent that the u.s. gets , dollar rallies is going to be a headwind to u.s. growth. i suspect we will get greater clarity in the months ahead. alix: how many companies do using are not increasing because of china, and how much of it is taxes? tax cut should capex, but we are liking what we would've expected, so i think it has a lot to do with worries over trade tension and china. the large cap multinational companies have not been investing as deeply as we would have expected to see. they've been buying back shares and increasing dividends. we want to see more capex because that has moved been driving productivity and that is what will keep this economy
running. david: he may be a washington insider now, but he came from the c-suite. he was the only ceo of a fortune 500 company now serving in congress, senator david perdue from the great state of georgia. welcome back. good to have you. sen. perdue: good morning. so for what is coming out of these talks in washington, what do you know? sen. perdue: after 30 years, we have seen the rapid rise of china, the abuse of their stealing our technology, forced transfer of technology, and rapid growth. what we've done right now is ask them for a negotiation to create a level playing field. i understand the uncertainty in the markets right now, and i am a little concerned, but 11% capex is pretty healthy from last year. that's on top of the pretty
strong year the year before. this uncertainty we need to ring out of what we are doing. i applaud the president for this cooling-off period. we encouraged him to have an offramp when we started these negotiations. i am really optimistic we are going to get to a could result. david: i don't want to be the kid in the back of the car saying are we there yet, but i think a lot of people are saying that, people who are being really hurt by this dispute. how long do you think this can continue until we really do some damage? sen. perdue: i think the extension on the march 1 eight was healthy because secretary mnuchin and lighthizer have been negotiating very diligently. i think we have got a balanced approach. i think we are down to the last few big items now. i anticipate sooner than later, we will see some announcements coming out. time in this one is on our side. they are moving in our direction, and that is a very
positive thing. farmers are really desperate right now in many parts of the country, not only because of this trade situation, but also just because of the unresolved disaster relief things we have been trying to do the last few weeks. david: before we get to that, one other issue that has been very much in the news, and that is the question of closing our border with mexico. the president came out and said he was going to do it. now it seems like he's backed off. but you have mitch mcconnell, the majority leader in the senate, saying that would be a disaster for the u.s. economy. did the president just make a mistake saying we would shut down the border? sen. perdue: this is the same guy who said we wanted to back out of nato, and we have nato paying their fair share. what he wants to do is get people's attention. we were just at the border. we have a five alarm disaster going on down there. it is the drug traffic that has accelerated at a rate we have not seen. it is unprecedented. this is a trick code he an
effort to thing about closing the borders, but right now we are out of control. the people down there are overwhelmed. the numbers are astronomical. we are over 100,000 a month coming in illegally that we are detaining. that doesn't count the ones we are missing. i saw many on the overnight control that came in with no cash, no water, but they had a burner phone with one cell number programmed. this is a very organized effort on the southern border. david: let's talk about the disaster relief because you are very much involved in that. we know a lot of farmers were really damaged extensively by the storms that came through. you had a bill that was trying to address that, and it got crossline with puerto rico. can you explain that to those not inside the beltway? sen. perdue: this is the height of obstructionism. i don't think we could have given the democrats everything they asked for. the president acquiesced and met
them in the middle ground on the puerto rico nutrition assistance, and he said yes. he approved an extension of about $600 million, so we thought we had a deal, and there were other things they asked for like in the house bill we just couldn't get past in the senate. we tried this week and failed. we will keep trying every day, but time is of the essence. farmers will lose their farms over this delay and trying to get relief to them. david: finally, we had a lot of discussion just this morning, as we often do, about capital investment. a lot of it driven by the tax reform. how concerned are you about now?al investment right are we getting the increasing capital investment we thought we would get and that we need? sen. perdue: if you look at the decade before the tax bill, and even the year before that, the bigger issue we've made is on the regulatory front.
we have dramatically pulled back some of the mortar kony and regulations. what we saw in 2017 and 2018 -- more draconian regulations. and 2018aw in 2017 was a trend upwards, and we will get more of a resolution with the china negotiations. china is negotiating in good faith. europe wants to get a deal done. the usmca is moving. we have progress, and i think most see it the same way. david: always enjoy talking with you, sir. thank you. that is senator david perdue from georgia coming to us from capitol hill. wonder 29,000 jobs added in march -- 100 29,000 jobs
♪ david: it is time now to look at three companies worth watching this morning. i am watching netflix because there is a big fight going on over the oscars. it involves steven spielberg on one side and the antitrust division on the other side. after the oscars, steven spielberg said we shouldn't have these people eligible for oscars. now the antitrust division of the justice department is saying i think that may be an antitrust violation. alix: unreal. it is a contest. shouldn't you set your own rules for a contest?
david: the rules have been if you show it on any movie theater before it goes to dv, it is eligible for the oscars. that has been true forever. alix: looking at gamestop, looking to open below nine dollars, the lowest open since 2005. horrible forecast for the company. cost cutting is happening here. they are really shaking investor confidence. drop here.a 20% david: i didn't even realize we still had gamestops. my son does it online. alix: there you go. david: the third company we are watching is boeing. us.ke sutherland joins brooke: there's a couple of new develop in some this story. the preliminary report for the ethiopian crash is that the pilot did follow boeing's protocol to disarm the flight control anti-stall software that was found to be a factor in both
that crash and the lion air crash in october. somewhere along the way, the system reengaged. but we don't know at this point is if the pilots turned it back on because they manually couldn't get the plane's nose back up, or if somehow the system turned back on on its own , which would obviously be a much more serious flaw. david: this is what you call a bad fact. as i recall, it went up and down before it crashed. it might be engaging and disengaging. brooke: which gives you the impression the pilots are fighting the plane and trying to get it to fly properly. it undermines the boeing narrative that pilots should have known the protocol. this raises yet more questions, and we have boeing pushing back the timeline for that software fix. the faa saying it is going to need to review that more thoroughly before we can put that on planes and put them back in the sky. alix: such a good point. tengler, do you like
boeing? , and before any of the bad news, and yet, we are not going to chase it. we do not know what any of the long-term implications are. there's no reason for investors to chase it here. it is better to sit back, see what the findings are, and make an informed decision. alix: good point. thank you. coming up, the u.s. and china get closer to a trade deal. what that would mean for companies seeking to expand in china.
.5%, s&p futures up futures up 16. italian equities looking into a bull market. positivity in equity markets. other asset classes, the same story, sell bonds and sell the dollar. euro-dollar kicking off six days of decline. the cable rate jumping. maybe theresa may meeting with jeremy corbyn. traders more optimistic. average.ve its moving all of those pointing to a risk on rally. david: a heck of a start to the second quarter. march, great january, and now look at second quarter. david: let's get an update on what is making headlines outside the business world. viviana: the city of chicago has made history.
voters elected a black woman as mayor. lori lightfoot will also be its first openly gay leader. the former federal prosecutor wound up with 74% of the vote over another black female democrat. the u.s. is third-largest city is struggling with gun violence. the u.s. attorney's leaving president trump out of the loop about how much to release publicly from robert mueller's investigation. william barr has not discussed any part of mueller's report with the president. that even goes for matters the president could say he is the authority to keep private. william barr is preparing to give congress a redacted version of the report by the middle of the month. president trump's relationship with federal reserve chairman is not getting any better. according to the wall street journal, in the last week the president blasted jerome powell at three meetings. it says he blames how for holding back -- jerome powell
for holding back the economy and the stock market. he told powell "i guess i'm stuck with you." 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. this is bloomberg. david: i think we're making progress. he was talking about firing him. alix: talk about an unhappy marriage. david: there was a report after the last jobs report came out that he called them up and said look what you've done to him. alix: trying to explain economics to president trump. then they went on pause. i want to turn to china trade. waiting to see whether talks in washington will bring resolution to the trade dispute. western companies eager for access to the china market. chiefcome alpine macro global strategist. we just talked with senator purdue from georgia about when we can expect the deal and this
is what he had to say. >> to have the extension on the march 1 date was healthy because secretary mnuchin and lighthizer have been negotiating diligently and made the trip. i think we are down to the last few big items. i anticipate sooner than later we will see some announcements. david: he says sooner ladder than later. what are you anticipating? that is exactly words i wanted to use. i think they are wrangling with a few last items such as the enforcement mechanism. i think there is a strong aesthetic from the chinese government as well as washington to get a deal down. i think the chinese side will make additional efforts to push forward. i agree with your guest that a deal will be reached sooner than later. david: let's assume we get that
deal. how good could it be for western companies wanting to move into china? chen: a huge deal in my view. the chinese government making a progress to increase the purchase from america in terms of agricultural products, something like $500 billion a year. a big number. the most important thing to me is the opening up of the service sector. as you know, the chinese financial service sector have been closed to foreign competition, and as part of this deal the chinese government has no option but to slowly open that up, maybe quickly open that up. that is worth talking about. the size of the chinese savings market. trillion.on to $15 once that market is open to foreign companies, the financial service sectors from the west will benefit hugely. alix: a lot of that is already
happening. jpmorgan will take a majority control of local securities. they are following ubs. this is happening even without a trade deal. chen: this is a gesture. that is a gesture made by the chinese government. this is not a system yet. there is no mechanism for foreign management companies to go to china. that has to be subject to special approval. once the trade deal is done, it will probably lay out a system where foreign companies can go in and out. david: give me a timetable. let's assume they get the deal done. traditionally, it takes a while to get the system up and running. when can we expect banks and car companies like mastercard and visa card to move into china? chen: this is a good question
you raise. this time is different from the past. the chinese government can always drag its feet, but today they are doing that under pressure. do not forget the americans are already closed 20% tariffs on a bunch of chinese goods already. the american intention has made clear that they take it seriously. i think the chinese government got the message. orelieve that within a year two the system will be in place. david: is it possible for president xi to do this deal with the enforcement mechanism you are talking about, that robert lighthizer is seeking, without losing face. i understand that is very important to the chinese regime. chen: is extremely important. that is why the negotiations have dragged on for so long. think americans
will have to back away from some demands, which is obviously not acceptable for any government. at the same time the chinese will have to swallow bullets too. there will be a compromise. the chinese side demanded americans must remove that 20% tariffs. that is open because all the chinese people know that. .ou have a 20% tariff already it is a slap on your export. at the same time u.k. making other demands. the chinese government would look back to the chinese people. that is the sticking point. they will be persisted on that. david: jens out of alpine -- chen zhao of outline micro. always good to have you with us. to kevin johnson, starbucks ceo about his expansion plans in china and i found it remarkable what they are doing. 600n: we build a new
stores a year in china. over 500 plus stores today. there are 300 million people in china in the middle class. that is projected to double over the next few years. they are consuming more coffee, and that will continue to grow. i look at the fact that over this next three years, we will build starbucks into 100 new cities in china that we are not currently in. everyone of those cities is larger than the population of los angeles. david: still with us is nancy tengler of butcher joseph. she own starbucks in her portfolio. the thing that jumped up, 100 cities in three years, each of which is larger than the city of los angeles. it is almost unimaginable. nancy: it is. and they have been there for 20 years. that bodes well for brand loyalty.
they are in it for the long game. they have done a great job. isir delivery services taking up and their growth is positive. look at a company like a starbucks or another company trying to get in to china when there is still tension between the u.s. and china? it is consumer given -- it is consumer driven, but on the other hand you will get into an economy you do not know. you do not know what they will say about u.s. companies operating in that area. think they experienced a pullback from the chinese consumer on a nationalistic basis toward the end of last year. they have severe competition. they are price undercutting from all of their major competitors. i think starbucks has done a great job from a branding standpoint, and they are innovating and honing their delivery. that is going to be where they
add value over time. david: thanks very much to nancy. we will have more of my conversation with kevin johnson tonight at 9:30 eastern on big decisions. alix: we are also talking about -- jean-claude juncker just ended his opening comments on brexit. he said the u.k. would hit the breakfast -- would take the biggest hit from a hard brexit. he said a no deal brexit on april 12 is more and more likely. part of the conversation is it jeremy corbyn and theresa may can get it together, they still will not make the april 12 deadline and might have asked for another extension. it looks like jean-claude juncker is throwing down. david: you do not know how much of this is negotiating posturing. theresa may is negotiating with herself. 12, whoy she said may agreed to that date? alix: jean-claude juncker is
regulation when it comes to social media. dorsey said europe got off to a good start with gdpr, the law that tightened up data privacy rules. >> typically, our terms of service are hard to read and hard to follow and not necessarily the most customer focused things. gdpr put a stake in the ground to at least bring out some elements that you have a lot more control over and i think that is a net positive. if there is more room for that, then yes, absolutely. not going to be any one that is responsible for fixing this. viviana: bloomberg has learned bankrupt california utility pg&e is close to rescue deal with the group of hedge funds. the agreement includes naming former tennessee value chief executive bill johnson as its next ceo. facese of wildfires, pg&e
$30 billion in liabilities. that is your bloomberg business flash. alix: i want to talk about jack dorsey's hat. david: i will find one of those and where it for you. alix: can you please do that? ifus on pg&e as well, even you get a new ceo, there are still huge unanswered questions, not only how you pay for the liabilities but what you do going forward. david: it is not like this is last big fire they will have in california. ison't know what the plan other than it is good to have new leadership. alix: new leadership, but also governor new some is not into the board they have been taking or the potential bailout plan. that sets you up for nothing good. david: is that the largest utility in the country? alix: is of the largest utility? david: i could be wrong. we will check on that. time for follow the lead.
we are focusing on different areas of the u.s. job market. today we're looking at the experiential economy and what it means for the job market. joining us is michael mckee, bloomberg economics and policy correspondent. michael: we have seen a big shift from a lot of manufacturing jobs to service jobs. many of the service jobs in the united states or in the recreation economy. i know this will bother alix, maybe she has to change your outlook on oil. here we have oil and gas extraction, the white line, versus the recreation industry, the blue line. they are on different scales. out is want to point there are a lot of good times when oil prices are high and everyone is going into that business, but it is very cyclical and volatile. the recreation industry has grown and grown. if you want some kind of security, get into recreation. right after the great recession, they do not follow up as much.
it has accelerated the hiring. where is the hiring happening? follow the money. bloomberg has put together an index of vacation home haven. where are they building? what to the top five have in common? they are ski areas. the rich are going out west. the rich are getting into the mountains and doing a lot of skiing and hiking in the things that go on out there. does that mean you should quit your focus on oil and become a ski instructor? not necessarily. the problem with ski instructor jobs is they are subject to the weather. the white line is ski industry employment. very volatile because of the weather. what you want to do is become a fitness instructor. if you work in a fitness facility, those jobs keep going up and up as americans spent
more money to stay in shape than they do a lot of other things these days. alix: in no way would i ever become a ski instructor or a fitness instructor. good stuff. appreciated. jobs, insider read on the joining us from washington is tim boyle, foursquare press -- columbia sportswear president and ceo. obviously the experiential economy would do well for your business. to those jobs, with a lot of wages? tim: we are based in portland, oregon, which is ground zero for the outdoor recreational business, as well as the fitness business. portland is the headquarters for nike, for the north american adidas business, under armour has a presence there. there are many other companies in addition to hours. we are seeing tremendous pressures on wages in our
hometown. it is an area, as the chart showed, people like to be in this business and there are many other benefits to working in the outdoor business, not just the location where we are. there is steady employment and it is a great business. david: it certainly looks like a good business. how is it evolving. what things are more popular? now that youu have did not five or 10 years ago? tim: earlier in the segment you talk about the business in china where we have a much more rapidly growing business than many others. it is based on the fact that the chinese government wants to dominate in the winter sports in the olympics. they plan to open 300 ski areas in china over the next several years. the chinese consumers are looking to the west for what kind of apparel should they be
wearing, what kind of footwear, and how can they emulate the western sports scene? that is been great for our business, as well as our business in europe, which has been quite good. in europe we have a different competitor in every local market. growing, have a large, pan-european competitor. those markets have been quite good for us. about 40% of our businesses outside the u.s.. it is the outdoor business and the fitness and athletic business looks to america as a leader. alix: talk me through the employment picture in this arena. how competitive is it? what is the barrier to entry. if i'm a sophomore in college and i want to join the experiential economy, what is the barrier to entry? tim: they are low in many of these areas. if you have a t-shirt company or a baseball cap company, you are
in the apparel business. the footwear business, much higher barriers to entry. if you want to be a guide in the mountains or a ski guide or work in a ski shop, those things are available and young people have less responsibility financially and can take on a job, as you showed in one of the chart, where there is variability in the business model. there are lots of opportunity and theoutdoor business athletic business, people enjoy it and it is a lifestyle play as well as anything else during david: one of the things we hear about a lot when it comes to jobs is the skills gap. we do not have the kind of skills we need in the tech area and things like that. is that true your neck of the woods, or do you learn to be a mountain guide by apprenticing? mountain guide you learn
by doing the stuff and being a fit human being. business,re running a in addition to having those kinds of requirements from an understanding standpoint, you need to have the ability to mine the data that exists and say we may want to offer this particular style garment, but what color does it need to be, what is our sizing scale, where does the merchandise the debate, who is buying it? multiple levels of sophistication in the business once you get beyond here is a great looking jacket and how we sell it? alix: tim, really appreciate it. tim boyle, columbia sportswear ceo. hiring trends in another industry -- banking. after cutting hundreds of thousands of jobs some banks are adding to the rank again. this is bloomberg. ♪
alix: here is what i am watching. big banks are hiring people. after the crisis, they cut 800,000 jobs. now some of them have been adding them back. this chart shows those that have started adding them back since the rebound. b and t in jpmorgan have reversed all of their pros bright -- their post crisis job cuts. david: i would bet you the people doing the new jobs are not the same ones doing the old jobs. the jobs are changing. alix: i do not know where those jobs have been added. you have automation a new technology replacing workers, but on the flipside investment banking -- trading has been stressed. look where there are jobs? new clients. alix: lawyers always when. win. -- lawyers always alix: that has led to new
compliance jobs. at bank of america there are cutting back in the back office but when it is customer facing, clients facing, they are beefing up hiring. alix: that is a good point. there been big banks selling off their assets. some people may have been going over there so it is not one for one. we will take it. that wraps it up for us. coming up, peter tchir, academy securities head of macro strategy on this risk on rally kind of day where it is a weaker dollar story, a cell phone story and a buy equities and sell bonds story. this is bloomberg. ♪
jonathan: coming up, global equity markets rising. hopes high as u.s. china trade talks resume. services data offsetting the gloom in manufacturing. lyrical tension hanging over the fed. the fed reportedly telling jay powell "i guess i'm stuck with you. " you are stuck with me. futures positive, the euro firmer. euro-dollar 1.1234. treasury yields up for basis points to 2.52. we begin with our top story. one thing on the mind of the market and the president. >> china. china. >> the story is mainly about china. >> the china story. >> the u.s. china trade. >>