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tv   Bloomberg Daybreak Americas  Bloomberg  April 8, 2019 7:00am-9:00am EDT

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united states, i would recognize that this is a national emergency. alix: ray dalio says the income gap is a national emergency. ,nd inching closer and closer larry kudlow is guardedly optimistic as the u.s. and china make headways on trade. eee.e battle for a libyan motionless a leader -- libya militia leader cities. on major david: a little disappointed in that open you did not mention the finals tonight. it did not make the cut. alix: because michigan is not in it. i thought you would be crying onset today. david: to our surprise, the team
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that beat michigan is in the finals. texas tech and virginia. very controversial whether texas tech is going to be there. alix: so who are you going to word for? -- going to root for? david: my wife went to virginia. but let's talk about brackets for a cause. depending on who wins, margaret keene will tie for third place. i'm not sure the last time we had a woman win. alix: i have no dog in this race. i'm going to go with the woman he's going to be number three. david: go margaret keene. we are rooting for you. alix: i feel like we are looking for a little bit of direction here. potential good news on trade. markets not really reflecting that. we are a stones throw away from record highs for the s&p. the nasdaq closed at a record friday afternoon.
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it is a weaker dollar story. bonds pretty much go nowhere. crude getting a lift around a five month high. how do we deal with these records hi, four days away from earning season? david: we will find out whether we mean what we say. it is time for the morning brief. and world bankmf begin spring meetings in washington come up with the imf set to release its latest outlook. u.k. prime minister theresa may meets with angela merkel in berlin ahead of a key eu summit this week. we get consumer price index numbers on wednesday, and the ecb releases its rate decision, followed by a news conference with mario draghi. and we get edits from the fed's march meeting. on friday we start earning season. now it is time for the bloomberg first take. we are joined by christine
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harper and marty schenker. so it turns out we have a new head of homeland security as of yesterday evening. marty: acting head. david: this is what president trump had to tweet last night. security security kirstjen nielsen is leaving her position. i would like to thank her for her service. i am pleased to announce that the current u.s. customs and border protection commissioner will be acting secretary. i have confidence kevin will do a great job." marty: what he doesn't talk about is the other missions that national security has. cybersecurity, national disaster consequences, but he is totally
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focused on the border. he is the hockey asked -- the hawks onof the immigration. alix: we are looking at the trucks lined up to get in between the two borders as we anticipate something being shut down. when do we see supply chain issues? are you hearing anything from companies? christine: there's a great deal of uncertainty, obviously. this is throwing somebody under the bus because the results haven't been with the president wanted. hard to know that there's really going to be progress going forward in any positive way. i don't think anybody knows that the new secretary has a strategy that is going to work a lot better. there's obviously no certainty going forward for companies. alix: that is never good. let's go to our second story and
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talk about optimism. larry kudlow sounding upbeat yesterday on "60 minutes." mr. kudlow: police to go stations just get closer and closer. we made good headway last week. this coming week there will be a lot of teleconferencing among top-tier people to continue the discussions. alix: closer and closer, not good enough for markets. christine: because they are hearing different messages from the chinese and other elements involved in the talks. so many times from the administration that we are getting closer, that things are going better, that it would be hard to be a portfolio manager and listen to larry kudlow and say i'm all in because we've heard this before. david: the chinese are saying we've got some "tough nuts to crack." marty: they do. in my view, this is going to be determined by donald trump.
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it is when he decides i have enough, let's cut a deal, a deal will happen. the chinese will cut a deal tomorrow as long as they stop the negotiation and say this is it. alix: our third story has to do with oil and what we have when it comes to libya. we have this warlord moving towards tripoli. where does the international community sit on this? marty: i do think they would like a political solution. whenever you go into armed conflict, there's always the chance of unintended consequences. a politicalstressed solution to this, and i think the world would like to see that happen. the question is, can it happen? david: put this together with bank earnings coming up. to what extent does any of this, whether trainees trade were oil,
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does the performance of financials depend on what goes on in china were libya? christine: the banks will tell you they are a leveraged bet on economic growth. if you have things that are ,etarding growth in some way that is not good for the banks. news thatn in the jamie dimon, ceo of jp morgan, has been out there trying to get the saudi aramco deal done. chaos in the oil markets not particularly good. this deal is going to be well subscribed no matter what, but there's a lot of investment bankers out there eager to do deals that don't benefit from chaotic oil prices. will coanchoryou "balance of power" today at noon for a special report. we don't know how is going to be resolved in tripoli at all. indication since
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the u.s. withdrew troops? marty: if there is ever armed conflict in an area, and i do think this administration is very much not inclined to engage in any war outside of the u.s. david: indeed. christine harper and marty schenker, thank you very much for being with us. a reminder, you can find all of the charts we just used and more by running g tv on your terminal. you can even save the charts if you want. coming up, more on the trade deal getting closer and closer with deutsche bank. this is bloomberg. ♪
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viviana: this is "bloomberg daybreak." shares of general electric falling in premarket trading. a key analyst at jp morgan returned to a bearish view on the stock, reversing a december upgrade on ge that provided a major boost to positive sentiment. a big transaction in the semiconductor industry in a deal that values $5.8 billion. arizona.based in the company earlier planned a merger with entegris. begins a roadshow to pitch shares to investor, setting the price range at $15 to $17 a share, below its ious outlook.
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david: closer and closer. that's how national economic council director larry kudlow described the promised u.s./china trade deal yesterday on "60 minutes," citing progress on an electoral property. mr. kudlow: we've made great progress on ip, on forced transfer of ownership. there are issues notwithstanding , not least of which are enforcement issues, but in each and every place, they've acknowledged there are problems. that was a very big hurdle. and what was not on the table is on the table, and we are getting closer and closer. david: joining us now is torsten chiefdeutsche bank's international economist. we heard this, that we are getting closer, but the chinese
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have admitted there is a problem. if that is true that is a significant step. guest: absolutely. it was a very long road to get to a deal, and from what he said yesterday, it sounds like there is still quite some distance left. from a market perspective, it depends how much is this a drag on global trade, which it has been quite a bit so far, and are there any signs it is getting a little bit better? if this you could argue resolution happens, that as a stabilizer, not necessarily a boost to the global economy. guest: absolutely. gina: there are some indicators that are showing signs of moving absolutely. there are some indicators that are showing signs of moving higher. i believe we have a chart with that. alix: beautiful timing. david: well done. guest: the weekly indicator shows what the shipping
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container prices are doing. they have gone up in the last six or seven weeks, and that is getting attention in the marketplace. metal prices have also begin to go higher. there's high-frequency data that we might see some progress. this doesn't have as much to do with the trade deal, just at the chinese have done a number of different initiatives to try and list the chinese economy. david: if you go back through history, when you see those indicators move up, do you see global trade growth pickup? guest: that is what you normally have seen. at the end of the day, as an investor, you need to feel whether this trade deal will end in a good or less good outcome. if you think this is going to be a big deal, you will end up with the conclusion that this is positive. but the indicators might be giving some false signals because they are not good indicators of a political deal.
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they are more a good indicator of where we are in terms of the business cycle. alix: so what is the downside in that? if there is a deal and china buys more stuff from the u.s., that demand is going to be somewhere else. then you have more capital flows going into china. that comes from something else. guest: this is why a number of left drivinges are this forward. a very important part of that discussion is if the china deal in u.s. negotiations brings this to something that is significant, what about the rest of the world? this is going to open up a lot of questions afterward with what the rest of the world will do. david: we care about the trade deal because there's a lot of trade back-and-forth that affects the economy of both countries. talk about china specifically. how important is this deal to the chinese economy, and where does the economy stand right now? guest: the chinese have said
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very clearly we want growth to slowly glide lower and lower from 6.6% to 6.5%. the chinese appetite for giving a big boost to growth if they have already said they want to the leather -- want to delever, what is important is the capacity for levering up in china has also been limiting it somewhat. this chart shows you what is total debt in china in different sectors, and what does it add up to at the economy wide level. the main message is the last few years, basically global debt has been moving sideways because that has been a very deliberate policy from the chinese. there is a limited appetite and willingness from the chinese to is whybig boost, which the discussion of the high-frequency indicators, we should not expect china to come and solve all problems in europe and the u.s.
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the big question for investors is is this enough to save the european pmi's? david: alix, you know what i love about torsten, he can do all of this without us. --yleig he needs but he needs kayley in the control room. you really have to lean back in your chair and say why are commodity prices moving higher when global growth is slowing? there probably is something that china is accelerating a bit, helping a bit to lift commodity prices and giving some boost, both on the real front to em, and with a more dovish fed, also giving a boost to portfolio flows. david: there was a time not too long ago --
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guest: leverage has been going sideways because the chinese worried about that in 2016. they haven't really been able to deal either -- two delever dramatically. all of these other side issues that have been here on the agenda for quite some time, at least it looks better that it has in while because the chinese have deliberately said we are not going to do big growth in credit because if we do that, we magnify those leverage problems. the world can't rely on china to solve global growth problems. are excited to see where they are going, but the forecast becomes very important for setting the stage for global growth. everyone is expecting's global growth to move slower. will be sticking with
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us. coming up, brent crude rises to a five-month high. --hting in libya encourages in libya encroaches on the capital. this is bloomberg. ♪
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david: they call it the second libyan civil war as a warlord embeds his -- warlord advances on the capital of tripoli. we welcome now from dubai our executive editor for the middle east and africa. give us the latest on what is going on. i understand forces are moving toward tripoli. reporter: there seems to be fighting near tripoli, and the .orces seem to have advanced there are mixed reports on that.
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the libyan government has been moving more allied forces towards tripoli. david: you say internationally recognized forces are backing the government in tripoli. as i understand it, egypt and uae and russia are backing the warlord. reporter: that is exactly right. even the major powers pleaded for a return to negotiations that would start next week, he has had very strong support from .rance france has said they were not informed prior to the advance, but they haven't come out and condemned it.
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david: thank you so much. hamaderg's riad reporting from dubai. a bad price for this zero to three months period of time. it looks like that is easily going to be reached. alix: do we want $75 oil? oil: if you are in the industry, that is good news. but what is global growth doing, and what is supply doing? this probably is more of a growth story than a supply story. gross is slowly sliding slower, and there is a limit to how much oil prices can go up. david: the chinese pmi have kicked up, right? torsten: that would certainly be
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a more cyclical boost. the question is if that is a temporary feature. alix: if we come inside the bloomberg, this is to 10 30 year breakevens. they have kind of condo where -- this is 210 30 year breakevens. they have kind of gone nowhere. quiten: the fed has been worried about inflation expectations slowly moving lower. that sends all the talk about average inflation targeting. the problem with this is this is the kind of bad inflation because oil prices going up is not the kind of inflation you like. you like inflation that is coming simple he because there is more demand or more supply, basically lifting inflation because the economy is getting better. that is not quite what we are seeing. david: that is exactly my question. we are told the fed differentiates between core inflation and headline inflation
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, headline inflation including oil, core not. do we draw that distinction? which expectations are we talking about? torsten: the five year breakevens on my bloomberg screen are including oil prices. there is no inflation measure on the marketplace that does not include oil prices. at least, the one that gets the most intention -- the most attention glued oil prices. the most attention includes oil prices. alix: so where does it leave the ecb this week? there's a lot of talk about the japanification of europe. why the ecb iss targeting headline inflation, which includes oil prices. generallyl bank, speaking, shouldn't want to target oil prices and energy prices. coreissue of
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inflation is really important because it means so much for the confidence from investors in tenure common bonds in germany and the u.s. alix: that is depressing. --nks, torsten's thanks, torsten slok of deutsche bank. up, ray dalio declares income inequality a national emergency. we speak to the chairman of young american. this is bloomberg. ♪ want more from your entertainment experience?
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just say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote
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and see how you can have an even better x1 experience. simple. easy. awesome. alix: it feels that global markets are trying to dig just -- trying to do just what it means with the nasdaq closing at
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a record high friday and the s&p insight. a little bit of softness in the equity markets. the same in europe. watch the automakers, though. there's some fines on some diesel issues and that sector. it is a weaker dollar story. we have a meeting between merkel acron tomorrow ahead of the eu meeting. david: and they are comparing now to charles de gaulle. in the meantime, there's some news going on outside of the business world. if jan tonto is here with the vivianard news -- hurtado is here with the first word news. homeland security
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secretary kirstjen nielsen was asked to resign. the british prime minister is hoping to restart brexit talks with her chief rival. over the weekend, theresa may defended her decision to work with labour party leader jeremy corbyn. she says without his support, the u.k. may never leave the european union. may is trying to come up with a plan she can sell this week at an eu summit. in turkey, the lira is falling after comments from president air to gone urging the country's election -- president air to urging president erdogan the country's election officials fraud inleged voter local elections. david: i don't mean to be skeptical, but president erdogan
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it's going to protect us from vote stealing. alix: i was definitely worried that was going to happen. david: in the meantime, we want to turn back to income inequality. ray dalio says he is worried about losing the american dream. lastpeared on "60 minutes" night, saying capitalism isn't producing enough opportunities for most americans. >> if i was president of the united states, it has to come from the top, i would recognize this is a national emergency. david: we welcome now peter georgescu, a man who has seen capitalism work at the highest levels of business, but now sees a pressing need for reform, something he addresses in his book. slok of deutsche bank is still with us. welcome. in your book, you go through the problem. give us your set optus about what is the problem today. guest: the problem today is that
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inequality is the highest it has probably been ever. we have the greatest inequality in the developed world, and the greatest immobility of our society. inple don't understand america the depth of the problem it is about people, about society. it is about lack of jobs and education. homes haveamerican to borrow money at the end of each month. david: let's put that chart up with the numbers you produced in your book, which is really stunning. if you look at money income a money outcome a month by month, you see up to the 60th decile before you break even. guest: that's exactly right. that is an enormous problem. alix: does that mean 60% of the populace and has to borrow each month to survive? peter: each home, correct. atyou go to the next 20%,
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the end of each year they have $8,500 disposable income -- about $500 disposable income. they are really struggling. our economy is not right for americans. david: it has not always been thus. one of the things you say in your book is to compare the bottom 90% with the next 9% with the 1%, and everybody was doing pretty well. then you take 1981 to 2004. in real dollars, the bottom 90% went down 3%, while the top 1% 60%. what happened? peter: let's give a shout out to free enterprise capitalism. it works. the problem is in those first 40 years, it says work with society. everybody should win. inclusive growth. and it was.
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now we are saying let's maximize short-term shareholder profits, and it works. the shareholders are doing magnificently, and the rest of the population is suffering. torsten, -- alix: and your work, what do you find? torsten: the data is showing a worrying trend, and the biggest question for investors is should i just ignore that, or should i begin to focus on what needs to be done? one thing we have worried a bit about in a broader context, namely what was the outcome of the corporate tax cuts. we did see a boost to capex, but also to buybacks. it happens to be that when buybacks goes up, it benefits those that hold stocks. it is just to say that it is pretty clear that we need some
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policies that address this head on if the politicians what to do something about it. david: where did those policies come from? we had ray dalio and jamie dimon coming out with somewhat different prescriptions. both of them really had largely to do with what the government should be doing. we can put up ray dalio's points, for example. increased taxes on the wealthy, helping private/public partnerships. is that part of it? peter: it is part. at the end of the day, this capitalism is broken. you cannot have 90% of all profits go to the shareholder. that is wrong. you have to start with society. society means people. so yes, education. training, retraining. there is no kindergarten for these people. it is a disastrous education.
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that is why we are ranked at the bottom of the developed world. that has to be fixed. but you start with people. you have to start with people and workers. unless you realize that people are not a cost on the income statement, then you are not going to fix the problem. alix: is it a government solution? you have these wall street guys coming out, saying it is bad. my question is what are you going to do about it. is it up to them or d.c.? peter: it is up to business. we are responsible for helping create the problem. ,ow we have to stop denying stop deflecting, and realize it is up to us to begin to fix the problem. yes, government can help. can help with the right incentives, not the way the tax plan that just went through was sentned, but really and that's really -- really get people to perform in a way that
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helps society. but we have to change. i think business has to take the lead. david: torsten, basically people act in enlightened self-interest. if you are a ceo, how long will it take if you pursue a plan of investing in your workers for a to show up in productivity? is their incentive to do that, or did you get punished? torsten: it is always a good idea to invest in your workers and everything diversity, human capital, increasing qualifications because ultimately, it raises productivity. the problem is the reporting season is every quarter, and you need to deliver earnings. if you have an enormous amount of costs, people will say, are you sure this is going to pay off? quarterly earnings reports but a lot of short-term pressure to have the results that are required. alix: going forward, what is the catalyst for companies putting the money to work? we saw manufacturing jobs last
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month fall, and we are prepping for some kind of downturn at some point. theten: if you let markets speak on their own, you have to make incentives for companies. that is really up to politicians. alix: is it no more buybacks? torsten: you want to incentivize companies to do the right thing, and you can do that in many different ways. you can do that with subsidies, with incentives in various ways through the tax system. it doesn't have to be complicated. it is just saying we need to get our priorities right in terms of what we want. david: peter, how much of this is a question of patient capital? take the example of walmart. three years ago they said we are not going to make as much money the next two or three years. we are going to invest in our increase their wages. at the time their stock plummeted.
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peter: i want to give a shout out to ray dalio, and to some degree jamie dimon as well. it is time to realize there's a crisis here. the reason to change is because the current system basically is not going to be sustainable, either politically at the voting box or in the streets. people are going to say enough already. -- thatwhy the problem is why the 2016 election happened. donald trump and bernie sanders were so powerful because of the problem. the problem has gotten worse. it is not sustainable. so actually, free enterprise capitalism itself is at risk because people are saying the system is broken. capitalism is no longer working. it is broken. it's not true. it is doing the wrong things because that is what we ask capitalists to do. alix: and how many moderates are
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on the ballot for the democratic side? thank you very much for that conversation, peter georgescu and torsten slok. coming up, saudi remco big bond debut -- saudi aramco big bond debut. this is bloomberg. >> it is very dynamic. the books have not been closed, but -- >> it is north of 30? >> i believe so.
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viviana: this is "bloomberg daybreak." coming up in the next hour, marcus glover. ♪ viviana: this is "bloomberg
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daybreak." shares of boeing taking a hit in premarket trading. a bank of america merrill lynch analyst downgraded the stock from buy to neutral, warning it will take more than a software fix for the 737 max to be recertified. the u.k. is set to crack down on facebook and other social media. prime minister theresa may's government is proposing a new industry funded watchdog. the regulator would enforce rules on removing online content that encourages terrorism and child abuse. companies could face heavy fines . individual managers could be held liable. out at the annual london metal of change gathering, playboy bunnies. the l.a. me is proposed -- the limitationssing new on the event held at the playboy club.
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the infamous strip club offered free entry and drinks. alix: thank you. for thecode of conduct event "should not take place at venues which could make some market to dispense uncomfortable -- some market dissidents uncomfortable -- some market participants uncomfortable." david: they need a role for that. ok. as we move into the 20th century, we covered three things wall street is buzzing about this morning. first up, saudi aramco set for mega debt deal, preparing to kick off what could be a $10 billion offering this week. then, wells fargo, in an interview with "the financial times," oren buffett says the next bank -- warren buffett says the next bank shouldn't come from the likes of j.p. morgan
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and goldman sachs. isx: joining us now bloomberg's lisa abramowicz. first, this saudi aramco bond deal. this is what the saudi oil minister had to say about the deal. establish all permanent presence in the capital markets that will have both debt and capital instruments, so i can assure you that in a couple of years, you are going to have your choice between investing your big savings from working for bloomberg in either aramco bonds or shares. alix: we are talking about potentially $30 billion worth of interest for $10 billion sales. lisa: this is saudi aramco's biggest sale, and this would become a massive amount of debt in the encz mark -- in the benchmark.
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there's already a massive amount of demand for this debt. there's also questions about the blick offering that may or may not happen. you have all the banks nasty public offering that may or may not happen -- the public offering that may or may not happen. you have all the banks wanting to be a part of this. that is why you are getting such a jockeying game. david: we know one bank that is in, jp morgan with jamie dimon personally involved in this. the second story is wells fargo. warren buffett had a big position on wells fargo, saying they just have to come from andplace outside of wells they shouldn't come from wall street because they don't have a ceo right now. lisa: do you want them to have the experience of running a bank, or of being a lawyer? or do you want them to have the experience of running the books?
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,'m just saying, is it crucial is it imperative, for this to be a political position? poor is it important at this point to have somebody who understands the nuts and bolts of how to run a bank successfully? david: we seen both. chuck prince was a lawyer, and it put him into run citi, and it didn't go so well. alix: or do you get someone who is may be up for ceo of goldman sachs who didn't get it, who is now out there looking. [laughter] alix: i am just saying. of ouro me, the idea bank ceos becoming political actors at this point. alix: 100% for wells fargo. so unicredit. let's talk about internal human security. an employee in china allegedly yuan byut 15 million taking advantage of passports. lisa: i love this story because
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he did this because even a to invest in apartment around the world to flip and put the money back. he was basically operating his own ponzi scheme that didn't work out. david: you will never know it's missing because i will make so much money i will put it back. lisa: it raises questions about the internal protocol at these banks. david: lisa, thank for being with us today. coming up, british regulators proposed a far bigger approach to regulating social media. we speak to the u.k. security of state for digital media. this is bloomberg. ♪
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david: ambitious plans for a new system of accountability and oversight for tech companies. that's how jeremy wright, digital secretary for u.k. culture and sport, said it out
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in a white paper this morning. he joins us now from london. thank you for being with us. could you take us through, in brief compass, what it is you are proposing? what do you principally propose? i understand it starts with a new obligation. guest: sure. what we are proposing is that online companies should be subject to a duty of care to keep the users of their services as safe as they can reasonably be kept. we think that an independent regulator will be needed to hold those companies to account to compliance with that duty of care. that is it in an outline. the regulator will need to be independent and properly funded, and will need to have sanctions available to bid encase companies don't comply with their duty of care. david: as i understand, those sanctions in the proposal would include possible fines directly on directors. guest: yes, that's a possibility. we want to consult on some of
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the proposals we are making, and we think the range of penalties available to the regulator should be all the way through compliance notices, through , possibly toines individual director liability, and in the most extreme of cases, a denial of service for some of the websites concerned. we want to make sure we take an account of a range of views for we settle on which sanctions should be in that list. alix: what kind of fines are we looking at here? do you have numbers you've worked on? guest: if you take as an example and comparator the information commissioner's office in the fine it has the power to those in breach of data privacy regulations up to 4% of the global turnover of the company concern. those are very substantial fines. we think some thing of that order may be appropriate here. david: we had mark zuckerberg of facebook come out and say we think it is time to have an
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internationally coordinated regulation. has your organization spoken with people like mr. zuckerberg? is this consistent with what they are looking for? guest: i have spoken to mr. zuckerberg, and we discussed exactly what it is the british government is prepared to do. i don't believe we will be the only government world to do this. i believe there's acceptance on his part in the part of many other companies like facebook that some form of regulation is now inevitable, and they recognize that government should play a part in this. decisions are made by an independent regulator, and that that regulator is able to assess the systems that companies like facebook put in place to keep their users safe. if they do what they should, the regulator will be satisfied. if they don't, the regulator will have penalties available to it. alix: are you concerned about
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tit-for-tat, having to issue penalties on u.s. companies and the u.s. does the same thing to companies operating in the u.s.? guest: i think it is companies, wherever they are located, that will be subject to these rules. from our perspective, it is most important to keep the citizens of the u.k. safe. so those who are offering services to the citizens of the u.k. will be subject to these rules. but we very much hope we are not the only country that will put in place measures like this. i am compass and -- i am confident that legislators in the united states will be subject to pressures from those saying we want to feel safer online, and we want to deal with some of the very harmful online content that at the moment we don't feel is being controlled, when it would be controlled in almost any other environment. i thick this is something that is coming everywhere, and we want to do, and i hope very much others will be interested in what we are doing. david: how do we strike a balance between keeping people
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safe and curtailing speech that may be uncomfortable, but is actually good for society? guest: that is a difficult balance to strike. one of the things we will specifically require our regulator to do is take full account of the protection of freedom of speech, and also the need to promote innovation because in the online space, it is very important businesses have the opportunity to innovate. striking that balance is always difficult. we are not looking at a system here that will enable a regulator to look at each and every individual piece of content. this is about the systems we need in place to keep people safe. david: thank you so much to jeremy wright. coming up, liz young of bny mellon. live from new york, this is bloomberg. ♪
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♪ alix: technology shares hit a
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record despite shrinking profits, weak outlook, and compressed margins. mega bondco's offering. the saudi oil minister says the offering could be $30 million. and inching closer and closer. larry kudlow guardedly optimistic as the u.s. and china make headway on issues surrounding tech, id theft, and sharing intellectual property. david: welcome to "bloomberg daybreak" on this monday. headn't have the same of homeland security as we did before. alix: there's been yet another leadership change at the white house. homeland security secretary kirstjen nielsen will be leaving her position. the current u.s. customs and head willtection
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become acting secondary. basically the next year and a half is solely going to be about president trump running for 2020. david: that is correct. alix: that is why this is all happening now. at what point do we really see any sort of supply chain issues? you see those lines of trucks. so far it is just avocado prices. something has got to give. david: when the president first said we would shut down the border, the majority leader came out and said we are not going to do that. and i said no, it's going to go away. you said you don't think this is going away. it has a going away. shutting down the border seems to be an actual possibility. they are talking about stephen miller having some substantial role, who is very hawkish. nasdaqn the markets, the
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sitting on a record high, the s&p near a record high, and nothing. the s&p flat. overall a weaker dollar story. wonder what that has in store for us over the next week. and it feels like wait and see. how do we digest the recent rally we have seen going into earnings season? david: that libya thing is really kicking around out there for crude. it is time for the mining brief. -- for the morning brief. tomorrow the imf and world bank begin their spring meeting and release their economic outlook. british prime minister theresa may eight swiss angela merkel in -- theresa may meets with an dilemma go in berlin ahead of a key eu summit. wednesday, the ecb releases its rate decision, followed by a news conference with mario draghi. we also get minutes from the fed's march meeting. friday we start banks earnings season. alix: yes.
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u.s. stocks sitting at or near record highs, leaving market but does been's to decide whether it is time to play risk or go neutral. >> we put the risk back on after deleveraging last year. >> we are sitting at neutral between stocks and bonds. we think growth is a stabilizing, but at this point it feels like the market has made a leap of faith. >> the economy is ok. not great, but good enough. we are pretty optimistic for the cyclical sectors, and we've been increasing our weightings since last fall. alix: joining us now is lead --g and -- is lee drug lee drogan and liz young. >> i think we have to watch and
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see how this bakes through for the rest of the year. coming out of 2018, we had the fed completely pivot. that is going to be supportive for risk assets. that does not mean it is going to drive a huge rally, but it puts a little bit of a floor on the volatility piece in stock prices from a big drawdown. alix: how do earnings wind up affecting that? what we have learned is that it has still been cyclicals that have led the rally. the white line is a cyclical versus defenses index, moving higher. s&p moving higher. >> if you look at the headline numbers, it really is energy and materials dragging the whole index down in terms of expected euro over year growth rates. materials specifically are half of the decline. energy, big rally in the last three months. if you look forward, i don't think people are going to care necessarily about negative year-over-year numbers on the
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entire index. we really expect basically a flat eps number on the industrials. technologies being dragged down basically just by apple. across the board it is pretty good. the one place i don't think we'll be as good as everybody expects it to be and won't get the credit going forward is financials. q4,ly, what happens is in we had a credit met down -- credit meltdown basically. all of that has gotten better, but we don't think there is the push going forward the next couple of quarters, so we think financials are kind of tapped. david: when you say flat, are you saying for which quarter or the entire year? leo: on a year-over-year basis. david: ok. leo: i'm sorry, for q1. david: if we take the whole year, where will we be on the back half of the year? leo: that is definitely the variable here. we think that q2 is going to be
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soft as well. we are seeing numbers vacillate all over the place for three and for, more than normal. we normally see the estimated consensus number, which don't show this normal up and down. there's about 7.5 percent decline over the last three months, about double the average . we seeout quarters, numbers move all over the place, which is why we think we will see some volatility coming up because we need to check of expectations. alix: in terms of the macro level, this is larry kudlow talking over the weekend about trade. closer and we are ever have been before. a lot of very difficult topics for the first time are on the table and being resolved. i think that is terribly important.
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i think the president expressed in the room thursday darted optimism, maybe more. david: alix: and then markets -- alix: and then markets flat today. marketsq1, i think the have already expected we will see this negative earnings growth. that is not necessarily negative from a really direct standpoint. last year, earnings were so strong and expectations got so high that they were almost unattainable, so we have to have a little normalization. regular growth on the s&p is about 6.25%. we are expecting a lot to come in the last half of the year, a lot of the growth. where i think there will be sensitivity is if we have second-quarter earnings come in flat or negative. in the second quarter when we start to report that, you might see a little bit of volatility. the trade piece, still a lot of lip service. alix: progress on ip theft. that's something.
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liz: but i still haven't seen anything. there's been a lot of promises. i'm glad like it sounds like it is going positively, but there still hasn't been a deal. david: suppose it turns out that it is not just lip service. if there is a deal, what happens? liz: we go through this first quarter reporting season. let's say we get a deal during the first quarter reporting season. that is a nice catalyst for the market to keep going up, and this rally continues. if we get a deal that is meaningful and enforceable, that might carry us the second quarter. china stimulus comes in and the third quarter, and that might carry us further. much the question is how of the rally actually central bank driven. peak liquidity means a beginning of the end of rally. what do you think? without funny part is
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the fourth quarter could have been a self fulfilling prophecy. the markets sold off, central banks would have to react. now what happens is the market might go up really far. we overshoot on earnings and growth, and it brings us back to the table in the second half of the year. leigh and liz will be sticking with us. coming up, we discuss the potential for earnings recession as groupthink takes over the market. this is bloomberg. ♪
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viviana: this is "bloomberg daybreak." shares of general electric falling in premarket trading. a key analyst at jp morgan
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returned to a bearish view on the stock, reversing a december upgrade on ge that provided a major boost to positive sentiment. shares of boeing taking a hit in premarket trading. a bank of america merrill lynch analyst downgraded the stock from buy to neutral, warning it would take more than a software fix for the 737 max to be recertified, expecting a six to nine month delay for 737 max 8 liveries. a big transaction -- max 8 deliveries. in the eicherion chip industry valued at $5.8 million -- in the semiconductor industry valued at $5.8 million. that is your bloomberg business flash. david: thank you very much. earnings season starts with jp morgan and financials this friday, with investors eager to see whether sectors such as financials and tech can carry us
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forward. here was a preview is taylor riggs. taylor: i'm taking a look at where we are as a whole. it looks like we will be set up for negative growth on a year-over-year basis. some of the winners and losers, winners will be health and communication services, one of the sectors looking for positive earnings-per-share growth. some of the big losers are expected to be cyclical sectors like materials and energy. you mentioned tech. there is a very interesting phenomenon within the tech sector if you come into my terminal here at gdb go -- at g tv . you are seeing prices rise even as you are expecting drops in profit growth for the first through third quarter's on a year-over-year basis, the largest drop going back since 2009. clearly a little bit of a disconnect between earning
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expectations and where the market is trading. jp morgan kicking us off on friday. very interesting, we are taking a look at the move which measures volatility in the bond. that will affect trading against the vix, which affects equity trading. we knew volatility was too much and that stalled trading. if it is too low, that makes people not want to trade either. my eye here is on fixed trading. alix: thank you so much. stanleyson of morgan still sounding bearish when it comes to earnings season. he thinks the first quarter is going to mark and earnings recession. "we do not see an attractive entry point." still with us, lead rogan -- still with us, leigh drogen of
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estimize and liz young of bny mellon. that: what will matter is the gross margins in the back half of the year are not going to be good. that is going to end up being the focus. it is an issue because we are only going to have 4.5% to 5% revenue growth here. there isn't anything on the horizon that is going to push anything significantly forward, so it is really hard to get good eps numbers and the backup of the year. historically are incredibly high right now and declining. david: the you agree margins are going to come down? liz: i do, but i slightly disagree that we don't have other things on the calendar that could push it forward. i don't want to sound overly optimistic, but a trade deal would obviously be something. you also might see a bit of a rollover in some of the indicators that started slowing at the end of last year. if we see small business optimism come back, consumers stay healthy, and see earnings beats in the right places, like
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financials, industrials, consumer staples, and discretionary. that could actually catapult us a little further forward. alix: how do you understand tech? if you come inside, the top panel is earnings growth. aigh: i to look a bit of broken record saying that enterprise technology industry groups have been on fire. it continues to be on fire. we are still in the cycle. liquid google said last year -- in the cycle. capex cycle.e look what google said last year. coming fromis apple, coming from asia. the interesting thing that we are really looking at is what is going on with the shares in china. massive rally there. that has got to mean something,
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right? maybe liquidity fueled, maybe debt fueled come up at a rally like that doesn't happen without some kind of macroeconomic nice thing going on. so yes, that would be the upside scenario for the back half of that china is at least pushing liquidity into the system. industrials really are pretty healthy overall relative to trade were fears and all that kind of stuff. my kind of variable that could go wrong is the financials. it could also go very right. david: you said for the financials, i want to ask liz that question and see if she agrees. we put of a chart basically saying the eps is going down faster than sales. do you agree that financials are lightly to disappoint this year? iz: earlier in the year, and started to sound a little bit insane because i kept saying financials are going to do well
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and the yield curve is going to steepen. that didn't work. but what i think will happen with financials is they will get compressed. obviously the eps is going to get compressed. i think it is a positive that revenue is still durable. the eps is going to get compressed because their margins are getting compressed. they are making less money as long as the yield curve stays flat to inverted. they could be under some pressure. where i think it is important to watch is the quality of fundamentals. that is what investors are going to have to pay attention to. we have some headwinds coming your way. i think china is the biggest risk out there. for ana falls out of bed stimulus isn't as big as people wanted to be, that will be the biggest risk to markets overall. with some of those headwinds, investors will really parse through the fundamentals, and i think they are healthy. alix: leigh, favorite sector?
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leigh: i still like enterprise tech. i also think consumer discretionary, we thought that would be the fulcrum for whether we'd tipped into earnings recession, and it did come down enough to put us there. i actually think it has stabilized somewhat here. although retail sales have been all over the place for some reason, we do think that consumer is still pretty healthy, and that that kind of back half of this big, cyclical advance the consumer has had isn't declining as much as i think a lot of people thought it would. i think it is still pretty healthy, and i think that could be your upside scenario in the back half of the year as the consumer stays healthy and those stocks outperform. alix: great stuff. really appreciate it. liz young of bny mellon will be sticking with us. we are getting new details about saudi aramco's bond sale.
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bonds theyhree year are going to be offering 75 basis points above. i don't even understand that. david: three year, 95 above. alix: they were supposed to be lower, right? david: we know they are off and running now. before this happened it was oversubscribed. people wanted to buy $30 billion, and they only had $10 billion or so to offer. it is expected they would have a yield lower than the sovereign itself. alix: if i am reading this correctly, it appears that is not the case. we will definitely keep monitoring these headlines as they cross. nonetheless, this is a huge amount of money. also an interesting way to see how digesters -- how investors digest the situation.
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david: what it also might say about initial stock offering. alix: and ipo? 100%. coming up, boeing loses another bowl from -- another bull from buy to neutral. this is bloomberg. ♪
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david: time now to take a look at three companies worth watching this morning. i'm looking at general electric, down in the premarket after a -- after onenalyst down.t has it o is a littlet ip
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dicey, up and down. david: they are below the money the less people put in. they must not be feeling too good today. the third company we are looking at is boeing. for more, brooke sutherland joins us now. there's news out about their 737 production because they are just producing them. brooke: they were continuing at pace at the expedition they would complete this software fix. of course, they push that back. they said the software fix is not ready, and this is now looking like it will be a very drawnout affair. you guys were talking earlier about that bank of america downgrade. about a sixg timeline tohs getting that 737 max back in the air. aere's also potentially margins squeeze and disruptions that could stretch into 2020. david: now in the premarket it
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is down almost 4%. we talk about a pole between trade talk, where boeing would go up, and the 737, where it would go down. it basically didn't suffer very much. brooke: you see a lot of complacency on the back of investors because knowing does have this is very strong backlog. there's only so much damage that can be done. but to see them halting production, that is a pretty significant steps. that has a lot of ramifications downstream, including the producers of metals. it goes very far. alix: apparently there's 600,000 parts needed for just one plane. what part of the supply chain will be hit the hardest? csm international makes the engines for the 737 max, and spirit air says they are continuing production at full tilt. they've had supply chain issues of their own, so they are
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keeping apace to work out some of the kinks. they will be keeping the extra inventory in their own warehouses, so this is only sustainable for so long before you start seeing suppliers having to dial back production, which affects their supply chain. it can start to get ugly pretty quickly. that's brooke sutherland. coming up, saudi aramco set to kick off its dollar bond sale after the saudi energy minister said demand is at more than $30 billion. now that is an order book. more from our exclusive interview with him, next. this is bloomberg. ♪
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alix: this is "bloomberg daybreak." i am alix steel. movements. it is how you will digest those record highs during
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the s&p -- 2900 insight. -- the daxker during weaker. a weaker dollar story carried crude has is apply issue. that is why you're seeing that higher. the cable rate not going anywhere. we do a lot of macro events happening this week but it feels like how are we going to die dressed -- to digest all of these macro headlines into earnings friday? david: we have the imf world bank. we have the ecb meeting. we have minutes out of the fed, and then we start earnings. alix: then you have macron and merkel and may talking about brexit and they're going to come up with a fancy deal. april 12 is the deadline for brexit. david: four days from now. alix: not over. a lot of macro events.
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will it move the market into earnings? david: a lot going on in the world. we turn to viviana hurtado with first word news. viviana: u.s. homeland security secretary kirstjen nielsen is out. she is apparently a casualty of president trump's frustration with the border system he says has been broken for many years. bloomberg learning nielsen was asked to resign. the president wants a strong law enforcement type figure. president trump's top law enforcement and pfizer says the u.s. and china are closing in on a trade deal. says negotiators will be doing teleconferencing after two weeks of talks. china's official news service says remaining issues are hard nuts to crack. in turkey, the lira is falling after comments from the president who is urging the country's election board to look into vote stealing in his den bulls local election. -- voteopposition
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stealing in istanbul local election. 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: this turkey story is quite a story. we know he lost on correct -- istanbul is on a knife's edge and he disputes the results. part of the reason he is concerned is because he knows municipal elections led to a turnover and the government when he did it. alix: he says in the u.s. they redo elections when there is a one percentage point difference. that could signal for a new election. pott it hot -- isn't it kettle black. david: reminds some of bush
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versus gore. alix: than the supreme court had to rule on that. david: it does affect markets as we are seeing with the lira. it is a monetary policy question. let's forget the election. they have substantial challenges in turkey and how they manage their economy. alix: especially in terms of inflation and what the central bank will do, but also stimulating growth and when you wind up having a dovish fed that should be good for emerging markets. the other issue being watch the central bank do. david: and the similarity to the united states. we know who is in charge in terms of monetary policy -- the president son-in-law. he has the whole thing under control. alix: exactly. stillher news we are trying to digest is the saudi aramco dollar bond. we are to find out what the yield is and how much demand there was.
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have anr was they would order book north of $30 million and is that coming true or are we seeing higher yield? 15-year, 110 year, 120 year, 130 year. it is a huge offering. particularly because it is saudi arabia. julian lee joins us from london. you've been looking at news we broke on the bond. what is the yield you can read? julian: i think we are seeing something above the sovereign yield. always going to be subordinated to the saudi government. i think that makes a great deal of sense. david: before this happened, there was speculation might be below the sovereign yield. it was so heavily oversubscribed. what do we think came out differently than anticipated?
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back andeople stepped looked at the relationship between the saudi government and logically camed to the conclusion that the fingers of the saudi government are so deeply and mashed in saudi aramco it was not possible for it to come up with a yield for saudi aramco that is lower than that for the sovereign. alix: fairpoint. i wonder how to set this up for a saudi aramco ipo and the appetite for investors based on that? julian: this is still a big question that is out there. we have seen the ipo pushed back on several occasions. aramco this purchase by of setback and the raising of funds to do that speaks to some
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of the difficulties they have had with this ipo. i think it is still a big question mark. there is still a ways to go. this issue has shown there is an , evente for saudi debt after all of the things that happened. sure you read the perspective that came out last week. what would you say was the biggest positive that investors were like, i want to buy this bond, and what was the negative that might have contributed to higher yields? julian: clearly the profitability is a big positive. one of the negatives are the things we know about. they are the huge involvement of the state. is inct that saudi aramco one sense and oil company like not., but in another it is
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it is very much a branch of government. that holds it back a little bit. alix: julian lee, thank you for much. appreciate that. david: our colleague got to talk with the saudi energy minister earlier today and this is what he had to say about this mega bond deal. the roadshow is ongoing. i think the deal will close on wednesday. i'm advised not to comment. i think the press reports in the analysts in the investors have been extremely impressed by what they have seen. this is no surprise to us. we've been saying it for years. saudi aramco is not only the largest but the best quality company that exists on the planet, and i say that from every angle. in terms of the resources the
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company has access to come in terms of its operational excellent, but also its environmental stewardship, also its technological prowess in terms of indigenous technologies it provides. safety, human resources, this is a company red -- led by saudi's, operated by saudi's and govern by a predominantly saudi board that has always taken the right decisions. the value is out there for the world to see. i think we have to think beyond the bonds. do you think if this is successful, and we are all speculating how successful it be a curtain it raise to come back to the bond market? >> i think aramco will establish
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a permanent presence in the markets. it will have debt and capital instruments. i can assure you that in a couple years you will have your choice between investing your savings from working for bonds or and aramco commercial papers. aramco, as the world's largest company will have all the tools at its disposal to access capital markets. in terms of paying the price for againal, it is going, and the perspective for the investor share is not the primary reason, the only reason for accessing the bond market. it is a tool the company needs levere and one we need to up and have some debt and instruments on our balance sheet. >> and that establishes a clear
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yield curve. let's play a little bit of sport in the move on from the bonds. -- howlion demanded strong has demand been? what the world knows is where is the demand and how strong has it been? >> it is still dynamic. i am not part of the roadshow. it is healthy. let's put it this way. be patient. alix: that was part of bloomberg's exclusive interview with the saudi energy minister and it appears the upwards of $30 billion, it is actually $40 billion. the latest headline is the bond order book -- the bond order book will be about $40 billion. still with us is liz young of
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bny mellon investment management. would you be interested in that kind of stock? do: generally speaking we not like state-owned enterprises in emerging markets. especially in em you will not get a dividend yield. there needs to be a shareholder friendly company on the other side. influence from the company usually makes it less attractive. david: they are saying we can take anything out of this company we can want. much of that is because it is state-owned and how much because it is an energy company? liz: energy companies we are bullish on, on the bond side and the equity side. if you look at commodity prices, they have been firming all year. they have been firming up of the big drop-off in q4. we are production cuts making it through the market and we are entering driving season in the u.s.. now we have replaced the middle
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east with the cheapest oil and we see a lot of profit potential going forward. on the bond side, we are more bullish on the pipeline space because they are in a deleveraging cycle and that is more attractive from a bond perspective. bullish on oil and gas in general but the state-owned enterprise puts too much and influence -- puts too much influence in the government's hands. alix: especially in saudi arabia. david: liz young. thank you so much for being with us today. coming up, betting on the big dance. we talked to mark's clever, -- marcus glover on the appetite for sports betting. that is coming up next on probably. this is bloomberg. ♪
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viviana: this is bloomberg
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daybreak. coming up later today on bloomberg, balance of our. the former -- a former u.s. attorney. david: ncaa march madness championship game is set to play tonight in minneapolis. we have brackets for a cause. and,000 plus was convicted $250,000 will go to somebody's charity. , then bluesh wins flat is number two. but if texas tech wins, there is a three-way tie. not i feel like i have to root for texas tech. david: i have to root for
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virginia because my wife went to virginia. alix: coming up, time for a follow the lead. a deep dive into headlines and moving markets with the insights from industry insiders. we look at the appetite for sports betting. taylor: it is all about how much money we spend on gambling. in nevada the average person spent $5,000 per year on gambling. then you have to go all the way down, rhode island and mississippi, a few surprises on how much a person spends per year in gambling. from a business perspective, cities rely on some of this tax revenue to help boost their budgets. yep new york, 4.6 -- you have new york, $4.6 billion per year. about only pulling in $900 million in terms of tax revenue from gambling. that if we take a look at basketball tonight, only about
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$1.48 billion was spent but they make up about 30% of the total gambling on sports. that is below football but above baseball. since 2011, sports betting has more than doubled. david: thanks so much to taylor riggs. for an inside read on sports betting, joining us is marcus hotel --orgot a borgotta hotel manager in atlantic city. how are you handling your customers on betting on this game? marcus: i think it is been a great response. we thought we would have great fanfare going into our first march madness with sports betting and it has played out exactly what we thought. when we had all of the games , therethe place was full
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was great energy and great vibrancy. we saw a little bit of the quantity over the subsequent weekends and we expect a nice crowd tonight to watch the finale between virginia and texas tech. david: this world has changed substantially because of the supreme court saying states could let people that within the state. how much is done in person. to they come to your facility, and how much is done online? marcus: you are seeing a bit of a mixed. i think the land-based wagering is a little bit more robust than the mobile wagering right now. rightfully so. one of the things we have seen is that many of our customers still enjoy the full experience we are a fullya integrated resort. sports betting because a piece of the offering. it is not the panacea and might be for some of the other operations in the state.
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we see our guests come in and enjoy placing a wager. they also enjoy eating in our restaurants were playing a slot machine and taking a look at a game of blackjack or crafts and they round out the experience and sports betting is a piece of that. we enjoy the vibrancy. we see a little but of crossover. it makes sense with the customer base we seeing come in and support that operation. alix: if you walk me forward five years, is there an incremental revenue driver you will get from sports betting? marcus: absolutely. we expect there to be migration to the convenience of the mobile offering. we expect as long as casinos are around, especially for the operations that tout themselves as fully integrated resort, you offer more than the transactional side. we expect great participation on mobile and continued great
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participation on land-based. convenience always tends to win. overtime we expect there to be a little more gradual increase over time on the mobile side than land-based. david: break it down a couple other ways. we just heard basketball has been growing a bit in terms of sports wagering. what are the sports you see the greatest growth in spending and professional versus amateur like ncaa? marcus: just like land-based casinos, the rules vary by jurisdiction. thetypical sports you see tried-and-true in terms of popularity in nevada are the same ones that transcend the as wagering continues to grow. we are seeing similar play out the nevada experiences. you have your signature events -- the super bowl, march madness continue to dominate. the baseball world series we expect to continue to pick up.
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your signature events will always be consistent across jurisdictions. right now march madness is the hot topic and we were able to take avenge of that and create our own experience at borgata with brackets and make fun with it. david: the nba has embraced legalized sports gambling. the nfl, roger goodell says he does not like it at all. what would happen if the abell changed its position? would it change -- if the nfl changed its position? wills: you think betting grow in popularity a sports leagues recognize this will be part and parcel of society moving forward. you would expect there to be a continued ramp-up in popularity with nfl betting. the key is to ensure both the leagues and the operators do so with this form of wagering toponsibly and we are proud
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engage in all forms of betting and mgm and our partner with game sense in ensuring our companies engage in betting responsibly and to have fun, not make a living. alix: marcus glover of borgata, thank you very much. coming up, saudi aramco kicks off the sale of its dollar bond. we will have more next. this is bloomberg. ♪
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alix: saudi aramco in its much-anticipated bond sales. joining us from dubai is bloomberg reporter matthew martin. walk us through what we know. isthew: what we have heard aramco has of $40 billion order book for its debut bond sales. the initial price order coming out is putting the pricing on this issue will be across six different tranches spanning
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three years to 30 years in the pricing looks like it will be tight to the saudi sovereign. we have gone another 24 hours until that pricing gets confirmed and giving the size of the order book and demand will probably see this come down and see saudi aramco able to price inside the sovereign, which i think will be a remarkable result for a state-owned company to appetite or pricing than the agency which owns it. there will be key for investors watching the issue. david: if there is that much demand, wire the yields lower? going into this people speculate -- you are saying we're not done on the pricing. it may still get below the sovereign. matthew: for the moment all we have seen are the initial price falls, comparing that to where the saudi sovereign curve is.
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most of those figures are close to the sovereign curve. given they have this $40 billion of demand, the question now is ndw big an issue does aramco e up printing and how is it price? from the feedback we have from investors, it is likely they will be able to tighten pricing of the next 24 hours and we will see a fairly sizable issue printed and inside the sovereign. alix: bloomberg matthew martin, thank you are much. that wraps it up for bloomberg daybreak. , jpmorganon the open alternative fixed income strategist. this is bloomberg. ♪
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jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪
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jonathan: coming up, equities softer following a seven-day winning streak just short of an all-time high. policyn central bank makers in no rush to rebound their negative rates policy and big demand for saudi aramco's debut bond offering set to hit about $40 billion. good morning. here is your monday price action. futures softer .2%. the dollar week in the euro former. -- the euro firmer. treasury yields creeping higher a single basis point. we begin with our top story. investors increasingly comfortable with the goldilocks backdrop. >> it has been a goldilocks environment. the driver of that is straightforward. >> inflation pressures remain subdued. >> lack of inflation. as long as we have no inflation

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