tv Bloomberg Surveillance Bloomberg April 23, 2019 4:00am-7:00am EDT
francine: ruling out extending sanctions. barclays cuts bonuses. enough to appease the activist shareholder? samsung delays the launch of its revolutionary smartphone amidst reports of screen failure. good morning, everyone. good afternoon if you are watching from asia. "surveillance," from london, these are your markets.
stoxx 600 down. asian markets and european markets range bound. crude extending. thomas coke shares rising. up 16.8%st time were as we speak. executive of chief the financial conduct authority -- don't miss that at 3 p.m. london time. police say the death toll in sri lanka has risen. 310. says the minister bombings were part of a global terror network. there were seven suicide bombers, targeting tourist, christians and churches on
easter sunday. bonuses planning to cut to investment bankers. this will be tied to performance. this is part of the effort to avoid an activist investor. u.s. house democrats issuing a subpoena to don mcgann, a key witness in robert mueller's investigation. tois the biggest move yet mine evidence over whether donald trump obstructed justice. president trump dropping plans to put herman cain on the federal reserve board, amid opposition from his own party. democrats are urging republicans to block the president's other pick. accusesdictment
corporate injury. funds.gedly used foreign 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. todd -- viviana hurtado. this is bloomberg. francine: saudi arabia has pledged the global crude market will not go out of balance and will coordinate other producers after the white house announced it was ending waivers. announcing we will no longer grant exemptions. we are going to 0. we will monitor compliance. any nation or entity interacting with iran should use due diligence. the risks will not be worth the
benefits. francine: joining us, our managing editor. this is probably our biggest story of the day. we have seen big moves on that story from the u.s. does the president know, basically, the oil price goes up, which he has rented against in the past? >>'s bet is saudi arabia will mitigate that pressure. it is clear saudi arabia has no plan to flood the market. they will be cautious, after last year, when they ramped up production to above 11 million barrels per day. the talk we are hearing from riyadh is they will help, but they will be cautious. they want to see material reduction in iranian exports
before they increase production. the market may be tight. francine: how credible is the threat that iran will close the strait? will: that would be drastic, probably a question of war and peace. the u.s. is committed to keeping that waterway open and has a big naval presence in the gulf. we can put that down to rhetorical bluster. francine: thank you. sonja, neville, thank you for joining us. the correlation between inflation and the price of oil. i have a great chart. what is the ideal price for the world economy? >> very good question.
upward pressure and price would be something that markets will watch carefully. cyclef the end of goldilocks scenario has been that -- so if we are demanding and disturbing the balance, markets will watch carefully. i'm not sure whether there is an ideal price. the price is disturbed now. francine: this is my chart looking at oil. pricesh more or higher can the world take? we are not seeing inflation take hold. this could be bonus for central banks. neville: it could give the european central bank the opportunity to say it is rising back to target. they wanted higher core inflation rather than something
driven by higher oil prices. the global economy is precarious at the moment. sharp slowdown in the last 6-9 months in industrial sector. there are signs of bottoming out. one of the key sources of strength in the global economy is the u.s. and european consumer that have held up well over the past year. a big rise in oil prices is the sort of thing, that at current levels, you shouldn't get too worried about, but the further it goes up, the more you worry. francine: it was unclear whether consumers took advantage of low prices 3, 4 years ago? neville: corporate stead. timead a reasonably long in europe. net oils a complete importer. windfall for businesses and households. that benefited the economy at
the time. it can spur on mining investments in the u.s.. francine: do you like the oil majors? there -- we seem to be oscillating between the end of big oil in 10 years, which is why no one wanted saudi aramco but then everyone bought in, so big oil is here to stay? sonja: i am more inclined to wait for the earnings picture to come through. oil price will always be a supportive element and how these companies trade. we should wait for first quarter. they have been re-rated alongside most other sectors since last year. earnings outlook will dictate what we should think. should the oil price day? it is clear -- stay? it is clear that there will be
benefits. majors willbig oil provide a buffer. francine: should i worry about underinvestment in this sector leading to higher oil prices in 10 years? sonja: then we come back to the idea of peak oil and the transition. in terms of what we experienced in london, climate change, protesters, the industry overall -- you could argue in the context of the argument of climate change, you probably don't want to invest too much more in carbon fuels but you want to see the energy transition model being pushed toward the right energy sources. -- take their cut answer but a clear-cut answer but it depends on the individual areas you want to look at. francine: is there healthy inflation? neville: the u.s. is getting there. we are seeing healthier
inflation in the labor market on both sides of the atlantic. there has been an improvement in wage growth in the last 2, 3 years. that has not passed sustainably and convincingly into higher core inflation. looks closere u.s. to target than the european central bank. having wage growth back where it is is the best sign of health. the ability of central banks to move a half percentage point is heroic these days. francine: thank you both. us.are staying with stay with "surveillance," for possible bonus cuts at barclays. slashing payouts to underperforming bankers -- will it be enough to appease activist investors? this is bloomberg. ♪
francine: economics, finance, politics. this is "surveillance," and i'm francine lacqua in london. viviana: new chief executive officer at kraft heinz to bring the company out of a slump. companyampered the since the bid to buy unilever failed. more than $180 million in the initial ipo. plant-based vegan
substitutes has the backing of some of the biggest names in food. be market value would billions of dollars. franklin plans to cut 5% of the workforce. outflows,er based net the industry faces pressure from automation. for jobk unveiled plans cuts. that is the bloomberg business flash. francine: barclays planning to cut bonuses if the division underperforms, according to the financial times. first quarter bonuses may decline by double digits from a year earlier. seasons for european banks kick off this week.
credit suisse reports on wednesday. we get results from deutsche bank on friday. banks and howean they are faring compared to the jonathan, when you look at barclays and the reports, as this to please the activist shareholder or does it make business sense? jonathan: it makes business sense. barclays has done pretty well versus european peers but the fact is, you have scalable expenses. revenues down 50%, i expect cost down at least 15%. activist making noise? publicn: the responses
public.esponse is they are not even making an 8% turn on capital. how much capital do you want to allocate where you are not in charge of the top line? peer want this to become brexit? lloyds and rbs are 95% u.k.. aboutne: we want to talk cbs. deutsche bank is double the size of commerzbank but is considered riskier. jonathan: the balance sheet is three times the size. part of what that is telling you is the more people thought about the merger -- we know they need to do something -- what are they going to do with the u.s. ib? it is not a merger. the dilution of
10 billion in capital creates risk for shareholders. suisse,: gps, credit deutsche bank. what is the killer question? interest rates or cost? jonathan: with credit suisse and 4q. net was a shocker in moving to asia became commoditized. every bank in europe said, we are going east. we have seen the gross margin go down and down and down. for ubs, what is their strategy now, other than generate and return capital? francine: there you go. not mincing words. up next, donald trump drops his plan to put herman cain on the fed board amid opposition from
bowing out of the race as his confirmation looks to be blocked. sonja and neville, still with us. aboutof all, do you worry that independence? neville: what we have seen since the start of trump, for the first time since george bush senior, very vocal and public criticism of the fed by the president. until recently, we were confident independence was going to remain solid. the fact that he is proposing various more questionable candidates for the board is a worrying sign that independence may be eroded.
it will be long. comeately, reckoning will when inflation is picking up and there is pressure on the fed not to tighten policy and whether or not they obey the president for their better judgment. concern long-term. francine: you agree? sonja: particularly that the market will test the fed if we saw the tail. the market is happily believing in long cycle goldilocks, no pressure. we have seen recent economic data is balanced. there is nothing to point toward worrying. anything that would put pressure on the fed to change current policy stance would test markets and mr. trump.
i believe he would put more pressure on the fed. francine: what do you worry about in the u.s. economy? end cycle? -- market seems to be have two have been euphoric. sonja: don't fight the fed. we have been here before. stunning reversal if you think markets and the fed and how one had follow the other in terms of policy stance, then patients, then full reversal. you have seen full repricing not because of earnings, only marginal's. don't fight the fed. buy risk assets when the fed gives the green light. if growth were not to be as stable as we assume -- we have --ked oil, geopolitical risk repricing on the back of
multiples looks precarious. if earnings picture doesn't come through, current multiple seems expensive. if the fed were to change the plot, markets would react carefully. charts,: one of our gdp, forecast revised upwards. predicting quarterly results. when you look at numbers coming out of the u.s., do you ignore the inverted yield curve and focus on eco-figures? neville: we are in a sweet spot potentially for markets. overweight equities recently. one of the reasons is we think we are at a turning point in the global cycle. upward trajectory in cyclical indicators in the u.s., asia and europe. we have seen the fed and ecb pivot more dovish.
months weext 6-9 should see cyclical data get stronger but not face offsetting headwinds from hawkish central banks. two the end of this year, that is probably the key testing point when we could see stronger economic data. does fed, ecb move more hawkish or maintain easing policy until then? francine: ecb next. next, pressures on the turkish economy intensify and we talk about the president. this is bloomberg. ♪
.fter iran waivers mike pompeo says any nation that continues to buy crude from the gulf nation will face american sanctions. in response, the islamic republic threatened to shut the traffic heavy a straight -- traffic heavy strata vermouth -- straight of vermouth. churches and luxury hotels were on easter by seven suicide bombers that targeted tourists and christians. president trump dropped his plan to put herman cain on the federal reserve board amid opposition from his own party. the mcreynolds are urging republicans to block the other picks even more. urgingcrats are republicans to block the other
picks even more. of planes bursting on social media. a white car bearing the tesla logo was a meeting smoke before catching fire. the team is in shanghai to investigate the incident. samsung delays the launch of its first foldable smartphone after reports of screen failures. samsung is aiming to avert a fiasco like the interdiction of the -- introduction of the note 7. it led toemember recall after the device started bursting into flames. global news 24 hours a day on-air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. president erdogan is facing a rare sign of rebellion as former allies attacked his
leadership. the ruling party suffered unprecedented losses. countries economy is on a night -- the country 'sts economy -- the country economy is on a knife edge. thank you for sticking around and thank you for joining us. a simple but difficult question, what does the reelection in this temple actually mean for the business climate? certainly, the business community like anybody else prefers certainty and stability. results being contested is not good news. in istanbul, it is one third of the turkish economy. it is the heart of the turkish financial system.
the trading system and global positioning. we are asking for clarification as soon as possible. francine: is there a danger that the government will block implementation of policy because they lost the races? >> i don't think so. but we are losing time and we should focus on the reform agenda. we should do that as soon as possible. therefore, with all these legal results the election being contested may delay this for a few more weeks. and we don't want that. as a business community, we want to the government to focus on agenda. the government already declared a reform agenda. and tighten monetary policy, fiscal policy. what are the social and political reforms that need to be delivered as soon as possible?
sector. is the private have a total debt of foreign currency in the form of 200 million u.s. dollars. and there are other financial institutions. so the government should focus ,he restructuring of the debt meeting with different means and different tools to make sure that the private sector positioning is stabilized. thehe other hand, government should inject confidence into the markets. declaringo even structure reforms with midterm effects could have a short-term and positive impact on the markets. the marketsat are
thinking about turkey at how will it change in the next six months? >> you have just seen the charts in terms of the currency markets and the 10 year government bond. you see clearly the uncertainty not only around the political situation but how this is impacting the economy. this picture in particular is not helping. maybe it isy, better to stay away before we see the reforms put in place. see thiss we happening, i would think international investors would rather stay on the sidelines and wait to see what is going to happen. see stability create greater reform and a more credible macroeconomic policy that can really recover international investors' confidence in turkey.
the flight of capital out of turkey last year led to a big squeeze in demand. may create deterioration in demand and turkish growth. francine: what does the government has to do in the next three months to win investor confidence back? >> start acting with certainty and focus your agenda. it is also about political rhetoric. designed to bedy shared with the public. so this is fine. it's not about thinking, it's about acting now. the structural reform agenda would really generate confidence in the turkish domestic market. and also in the eyes of international investors. this is fertile of hope, taxation, capital markets, labor markets.
these are really important areas where turkey and maybe even other companies may need investment by politics with political capital. assure the public that the thesement is behind policies. so far, it is moving positively and the turkish private sector is moving positively. or wee to enhance them will lose what opportunity there is now. >> turkey is competing with a lot of other emerging markets for global capital. and we should not forget that other markets recently have seen much more support with china stabilizing a weaker dollar. there are easier investment opportunities elsewhere. francine: thank you so much for joining us, secretary general of the turkish industry and
is bloombergs surveillance. let's get straight to the bloomberg business flash. here is viviana. viviana: a chinese startup looking to challenge starbucks filed for a u.s. ipo. they plan to raise $300 million. it is spending millions of dollars a year to unseat coffeeks as the top company. they rapidly expanded to 2500 stores.
the seattle coffee giant has 3700 outlets in china. rick gould is being appointed as a new global chief executive. he was previously head of the americas business, replacing jonathan sloan who resigned earlier this year. this is amid mounting tensions between the firm's old guard and the chinese owner. subaru's capital management .aising new funds it is reportedly aiming to bring in $2.5 billion. that is your bloomberg business flash. europee: let's turn to where last week's disappointing economic data fueled concerns over an extended economic slowdown. manufacturing shrank for a third month with weakness also spilling over into services. the ecb says they will raise rates this year but will look at
additional policy options if falling growth persists. our guests are still here. first of all, is the ecb the most difficult central-bank to grapple with? we have different economies, a wave of populism that could get worse. they could be running out of tools of their an extra downturn. all thenk they have tools, to be frank. the capacity to deliver meaningful stimulus will cause a significant improvement from growth. but that capacity is absolutely limited. and at the same time, their ability to buy another substantial outlook on bonds. what difference does it make in terms of reducing interest rates for households?
it is already low. it would really have to come from public sector and fiscal policy. we have been waiting for fiscal policy for i don't know how long. every single press conference, that is what mario draghi is talking about. >> we should be fear that there is a slight positive coming from europe this year. it is not in comparison to what we seen from the u.s. from being ang drag to a slight positive this year. casethat be enough in the of the downturn this year? the deposit rate, clear that banks can't earn anything meaningful on the bread-and-butter business. it would help.
he'll idea that banks have to , they wouldeposits be able to do that efficiently. >> it will definitely mitigate some of the pain but the issue that negative rates have is more increasing the cost of capital for banks. expectations of data earnings in the future that have depressed the share price. banks are incentivized to return capital to shareholders or avoid raising it, rather than using it to grow their own books. francine: we have an ecb president change at some point this year. are you expecting change in policy or that person to fall in line with mario draghi's thinking. >> whoever takes the helm, the ecb will follow mr. draghi's
footsteps. it might coincide with a potential downturn of the u.s. economy and what we are seeing. risk ofhas higher recession, it would coincide with the first couple of months of the new ecb president. it would be interesting to see if there is more unconventional policy. think the new ecb president may well take control at a time when economic news is getting better. francine: better in terms of inflation? >> better in terms of growth. interesting is that it is predominantly driven by the rest of the world rather than by domestic weakness in europe. is the manufacturing sector where most of the intense pain is. butnumbers disappointed, they did rise for the first time in a long while. i think if the economic data is
improving but it's only get through to the end of this year, that a morebe seen hawkish president takes over at a time when data is consistent with a slightly more hawkish approach, whoever is running the ecb. francine: is there danger of a new trade were between the eu and the u.s. or between the eu and china? >> there will be a ceremony at the end of the first quarter and that the u.s. and china, close to the finishing line, when it comes to that trade dispute, there are no details yet. we have no view if this will shift toward europe. you talked about the european car manufacturers for a while. action, it at market seems to not be priced in for the time being. francine: do you worry about germany? >> i think a is a big problem for europe.
it is reaping the cost of having account surplus and effectively being an economy that is largely dependent on external trade. the economy slows and the german economy is attached to it. it affects the whole euro area. andade war between the u.s. the eu is the number one risk from here. we have seen the german auto sector suffer a lot of the last six months or so. the imposition of substantial tariffs is something that given the fragility of the economy at the moment would be a big downside risk and germany would be bearing the brunt of that. francine: thank you both, neville hill and sony allowed -- sonja loud. it turns out a folding phone is as complicated as it sounds for samsung. that's up next. this is bloomberg. ♪
this is bloomberg surveillance. i'm francine lacqua in london. samsung's smartphone is getting reports of screen failures on review units. the giant says they will investigate the issue. since i will be aiming to of her fiasco like the introduction of to recall that led after some devices started bursting into flames. chief executive of tesla elon musk spoke to investors in palo alto. driving computer designs called the homegrown chip the best in the world by a long shot. >> that is objectively what has occurred. not best buy a small margin. best by a huge margin. francine: it would not be the first time that he overhyped something. let's bring in matthew. we're also with neville and sonja. on samsung, what is behind the
delay? >> the phone has proven not to be very robust. after a couple of days, they were finding ways to break these phones. we have these devices in barcelona and something that is foldable and droppable. how will it last? it is proven not to be robust enough for that. francine: where do they do next? can they change it quickly? is it a disaster for them? is the question that journalists are waiting to find out. but this is a $2000 phone. they have a high bar of expectation. they need to spend whatever time they need to get it right. and they are in a race with huawei. francine: talk about tesla. of the selfluation
driving unit, has significant can this be for tesla? obviously, they have moved to the autonomousin part of their driving vehicles. the texas would generate huge amounts of cash flow for them. i think this is a bit of a diversionary tactic. we know that they have had disappointing deliveries in q1. .nd it pushed expectations the question is, is this a sustainable business are not? elon is pushing. francine: what is your take on stocks? what do stocks need from tech earnings? to give you impetus, do you look at earnings in the technology
space? >> expectations have come down a lot and expectations ever really turned negative. everybody had said that there would be a lot of scrutiny. overall s&p earnings for the first quarter that we were looking at. it seems that weakness in semiconductors and in hardware that people would be watching, it would be more than 20% negative year on year earnings growth. a lot of focus they're not just because it is heavyweight in the sector but because it has been in a performer of the last couple of years. it is such a big week for tech earnings, is there a standout? >> facebook at a better than expected quarter last time. people were concerned about privacy but it doesn't seem to be affecting advertises or users. as to graham is the big driver of growth right now.
is the big driver of growth right now. bid is lagging. not just for facebook but most of these tech firms. francine: is there a specter of having to break these up? .> i don't think so facebook is still trying to get closer cooperation the between different units. the question is how to turn this revenue growth and to profit. -- into profit. francine: is there anything that iny are shying away from terms of these outlets? >> there is a lot of attention from the social media stocks. just because of the earnings nature, it is interesting from a market angle -- francine: but do you do anything with the chinese companies? >> it is the same across the board.
we will get earnings not just for the first quarter, but for the outlook. i think the predictive part is higher in some subsectors than others. we have to make sure that we understand. the media attention would be on the big names compared to some of the more economically sensitive names. francine: and i think we have twitter and snap today. thank you for joining us for the hour. bloomberg surveillance continues in the next hour with tom keene who joins me out of of new york. we will be talking later run with the chief executive of the financial conduct authority. this is bloomberg. ♪ moving is hard.
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extends waivers, sparking supply fears. a british lender plans to cut payouts to underperforming bankers. will it be enough to appease activist shareholder's? and the fuld on hold. samsung launches the delay -- delays the launch of their folding smart phone. london, tomqua in keene in new york. we look at the devastation in sri lanka and we look at geopolitics including what is happening with iranian oil and the impact on inflation in the future. tom: i know prime minister may is on her walking tour of wales, francine. i assume you were on a walking tour of, i don't know, the midlands? a walking tour of the italian coast. but the whole brexit thing begins to heat up today, doesn't it? francine: she is sitting down with jeremy corbyn today, her
labor counterpart. and the deadline is october 30, but if they shake cans on an agreement then things can move -- shake hands on an agreement with labor, then things can move. but get to the the on a from new york city. viviana: -- let's get to viviana from new york city. viviana: the bombing in sri lanka has now claimed 310 lives. they targeted christians and tourists. to identifying possible international connections. three long to has more than 40 suspects in custody. and brexit talks between conservatives and jeremy corbyn's labour party resumes. theresa may is fighting to keep her job so that she can reach a brexit deal. her best hope of success now lies with jeremy corbyn.
and president donald trump has backed off his plans to nominate former pizza executive herman cain to the u.s. federal reserve board. support ofhave the enough republicans to be confirmed. he denies accusations of sexual harassment and democrats are urging republicans to block ial assignments. that talk ofs one impeachment could hurt the democratic party and legislative agenda. it puts sanders at odds with elizabeth warren and kamala harris. sanders telling cnn town hall offend -- event that he wants the president thoroughly investigated. global news 24 hours a day on-air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. can't convey how interesting it is right now.
there are no words for the great divide. rate increase, rate cuts, or the idea of stability until game of thrones ends. futures at negative three, the curve steepening. the euro goes nowhere. next screen. the vix showing the grinding bull market. sterling is important because francine was on her walking tour , giving away under 130. , grinding overog 5000. 5542. francine: we haven't looked at bitcoin, thank you for putting it in, tom. a full overview of the global oil markets coming up. and i'm looking at the pound because of the walking tour. not mine, but theresa may's.
you can see the pound is at 95.91 awakening, joining us is bloomberg's executive editor for energy and commodities. .nd the global chief economist and the head of european equities is also with us for the hour. welcome to the program. when you look at how the market is reacting, do we believe saudi arabia can pump enough oil to make up for what comes out of iranian oil? >> yes, and i >> yes, andalled -- i believe it calmed the markets somewhat.
can they produce the right kind of oil? and there are varying opinions. bond oil,very well to but if it's not the right kind of oil, it can't go to the right refineries. tom: iran said that they can also close the strait of harmuz. this would be full-blown war. >> basically. could they close it? absolutely. they could close it for a few days or a few weeks. but it will not be a long run thing and would be devastating to the iranian economy to do that. if they declare a war in harmuz, it is game over. of: all maps of the strait harmuz, it is 21 miles and the .slands really loom it is a lot narrower than what
people think. what is elasticity of the market going from 71 to 72 to 73 and now rounded up to $75 a barrel. where is the tipping point? is at $80 or $85 a barrel? hard to pinpoint in number but the rumblings out of asia are not positive. we are starting to see it become a big political issue. even if we get some sort of the price, working in that background is the known unknowns. i don't think the leaders will tell you where they will be in six months. what is the supply crunch for the future? tom: stewart, yuan your team put out headlines, obviously coordinated yesterday, between the trump administration and supply wouldthat
come out to help balance that and i don't buy it for a second. what is the reaction between the saudis and the trump administration? careful. at the last minute, they issued these waivers. they applied extra barrels to the market and the oil price crash for the next several months. they will not make that mistake again. that we arefing getting is that they will wait to see which barrels are missing and how effective the sanctions are, then act accordingly. we are looking at oil -- francine: we're looking at oil and inflation. the move could prove to be inflationary or a drag on growth. we have the u.s. breaking to the generic future, which is the
main contract for oil. how do you look at this? this is not the good kind of inflation that central banks want. >> we will break even and this will go higher. this is been the story for the last decade if not longer. underlying inflation doesn't move and that is where the focus is right now. francine: when you look at big oil, do we worry about underinvestment? >> i think there is a sensitivity to higher oil prices because they take the arrangements that they have and the way the tax affects them. it is helpful for them in terms of the free cash generation. it is still maintaining their cost of capital investment. if they still want to maintain production growth, that is the rate they are looking for. chevronre was a take on
, and will we see oil return? that deal could take place at any point in the last couple of years. prices have been lowered in the past, so why would they have the time to do that? the confidence in shale and those that have been exposed to that area, that would be a positive, i would've thought. i don't think this is the start of a whole new roll up. they can buy parts of the area that people have passed on over the years. ritchie and stuart wallace, thank you for your coverage on petroleum. coming up on bloomberg television, the chief executive of the financial conduct authority worldwide. this is bloomberg. ♪
viviana: this is bloomberg surveillance. let's get the bloomberg business flash. -- stocks of thomas cook are soaring. sky approach the company about buying all or part of the business. thomas cook is not commenting. they left with a weakened balance sheet. job cuts are on the way for franklin resources. they plan to cut as much as 5% of the workforce following outflows the last five years. franklin operates franklin templeton investments. barclays cutting bonuses to investment bankers. according to the financial times, it may decline by double digits from a year ago.
the investment bank has underperformed. they are making the move as part of an effort to oppose activist investor edward bramson. that is the bloomberg business flash. francine: for more on european banks, the sector is facing one of the toughest environments in recent years. ,eek volatility and low rates the initial public offering business takes a picture ahead of earnings this week. they kick off tomorrow followed by ubs and barclays on thursday. we will get results from rbs and deutsche bank on friday. the bloomberg intelligence senior analyst from investment banks are also still with us. what are you looking for in terms of cost cuts and in terms of economic growth revenue? >> i think it snows surprise that we're looking at expense cuts. in the u.s., we have
seen equities trading down 20 percent. ubs has warned that training will be down one third. it will be worse in europe. things to look out for, barclays does have to have a much better number then european peers. the french have been pretty appalling. .ook at bnp they have had some cuts and we need more. francine: how are activist shareholder's putting pressure on them? >> they are not saying anything that people didn't already know. revenues, they look at cost. the outperformed europe and it is nearly keeping pace with the u.s.
to have midteens or better, it is a pretty strong position. they will have to stress costs either way. they have given is a range of 13.6 billion to 13.9 billion this year. i think we will be on the bottom end of that. tom: i want to bring you a chart . you have been great bringing us the scope and scale of american banking. jpmorgan with 255,000 employees. deutsche bank with 91,000 employees. and what is so apparent to me coming off of 2017 is that barclays is in no man's land. they say strategically, this is who we are. who is barclays? compare it to u.s. investment banks, but don't forget rbs. 95% u.k. banks largely outperformed this year.
that's in the face of brexit fears. , they are a self-funded bank. they have a big investment bank. they will continue to trade. how big does the diskette need to be? thehe moment, it is up from back end of the sector. but if they can deliver this quarter, it is four quarters in a row where they proved the investment bank is doing better than the rest of europe. -- where do they belong? now,ap versus u.k. peers if they start delivering on tour,buyback to her -- they can narrow that. doubt, do a merger. be strategic and use the word synergy.
where is the merger that salvages jes staley's career? barclayst think that needs a merger. they pulled out from so many. great, expansion. if you look at most banks, you want to cut the outdated retail banking franchise where you have branches unused and tens of thousands of arguably cheaper than investment bank staff that are needed. barclays doesn't need to do that. they can bring people and when they need to. deutsche bank is really struggling. that is where you need deals. commerzbank needs to have an germany, cut costs there. and just stick to its bidding. you.john and aaron, thank
economics. ben. and then -- thehe great u.s. divide, need for a rate increase versus stability as we have seen with mario draghi. or the need for a rate cut. soave never seen the gap big. how do you see this? is it a grand canyon or is there middleground? >> the middle ground is where we are right now. the likelihood of a cut or a hike is extremely remote right now. pce will bet core lucky if we get to 1/8 by the end of the year. they have them hiking next year. tom: does the ecb boxed in the
same way? we get the dots and the inflation forecast. does mario draghi have an inflation forecast? >> they have one, but they don't get back the target. seeing, what they were i think they decided to positive move back on base guidance. year, the rest of the they can't move. normalization earliest would be sometime in the first half of next year. select the fed, they are in the weight -- they are in wait and see mood -- mode. become a good question the last couple of months, hasn't it? they have attempted appointments to the set itself. i think that there is still a strong desire to be seen as a strong and independent body. if we go back to the u.k., it was not long ago that we had a political chance at sitting --
setting interest rates. but these things have happened in the past so we will have to see how it develops. francine: do you worry about it? >> not too much. congress over the last century has try to reopen the federal reserve like 18 times. and that is not happening now. trump is ultimately cap cap -- appointments. i'm not overly worried about that changing the direction of policy. on the economy of the united states and europe as well, it is always, at the end of the day, about the global consumer. how is the global consumer doing? what does ubs see on this spirit of consumption on global platforms? >> not great in the u.s., to be honest. i think it is still the tail end of the tariff disruption.
i think it will get better in q2 . but europe looks pretty good. the weakness in europe is really entirely external. i knew you would say this. i set you up for ben ritchie. great.i play the capoten domestic ok, external not so? >> look at the levels of growth, tom. even though domestic consumption is holding up somewhat better than the overall gdp growth component, i am still somewhat cautious on what that really means for investments. the kind of rates of growth we are seeing, we are not really generating organic growth within europe. that result, we are focused on companies that can grow in a meaningful and sustainable way in the long term. fromnds to lead us away the domestic focus in europe. because frankly, the outlook today was disappointing.
we don't expect that to change when we look at the backdrop of what going on around the world. francine: thank you very much to both of you. stay with us. coming up next, the eu parliament candidate and former italian european affairs minister. he was in the italian government and is now running in france. we will discuss that with european stocks edging lower. also looking at oil. crude oil extending recent gains. the dollar is pretty much steady. we will have 20 more on your markets. -- plenty more on your markets. this is bloomberg. ♪
minister. started speaking to the reporters gathered in the steps of the palace. he talked about the terrorist attacks that happened in sri lanka. we also found out earlier this has askedat the wife emmanuel macron to discuss jail conditions in japan with mr. abe. we expect the prime minister of japan to respond to some of the things that mr. micron is set -- cron a saying shortly. first, let's get to the bloomberg news in new york. >> in sri lanka, the military has sweeping police powers following deadly bombing, include more authorities detaining suspects. they are now joining the investigation to see if there are local connections. the death toll rose to 310 in an attack that targeted christians
easter sunday. saudi arabia is pledging to ensure adequate oil supplies are available at iranian exports collapsed. this is after the u.s. sent sanction waivers to buying saudi arabia include to read trump says opec can offset losses in oil output from iran. u.s. house democrats summoning dom again to testify on the mueller
dom again to testify on the mueller report. mccann was one of the key witnesses. jerrold nadler says mccann will be able to ship like on alleged instances of obstruction of justice by president trump. he was member of the italian chamber from 2006 2018, or he advocated or mario draghi's appointment to the ecb. paris.s us now from thank you for joining us. when you look at some of the concerns that investors have for the european parliamentary elections, how much of a going to see populist parties do well in these of coming elections?
has been a peaceful leadership transition for ukraine after the country's most popular comedian won the presidency in a landslide victory. -- thee has an expense currency has extended 4% in months and there is a lookout for what policies will be since there seems to be an emphasis on style over substance. first of all, what do we know about this comedian? what do we know about how he plans to govern ukraine? >> you are right. the campaign was very light on substance. what we do know is that he has made it known that he is pro-europe and he wants to continue ukraine's cooperation with the imf but his main message was he wants to stamp out corruption. that was the biggest issue for ukrainians in the selection. in terms of policy specifics, we
don't know much and we will be -- waiting with much interest to find out his exact plans as he builds out his team and makes it known what -- how he wants to govern. francine: we are looking at the currency and it has rallied, extended its rally. do we know how he will deal with the imf at all? with imfe met representatives before the election and there seems to be some sort of a agreement or positive vibes between the two sides and he sounds like he wants to continue cooperation with the imf. for now, it looks like it is -- therelief at the rally is mostly the relief of the peaceful transition and people, investors are taking a positive view. , thank you.
francine: this is "bloomberg: surveillance." it is a big setback for the world's largest maker of smartphones. samsung will delay this week's launch of the galaxy fuld. screen -- samsung said it will investigate the feedback. amazon is breaking its spending record for lobbying washington. spent $6.9 billion for the quarter come out spending google for the first time in a decade. amazon is coming closer to winning a controversial $10 billion cloud contract for the pentagon. says by the musk middle of next year, one million
has less capable of driving themselves will be on the road. electric carmaker, acknowledging self driving expenses are cutting into cash flow. the presentation lack a silver bullet initiative to excite investors. tom: if you look at ubs's research, there is a terrific our chart that shows the underperformance of europe versus the u.s. the u.s. continues to really out to do on economic growth. ubs and our guest from another from aberdeen standard. how do you place the u.s. in a global context for investment? >> i think the key thing to my mind is the u.s. will lead the global economy and lead global equity markets. getting his writing terms of where the u.s. is in the cycle
is going to be important. it is hard to pin that down for days or months, but we can agree that we are pretty late in the cycle for the u.s. economy and it is at this point where investors need to make choices about how they position themselves over the next 12 taking months and put themselves into good shape and environment where growth is lower and hot -- volatility, higher. tom: if you are late in the cycle, how do you own stocks? how do you own u.s. blue chips if you are late in a cycle? again, it is looking for companies that have visibility and resilience in terms of their profit performance. companies were valuations are not that high. if you put that combination together, that creates an attractive picture for us. in the european context, things like staples. against elements of pharmaceuticals, health care, some elements within industrial engineering, we have reoccurring a cyclical affability.
those are still quite attractive and likely to do well through the latter point of the cycle into a downturn but it is time to be cautious on cyclical elements. the current time, people are looking for a cyclical pickup in europe driven by recovery in asia. to long-term, european equities will be driven by what happens in the u.s.. francine: you are quite bullish on the european economy. is that germany in particular or is there a difference between the real numbers and future expectations? gap nowall-time high between where the hard data is running and the soft data. soft data -- hard data 2.1%. that is a massive gap. the hard data is a more reliable signal. the market is over focused on is theturing pmi, which trade weikel -- trade cycle. why are they so strong? it is largely eestnet you four
weakness. it won't necessarily carry over into q two. data but thereve is underlying strength in consumption. the labor market is healthy, wages and not going down. think expectations are too bearish year. francine: expectations from the markets or -- what do you do with inflation? arend: the growth expectation -- the market has drifted lower all year long so full-year growth europe, markets had too low. everyone will have to raise their forecast for the rest of the year, even if the yo keep q4 the same.2, germany running low below 1% is too low.
core inflation is going nowhere so inflation is less obvious. tom: you seen this tension at the dutch central bank. tepid nominal gdp, not only under 4%, but in some geography, under 3%. how do politicians deal with that? it is unacceptable, isn't it? ben: there is clearly political pressure -- there is clearly political pressure on the central european bank. we used to never have these political pressures or interference and policy. it is just the function of the times that it has taken so long. there is a little people's party that has traction because they feel tensions are being eroded by negative rates and there is pressure to get negative rates up to at least zero. the problem is, inflation has
the central bank trapped. if inflation is going nowhere, it is negative -- difficult to do negative rate policy. they are stuck between where inflation is and where pressure is. tom: arend kapteyn and ben ritchie. we will drive this conversation forward. we are doing this a lot with the polarity of opinion. hsbc has been on fire in gaming low interest rates in a wonderful bull market. , theyg with john have been looking at fed up stability. stay with us. this is bloomberg. ♪ ♪
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resilient america and on the other, recession and a rate cut. wide, thed canyon comes a white house to capitol hill. how will house democrats respond to the report of mr. mueller? and in colombo, terror, chaos, and mystery. good morning. this is "bloomberg: surveillance " from new york. they are back from walking tours of wales, francine lacqua with theoday and i was amazed at london paper today. the tories really going after mrs. may right away. francine: this is something we have heard in the past but they will pile on the pressure for the prime minister to go. we know the prime minister and some top advisors will meet with the labour party to thresh out an agreement but the main story today is oil, climbing upwards
as president trump is tightening the screws on iran. tom: did seen the first two she days with sanctions and china, part of that discussion. right now, our first word news with viviana hurtado. viviana: we begin with a national day of mourning in sri lanka. the death toll from the bombings has climbed to 310. a local islamist terror group is responsible for the attacks that targeted christians and foreign tourists. interpol is investigating international connections. sri lanka has more than 40 suspects in custody. exit talks between conservatives and the labour party resume. theresa may is fighting to keep her job so she can try to reach a brexit deal. her best chance of success lies with jeremy corbyn. there is a plot to force-out may. resident donald trump's plan to nominate herman cain to the
federal reserve board. he didn't have the support of enough republicans in the senate to be confirmed. he denied accusations of sexual harassment. democrats are urging republicans to block the president's pic of stephen moore for the fed. he had echoed the president's cause -- call for rate cuts. ofnie sanders warns talk impeachment could hurt the party's legislative agenda. that put sanders at odds with two other candidates elizabeth warren and, like harris -- kamala harris. bernie sanders still says he wants the president thoroughly investigated. 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'm viviana hurtado. this is bloomberg. tom: equities, bonds, currencies commodities and london closed yesterday. four-day workweek in europe carried futures at negative three, stern -- curve steepening
and oil lift two days in a row, american oil. $66 a barrel. 12 handle, 12.59. sterling back about 130. one 29 -- 129 consistently. nice one month lift for bitcoin. francine: european stocks are edging a little lower, down .25%. if you look at the asian trading, they seem to range bound. i'm looking at many markets reopening after the long weekend. earnings season is ramping up. we have twitter later, technology stocks, and banks from tomorrow. dollar is up, treasury. i want to look at pound because theresa may is back from her walking adventure. pound at 1.3014. khamenei polarized debates out there and there has to be a chart that captures the stasis we are in. the difference in yield between the 10 year and two-year.
down we go with a nice vector and it doesn't continue in the so-called inversion. it goes flat line here. that would be a theme for the hour. somethingi chose different because i know we will focus a lot on oil and the price with james, but we wanted to show volatility in the oil market really collapsing. you can see that possibly picking up again on this u.s. ending iranian waivers. oil expending gains after a six-month high. the u.s. no longer gives any buyer of uranium crude a waiver for sanctions aimed at cutting the opec producers exports to zero. our bloomberg leader for european is with us. it seems the market is believing saudi arabia and the uae can make up for lost barrels. are they right? >> it would appear so.
they have been cutting production for six months. in saudi arabia, they have been cutting even within promised. even within the confines of the opec market, a good at oil to the markets. uae also had a low spare capacity. they could compensate for iran as trump suspects. bencine: can the u.s. really expected to drive iranian exports to zero? james: the question is about what china will do and to lessen extent, what he will do. they have both come out as buyers and the notion that the u.s. can compel them to buy anything and they can buy oil from wherever they like. against u.s.ts -- sanctions is a big risk. these are integrated economies to the question is whether they have the stomach to fight over iran. there is oil available elsewhere, so it is not like they have no choice.
tom: thank you so much. appreciated this morning. stuart wallace, oil team. we have two smart voices of conversation. rdq economics with a holistic view of linking fed to the markets. teamsbc private bank, the has been absolutely on fire on various calls, including equity markets and fixed-income. let me go to you with the linking of oil into the market. always a micro economic ambiguity of oil, how it helps or hinders. which is it right now? in this have seen business cycle thanks to washington, the u.s. is in that export of oil and product and as a result, higher oil prices now are a net positive. tom: ben is all over this, but you agree? >> there has been a shift. calculate thed to
dragon economy from higher oil prices. -- drag on economy from higher oil prices. the expectation in 2016 was a net positive it wasn't. changed with the u.s. becoming a bigger producer of oil. francine: when you look at the price of oil, we were worried about underinvestment and that would hurt in two years. what will the oil dynamic look like from the oil producers in five to six years. that was a big story when we had the decline in oil prices year ago. impacts on broader aggregates of capex and gdp. i think we haven't seen the same thing this time around when we had the decent -- recent declining oil price and we are bouncing back. that story is a little behind us and oil prices, obviously i am not an oil forecaster but we think we are pretty range bound
between 40 and $70 a barrel. the most immediate impact to the end of waivers would be the u.s. driver. what would that mean for the u.s. economy. >> producing gasoline prices rising for weeks but keep in mind, the economy is raising in q2 and the second half of the year. we are seeing other inflationary variables not picking up so the consumer while it looks good and we think spending will pick up. ben has the call in the equity markets. i remember laughing at him last year. you are out of your mind, double-digit and 20%? we have to get in hsbc stock update. conrad said he wouldn't respond unless i asked. are you still in this market? double-digit from here?
we will seeforget, margin compression. a little on wages but as wages go up, it lifts all and it is better for the economy. tom: this is the theme, a lift all boats feel. >> i think there has been too much over the past four the five months, too much looking at markets and trying to derive an economic story out of them. we had a tremendous amount of volatility and then a couple of reports. we had a couple of week reports in february and we have bounced back and the trend in employment has been strong, retail numbers have been strong. the first order is supposed to because ofer seasonal adjustments with government data and it is not shaping up that way. as high as the atlanta fed has but if we get a gdp number in the first quarter, we will hang on to 3% year-over-year growth and that is something not a lot of evil expected the year ago. tom: this is too optimistic for
put in jail. >> impeachment proceedings are up to the house. they will have to make that decision. i think congress should take steps to impeachment. >> all of the congress is talking about is impeaching trump and trump, trump, trump and moeller, moeller, mueller. i worry that works to trump's advantage. >> there is no political inconvenience exception to the united states constitution. >> nine weeks to the convention and months to the election -- wait, we are three years away from the election and there are five democratic candidates going at it on cnn last night. whoing us, marty schenker, remembers mckinley's election from the front porch in ohio a few years ago. i want to go to witching robertson article in "the washington post" that encapsulates the mueller tension. anyone who thinks there is a chance the president will lick his moves and move on is not
paying attention. the best defense against mr. trump has to be a powerful offense. cats that shirt their constitutional duty. doesre in the constitution it say nevermind about presidential obstruction of justice or abuse of power if there is an election next year. speaker pelosi in the house. what does speaker pelosi do right now? she seems to be important? marty: she made the comment there are many ways to hold the president accountable short of impeachment. she is obviously trying to thread the needle here, making it look like they are actually holding him to account without embarking on formal impeachment. tom: the advantage of this congressional process, if they get there, the house process, is you get bombshell your. bombshell the -- a bombshell here and a bombshell there. they are hoping for a watergate like moment to advance the discussion. report,ven the mueller
as stark as it is, when you get individuals in person on live tv talking for eight hours, there is always chance of something new and it always resonates more with voters in a live setting. francine: marty, do we have any of how this is actually playing out with voters ahead of the presidential election? marty: there is a pullout this morning from politico morning console but shows donald trump's approval rating as it -- at its lowest point in his presidency. disapproval at 39% -- approval at 39% of impeachment only got 34% of approval from american voters. the american people are sort of making a judgment. no, they don't like what donald trump did. no, they don't want an impeachment process. francine: will joe biden run? there are rumors it could happen as soon as tomorrow?
is he the democrats biggest chance to actually go against trump? >> there was "the atlantic report that it was supposed to be tomorrow. he is running. in most polls, he is first or second but the real questions about whether joe biden the candidate is as effective as joe biden the potential candidate. it is not a slamdunk that joe biden will get the nomination. tom: there is a whole group of people invested in the mueller report, the analysis and trump supporters, i get all that. what does silent majority think of that? do we have study or research? marty: not that i have seen the anecdotally when you go inside the united states and off the coast, the russian interference in the election is not something voters care about. theater care about health care, they care about wage growth,
they care about income inequality, they care about immigration. tom: who do senator romney's comments resonate with? a moral imperative and i get that angle, but where is the residence of the morality of the mueller report? marty: i think romney's comments are often expressed privately by republicans but never overtly. romney did not issue any call to action. he condemned the actions of the trump administration, but he didn't support impeachment and so unless there is republican support for impeachment, that will fail. francine: marty, thank you. luby's marty schenker. coming up, and and that conversation with the chief executive of the financial conduct authority, also possible replacement for governor mark carney. 3:00 p.m. in london, and this is
viviana: this is "bloomberg: surveillance." arey's share of thomas cook soaring. sky is reporting potential bidders have approached about lying all or part of businesses. thomas cook isn't commenting. a series of problems last time left it with a weakened balance sheet. job cuts on the way at fund manager franklin resources. it plans to cut as much as 5% of
its workforce. this followed outflows the last five years. franklin is a holding company that operates franklin investments. barclays plans to cut bonuses to investment bankers. the bonus pool for the first quarter may decline by double digits from a year ago. barclays investment bank has underperformed. the bank is making a move as part of efforts to oppose activist investor edward bramson. now to the fed. conrad. sometimes it is important to have a banner to a conversation that is a sub banner. i thought this was brilliant. riding on a fed, communicating to who? i thought that was brilliant. who is jay powell talking to? >> the point of the piece was this potential shift in the
fed's policy framework where the basis is trying to change public expectations of inflation to get inflation to overshoot their target for a little while to make up for an under shoot of the target for a little while but the problem is the public -- we pointednow to or research paper where 40% of the public think the fed's inflation target is 10% plus. who are they communicating to? how will it change expectations? they don't know what their target is when it is the most simple metric right now. tom: joe and joanna six pack talk to bloomberg surveillance every day and it is simple. good send inflation isn't there and they are getting killed by service sector inflation. that is the mood. is that true? >> that's what we are seeing in the data. we have an offset from lower goods inflation and what that averages out to is about 2% inflation, so from our
perspective, we are not sure why the push to try to rework the whole fed policy framework. line relatively small miss inflation. if you look at underlying measures of inflation, they are all around 2%. we are not sure why the fed is so driven to change its framework. francine: when you look at the markets, two months ago, it is the end of the world and suddenly, they were euphoric again. where is the truth. if we look at the inverted yield curve, is it an impending slowdown or do we ignore it? torad: i would never be one tell you to ignore the old curve, but we have to look at some of the factors. usually, when we have an inversion of the yield curve driven by a very of tech -- a grexit -- it is driven by an aggressive fed. we haven't had an aggressive fed. before we move away from the fed , another thing we have is the fed operating on both ends of
the yield curve. we have had a fed that has pushed out short-term rates but also repressing long-term rates. if the fed hadn't made this from on its balance sheet previously powell's automatic pilot from december and early january, that guidance has shifted and the fed will be ending its balance sheet wind down. that is holding down long yields and resulting in a flatter yield curve. the other aspect is the arguments made that the yield curve doesn't only signally slowdown or potential recession, it causes one and there is research by the st. louis fed. one of the points we make is we think people are looking at the wrong yield curve because what has happened is deposit rates, which is funding bank lending, have remained very low. that yield curve remains steep. francine: conrad dequadros of rdq economics. both stay with us.
coming up on bloomberg markets, a conversation with the coca-cola chief executive. we spoke to him in davos talking about classics -- plastics in the oceans. that interview is 10:00 new york, three: -- 3:00 in london. indicating ares lower start to the day but they seem to be range bound. i'm looking at markets. they did reopen after a long weekend. earnings season, ramping up but we are looking at crude oil, 65.96. twitter and snap today. this is bloomberg. ♪
in sri lanka. the death toll has climbed to 321. according to the government, a local jihadist terror group is responsible for the attack that targeted christians and foreign tourists. therpol has joined investigation to identify possible international connections. sri lanka has more than 40 suspects in custody. joining us is bloomberg's government reporter in marlowe who covers south asia. good morning to you. what do we know about this little-known terror group? n: what we know is even for experts who follow these things quite closely in south asia, they kind of flew under the radar. for local muslim groups, reported yesterday there had been quite a lot of concern for a number of years. i spoke to one person at the muslim council of sri lanka who said they had handed over documents, names, contact details as long as three years ago so for local muslims in sri
lanka, they had watched some members of this group preaching online, preaching in certain and hadand the like grown more concerned and pass those concerns on to the authorities. they said people had not acted on it. , as we count the dead and a lot of people are morning, all of our thoughts extend -- mourning, our thoughts extend to the loved ones, one of the mystifying elements is there is no motivation. interval is connected, who masterminded this? government's probing links between this local islamist group and another one internationally, potentially based in bangladesh. at the moment, it is not quite clear. all of the analysts we have spoken to said this group probably did not have the ability to carry out an attack of coronation and
sophistication on its own so from the beginning, people had been looking at these international links. there is one group which the authorities are looking at but it is early days and there have been conflicting messages because it is still a chaotic situation down there. moment, they have apprehended some suspects and are looking at this group, but that is what we know as things are unfolding. now, ais continues right headline from bloomberg, sri lanka police on high alert for explosive laden vehicles. what is the linkage of sri lanka to southern india? linkage or is this a discrete action where sri lanka is alone? iain: it is not quite clear. a lot of the terrorists groups in south asia have cells in different countries. they claim to have -- isis claims to have australia and
different countries in south asia but there is not how much -- clear how much ability to have to launch these attacks. at this point, it looks like indian intelligence had passed on some intelligence to the sri lankan authorities that wasn't acted on, saying some attacks were coming and that has been the focus both in sri lanka and in the region because it looks like sri lanka did get some specific warnings of attacks on churches and they didn't act on it. this came from foreign intelligence agencies. there is some link. at the moment, it is not clear. tom: thank you so much. iain marlow on what we see in sri lanka and it is most definitely a story unfolding. with the first word news in new york city, here is viviana hurtado. viviana: saudi arabia pledges adequate oil surprise -- supplies available if iran's oil supply collapses.
the saudi's say they will courtney with other producers. donald trump says opec can oil output from iran. in northern ireland, police make an arrest in the killing of a journalist. the suspect is a 57-year-old woman, irish republican army splinter group admitted one of its members killed him last week during rioting. was shotra says mickey while standing next to police. the group is apologizing. u.s. house democrats summoning the former white house counsel to testify on the mueller report. mcgann was one of the key witnesses in the investigation. committeejudiciary chairman says he will be about the shed light on allegedly instances of obstruction of justice by president trump. todays. supreme court takes up the issue of whether the trump administration can add a question about citizenship to next year's census. a report says it is not legal.
intenselys an political fight that could affect the makeup of the u.s. house of representatives and could determine how much federal money its state gets. 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'm viviana hurtado. this is bloomberg. . francine: now to european banking and the sector is facing one of the toughest first quarter environments in years. ratesus clients see low and an initial public offering paint a grim picture ahead of earnings. earnings will kickoff with credit suisse tomorrow followed by ubs and barclays on thursday. we get results from rbs and deutsche friday. joining us now is bloomberg's european finance managing editor. thank you for coming in. there is a story about barclays, linking more bankers bonuses to their performance. they also have an activist shareholder on their bank.
how much is business and and how much is it to appease activists? >> activists have been a catalyst in terms of getting all these decisions on board ahead of earnings and ahead of the annual general meeting. in coming weeks. there certainly seems to be a sense that the activists have correctly identified a lot of the weaknesses that barclays has been struggling with and more recently, jes staley has acknowledged the investment bank hasn't been as profitable as they would have hoped it would be. we are certainly seeing that the activists and -- activist and his demands may not be met with as much seriousness, he may not get the board seat but he has been a catalyst for change. francine: how does barclays change the next 24 months and where is jes staley's position in all of this? sree: jes staley has been very
adamant that investment banking is where he sees the most value for barclays. as one of europe's most premier investment banking names, it is hard to see him back off of that position. what we could see is the type of --backs that we already have we see some foreshadowing their that -- there that he will be a leaner operation. staleyorganized a has taken more control of this business. we are certainly seeing it is front and center of barclays' agenda. tom: i just put out on twitter for those that have the terminal, the bloomberg intelligence article from johnson tyce.
it is the most brutal set of paragraphs on banking i have ever seen from bloomberg. it is brutal, about what we will see off the eu banking in the next 10 days. what is this what level of ceos right now? what is the agony they are going through right now? sree: it is a very tough time to be a ceo at a european bank. between what we are seeing at deutsche bank and what we are seeing at some of its other it does look like a very grim climate and they are not being helped by the fact that rates have been so persistently low for so long. the capital markets aren't as deep as they have been in the u.s. and that has really helped goldman and some of the u.s. powerhouses get through the quarter. the u.s. banks benefited from thatet interest income
went up because we saw a nice boost from the fed and that is not the case here. a good place to be if you are a bank ceo in europe today. francine: bloomberg's sree bhaktavatsalam. later, we will speak with the chief executives of credit suisse, barclays. those start tomorrow with the credit suisse earnings. this is bloomberg. ♪
samsung will delay the scheduled launch of the galaxy fold. a number of viewers reported screen failures with touch versions of the foldable phone. samsung said it will reevaluate feedback and run tests. phone will cost almost $2000. amazon is breaking its own spending record for lobbying washington. billion for the quarter come out spending google for the first time in a decade. amazon is coming closer to winning a controversial $10 billion pentagon cloud contract. the ceo elon musk says by the middle of next year, one million teslas capable of driving themselves will be on the road. electric carmaker, acknowledging self driving expenses are cutting into cash flow. said the presentation lack a one -- lacked a silver bullet initiative to excite investors. that is the bloomberg business flash. our guests are still with
us. you guys are way too optimistic so i need a confounding optimistic chart. adjusted for employed is a standing -- stunning three and four standard aviation chart. it is absolutely stunning, the vector of claims coming out of 2008, 2009. why did that line occur? jose: you are talking about the -- tom: the lack of ability to go into state offices and claim for employment. why did that occur? jose: the reason now is because we have an extremely tight labor market and so, people aren't unemployed for long. bangs of time -- period of time. i look at the claim data and see it as confirming information from other indicators, whether the unemployment wage -- rate or
pickup and wage growth, the labor market is tight. francine: to pick up on what tom was asking, what does the chart tell you? jose: demographics, right? if you look at the youth of today, a lot of them are working full-time but not necessarily employed full-time. part-time jobs or temp jobs and so what we're seeing is a lot of ofm are taking stints employment and don't qualify for claims. i may work for 12 weeks and don't i'll fight for claims, can i go to the next gig. we are seeing a lot of that in our data, as well. at the end of the day, the key point is the economy, the labor part of the economy looks solid. is the u.s.se, actually creating quality jobs and is that the only question we should be asking? jose: quality jobs, we could talk about that for hours. we have to look at what is going on with the wage gaps, whether groupsmale or different in terms of educational status. billy, we are seeing differences
clearly, tom: we're seeing differences there. tom:i have to go back to what you are doing at hb's -- hsbc. people are scared. you nailed it with optimism. can anyone get on board with -- did anyone get on board with labor optimism? jose: some. we don't see a lot of exuberance and what i am seeing is the market is a little complacent and i have talked a lot about the market being complacent and now comes the heavy lifting. you need to see earnings improve. we need to see better economic data going forward. tom: let's go to the earnings expert, conrad dequadros. earnings are about revenues. can you fold revenue growth into nominal gdp? conrad: phenomenal gdp picture from a macro perspective is looking pretty good. we have inflation running around
2%. year-over-year growth rates are three and we expect that to slow. nominal gdp growth might be a little below 5%, but this is pretty solid topline growth. francine: do you agree with that? jose: absolutely. we talked earlier off-camera. at the end of the day, we are looking at a slowing economy this year and next. the u.s. looks good, but it is a slowing economy. that said, if you have inflation under control and wage accelerating, we are in a knot period.- an odd tom: i look at this:, it has been going our tower. to hour. there are other fed meetings. the bloomberg terminal in your car, fomc go. october, which,
date manners -- matters to you? conrad: i will be looking for how the fed chairman discusses his cross cards. that is part of the story why people are concerned about the outlook, because of all the talk about cross cards but if we go through them one by one, the volatility index remark as come down with equity prices that have risen markedly since the end of december. the u.s. economic data for all the concerns about the government shutdown, the economic data looks good. china is looking little better too. a lot of those have passed. tom: bring this chart up. i'm making this up in real-time. go.will not see this at gdb we will put it on later. there is bomber and there is after bomber and it is microsoft on the log basis. you could teach at course of this chart. there are crosscurrents. we are minting money, aren't we? conrad: one of the things we
need to keep an eye on his volatility and where we are. things aren't too tranquil. the market is assuming this is slamdunk. we think it is going to be a good report but not necessarily as gangbusters as the market seems to be assuming. don't forget we have trade negotiations with japan and europe that it just begun. we still need to ratify usmca. we think a is room for volatility despite all the positive news and slowing economy. francine: i was going to ask about the. -- that. u.s.-china trade were become a u.s.-eu trade war? jose: president trump has made it clear he wants to renegotiate every treaty we have and is in the process of doing that. that remains on the table, clearly. is verya accord
important from our perspective not just for the u.s. but also for europe because we saw a lot of the european deterioration from our perspective due to slowing trade flows globally. chinese deal the with the u.s., we should see trade flows improve on the margin and that should be positive somewhat for european markets. tom: great conversation. jose rasco with hsbc and conrad dequadros, rdq economics. he owned mortgage equity withdrawal one million years ago. sachs, ons of goldman the conundrum at the fed. that is in the 7:00 hour. stay with us worldwide. this is bloomberg. ♪
about earnings. statement, net income, or is it all about revenue? it depends on the companies but investors are really looking at topline growth. tom: 20%, 30% growth? paul: yes. tom: what about industrials? bring up this wall. there is coca-cola, bayer,. what do you say? francine: i say bayer. bayer going to do? paul: it is a question about the margins for a lot of these companies. they are growing in health care spacex consumer space that they need to show growth, profit
margins, and net income margins. francine: what will do well and what will not? we expect twitter any moment. paul: we will have twitter before the opening and snap after the close and facebook, amazon, a lot of tech companies. for twitter, the issue is not really growth of subscribers anymore because we know they are not growing their subscribers. the people on twitter, they are very committed. look at daily active users. andengaged are the users that is what twitter really tries to sell to advertisers. they don't really sell billions of users because they don't have them. they have 125 million active users who are engaged in hard-core. that is what twitter tries to sell to advertisers. that is the metric. francine: facebook? is it the hardest company to work for right now? paul: exactly. a lot of noise around the company but for the business and stock, users are very loyal.
advertisers are very loyal. when you look at the digital advertising space, it is growing about 25% per year. most of those dollars are going to facebook and to google. if you are facebook, the job is to grow the user base, keep your users engaged, and provide a safe platform for advertisers because advertisers want to put their money on to facebook's platform, including instagram and whatsapp, so on. it is to win the public relations war for facebook. tom: paul sweeney and i will drive the conversation in the 9:00 hour. if you go to the sri lanka headlines in bloomberg, you will see utter chaos about the message in. there is one important headline. this, from reuters. isis claims responsibility for sri lanka attack. we do not have any other news services coming in with this report that their it is.
something a lot of people have been waiting for. from reuters, isis claims to sponsor the sri lanka attack. this will be unfolding today, to say the least. francine: he will keep a close eye on it. we know interpol joined the investigation into these devastating blasts across remarkably killed 321 people. tom: we will continue on bloomberg and have more, -- coverage on that on bloomberg surveillance and radio. later today, the twitter chief financial officer has some things to answer for in the 3:00 hour. stay with us worldwide. this is bloomberg. ♪
high. is the rally effect out, or will higher oil costs weigh on growth? china market confuses as to whether the government will keep stimulus on in the next quarter. and twitter out with earnings in just moments, a big week for tech, with the nasdaq 100 cinching another record high. david: welcome to "bloomberg daybreak." i'm david westin, here with alix steel, i a spate of earnings. -- amid a spate of earnings. right now, in premarket, united trading up 1%. -- alix: twitter looks at monetize