Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  April 23, 2019 1:00pm-2:00pm EDT

1:00 pm
today, chief justice john roberts and justice brett kavanaugh directed almost all their questions to the lawyers challenging the decision to ask about citizenship. firstse is the court us look at an administration initiative is the justices upheld president trump's travel ban last year. office says the german chancellor has called the ukrainian president-elect to congratulate him, saying the vote gives him a strong mandate. she spoke today with him as election officials said a former tv comedian received 73% of the vote in the runoff against incumbent president petro poroshenko. before the election, merkel met with poroshenko, a move widely seen as supporting his candidacy. is ready to crude oil production in response to tighter u.s. sanctions on iran. still it does not lead any radical moves.
1:01 pm
bloomberg has learned the saudi's want to see a decline in iranian exports before it starts increasing its own output significantly. in china, there is reportedly speculation about the health of president xi jinping following a recent trip to europe. according to the wall street journal, his slight limp and unsteadiness have raised questions about the lack of a suspect that succession plan. he is 66. neither the government nor the commonest party responded to requests for comment. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. it is 1:00 in new york, 6:00 in london, 1:00 in hong kong. i'm vonnie quinn. welcome to "bloomberg markets."
1:02 pm
from bloomberg world headquarters in new york, here are the top stories on the bloomberg and around the world. the s&p 500 hit a record. he was climbing on the back of better than forecast earnings. harley davidson overcomes higher tariff costs to ride high but is once again the subject of president donald trump's tweets. and the top court signals support for trump's citizenship since his query. we will speak to carolyn maloney. first, a closer look at the markets. abigail doolittle is with us halfway through the trading day. abigail: take a look at the green on the screen for the dow, s&p, nasdaq. after a couple days of stalled action, clearly, the buyers are taking over. the s&p 500 on pace for a record closing high, close to the possibility of an all-time high. small caps participating today.
1:03 pm
the russell 2000 had been down three days, but today the small-cap bowls are out, so it is a rally. relative to the s&p 500, in the bloomberg, looking at the one-your chart, rsi momentum indicator. the s&p 500 last september hitting that all-time high, record closing highs. this quarter's big rally, which is not reversed, even though the uptrend is reversing. right now on pace for a record closing high and possibly an all-time high. this as we are stretching into overbought conditions, which is not a bad thing. technician do not mind overbought conditions. it is if they come back in. as for other sectors, consumer discretionary, tech, lots of green. investors wanting in on this year's low-volume rally on central-bank support.
1:04 pm
the interesting thing about stocks, this as memory pricing crucial to chips is on the decline. some analysts think that cannot last. , notly, some big movers surprisingly to the upside for the s&p 500. twitter up 15.8% after putting up a strong first quarter. sales grew by 18%. daily active users past analyst expectations. kohl's up 10% on the expansion of amazon returns done at their stores. finally, coca-cola also trading higher, beating top and bottom line estimates, lifted by strength for beverages in china. vonnie: thank you for that. now joining us to discuss earnings season and these cordero.s chris we are at records, we are not getting those disappointing earnings we thought we would.
1:05 pm
arenything, earnings proving to be a boon to the market. what happens next? >> if we continue to get these prizes to the upside, the market will continue to rally. when i look at the last six months in the market, it's been an interesting time period. at the end of the year in the last are you had great economic news coming out but you had the markets falling off. this year coming into the new year you had economic news that was cooling but the market started heating up. it's been a paradox of what is going on. we all react to relative news, we look at what is relative to the last thing that happened. these surprises to the outside fit really well into that. relative to what we've been experiencing, what we expect, they are great. i would expect the market will continue to do well. vonnie: what is the biggest concern of your clients? aren't we due for some type
1:06 pm
of bear market, recession? the interesting thing is, when they talk about recession, it's been 10 years since we have had a recession, and we have only last 20 years, so there is a great unknown fear about what the markets will do. the last recession we had was horrible for the markets. this time, if we have a recession, i don't see a large asset bubble out there to be fearful of. i think a lot of those fears are unwarranted. vonnie: do you think there will be a recession? be slowingwe'll down, i don't know that we hit a recession. but i know that is a common fear of clients, aren't we due for a recession, will one happen soon? do you advise clients to get into certain sectors, geographies? the areas that we let
1:07 pm
currently, we have increased our allocation to u.s. small-cap stocks. they have underperformed large-cap stocks over the past decade. you had a the areas that we let currently, we have increased our allocation flip-flop where their valuations were better than large-cap stocks, and earnings have been robust. that is probably a place where we will see some upside in the future. vonnie: why is that, if we get more trade tensions with china, isn't it the small and medium-sized enterprises that are hurt? chris: with china, it's interesting, we have reached a trade d'etant. we have just stood off from each other. that is likely what will continue here. i don't see a real agreement coming anytime soon. but that is a good thing. just not being at war with each other is a good thing. stability, that is where i see the small companies doing well. at better are selling valuations and earnings are growing faster than large companies, that is why we see them as favorable. vonnie: chris, thank you.
1:08 pm
snap, the social media company is set to report first-quarter results after the close today. investors looking for positive momentum in a stock that so far has seen massive gains. joining us now is our bloomberg reporter from san francisco. if twitter is anything to go by, we will be blown away, but can you compare the two? >> like you said, the stock had a huge run this year. expectations on the revenue growth side, 33% seem fine. >>they should come ahead of that because they have tailwinds. s&p demand, advertising is working. pricing comparisons are favorable for them, so revenue is good. the two numbers the market will look for is user growth. butxpect that to stabilize, we saw an upside surprise with
1:09 pm
twitter. if they could swing a price, that would be a big deal for them. the second is cash burn. they have to show a path to profitability. if they show any acceleration in their plans, that would be a positive. those are the two metrics that would decide if snap wins today. vonnie: have they managed to move past the blip that we saw where it rolled out some new innovations and people were turned off? more of a useris engagement story and not user growth story. in the core audience that snap years old,lly 13-24 the engagement has been strong. despite users declining. if they can use these innovations to increase engagement and monetization of monday's audience is, and pivot from competing with facebook, twitter, but being a content platform for the youth, if you will, then they can manage out of the situation. at the moment, they have to first stabilize user growth and show the steps they are taking right now, the new android app
1:10 pm
they have launched, things like that, can increase users going somerd and really show good growth recovery longer-term. but revenue growth should be fine. benie: something there will a 2.8% decline of users in the million monthly users. is that enough in the intermediate term for a company like snap? jitendra: on a sequential basis, expectations are not that high. expectations are for them to have flat users on existential basis. if they are able to prove, like twitter did, with the changes they have made to the plot or, they can revive growth. if snap can prove that, that sentiment will change. that is what we have to see today, why the user growth number is so critical for snap. that 77 .5 million
1:11 pm
monthly users on an annual basis. thank you. up next, key u.s. up in court justices seem inclined to let the trump administration at a question about citizenship to the 2020 census. we will speak to congressman carolyn maloney about what is at stake. this is bloomberg. ♪
1:12 pm
1:13 pm
u.s.e: in arguments at the supreme court, justices seem inclined to let the trump administration at a question about citizenship to the 2020 census, a decision that could shape congressional seats and federal dollars. kevin cirilli is outside the courthouse in washington with a guest leading the congressional charge against this query. kevin: we are here with
1:14 pm
congresswoman carolyn maloney. you are inside to hear the arguments. why is it so important that does not go through? requires anitution accurate count, our taxpayers depend on it. our democracy depends on it. the numbers that come out of the census are what is use for representation, the basis of our democracy, used to district over $700 billion annually for needs for people. and good data. if you don't have good data, you don't have good plans for the future. businesses depend on it, governments depend on it. the whole purpose of the census is to be accurate. so why would you had a question that all professionals are saying would decrease the accuracy by a minimum of 5.8%, which is rex -- roughly 6 million people. we have states that have less population than 6 million people, so it's important. kevin: you are the cochair of the house census caucus, and
1:15 pm
also the author of the census idea act, which would remove the citizenship question to prevent last-minute additions in the future. you know this. republicans will say, this is crucial to get this question on to help in terms of security issues, as well as to be able to see precisely who is in the country. your response? get theoney: we already number from the american community survey, and we have since 1956, gather that information on the long arm. the purpose of the short form census is to get an accurate count. that is why it has been so debated. there have been three federal cases that justices came out and said adding the question was capricious and would lead to an undercount, that it violated the constitution and the requirement of enumeration. my own city of new york, tish that 17ought a lawsuit
1:16 pm
other states joined. i did an amicus brief with 126 members of congress. there have been many decisions. very chilling to me was a letter from the former heads of the census department. this was both republicans and democrats. they said, please don't add the question, it will result in an undercount. kevin: not just politicians and lawmakers, but also uber and lyft, levi strauss, they have really come out against this question being asked on the senses. they say it will make an economic impact precisely because of the data that is used to calculate a lot of their economic decisions. if this were added, how would this impact small businesses as well as those businesses i mentioned? rep. maloney: it would impact small businesses in terms of services you receive, your roads and a transportation,
1:17 pm
infrastructure for hospitals and so forth. but also it is planning. , all theer of commerce business organizations for both large and small use census data orproject how many ubers lyfts are needed in a neighborhood, how many people are moving around. they can use these numbers to project what is needed in the future for their business models. on a: we are here beautiful day in washington, it is kind of hot outside, but you have this jacket on. tell me about it. rep. maloney: this was given to me by fire officers, firefighters or passing a bill which gave health care to first responders and survivors that we lost on 9/11. thousands more were sick and dying. part of the bill was a victims compensation fund which is now running out of money because of
1:18 pm
all of the cancers people are getting, so we need to replenish it and make it permanent. that is the least we can do as a grateful nation. they were there for us, we need to be there for them. i said i would wear the code until we pass the bill. i hope we do that soon because it is getting warm in washington. kevin: i want to ask you about this house democratic call with bigger pelosi, the issue of impeachment. where do things stand with the divide within the democratic caucus on the issue impeachment? rep. maloney: you have to remember the mole report was very focused on what it could look at. it was looking at the influence of russia. we have roughly six other committees conducting investigations, subpoenas, and so forth, looking into other areas. we have five different desk district court looking into other areas, so the investigation will continue, we need to get the facts. we were very focused on the mueller report. we need to see that unredacted.
1:19 pm
i believe eventually we will get the full report. right now there is a lot of work taking place in all the committees. we have very scored systems across the country. congressman maloney, thank you for coming on on a beautiful day, even with a jacket on outside the supreme court. back to you in new york. vonnie: thanks to you, kevin really. harley davidson overcomes higher terrace by shifting production overseas, but is the company doing better? an in-depth look at first quarter earnings, next. this is bloomberg. ♪
1:20 pm
1:21 pm
vonnie: this is "bloomberg markets." i'm vonnie quinn. time for the latest bloomberg business flash. it is a breakthrough in a drone business. an offshoot of alphabet's google
1:22 pm
has become the first drone operator to get u.s. approval as an airline. the subsidiary is called news 24 hours a day, when plans to start delivering small consumer items to rural communities in virginia within months. shares of hasbro are soaring, having their best day since 1996. the toymaker posting an unexpected gain in first-quarter sales. recovering hasbro is from the collapse of toys "r" us. lockheed martin has raised its profit and sales forecast for the year. they are reaping the benefits from higher production of the f-35 fighter. hit $133og has now billion. motorcycle maker harley-davidson reporting first-quarter results yesterday, including a slump that was less severe than wall
1:23 pm
street feared. the company posted earnings of $.19 a share, beating the consensus fo. joining us now is get a real coppola. is harley actually doing well? >> i think the way to think about it is they are doing less badly. sales in the u.s. fell for the ninth consecutive quarter but it was also the best performance they have had since the end of 2016. they are managing through a lot of difficulty is, not the least of which is the trade term while have seen around the world. vonnie: talk about the tariff impact. we know they have moved some production. are they able to continue operations in this haze of uncertainty, where there will be tariffs in the world? >> they have a plan and they are working on it. the biggest tariff heading for them is the eu tariff. iny have a plan they built
1:24 pm
thailand, and the plan is to export from thailand to the eu. the is the move that upset president, got them a lot of unwarranted press attention last year. but now they are hoping that the the eu has to approve that and says you can have this break on tariff, if you are exporting from thailand. if they reject that, they have talked about having an assembly plant for the motor vehicles in europe. the president's goal was to bring more jobs back to the u.s. but so far this plant in thailand is sort of to do with that trade war that he created. brexit hurting the u.k. as well, so they didn't have much luck there for a while, but it seems like things may be turning around. is this sustainable for harley? >> the jury is still out. they have a big turnaround plan, the heart of which is producing cheaper, lighter motorcycles.
1:25 pm
that is supposed to be for europe and asian markets, and even an electric motorcycle. they are investing the money, marketing it, but it is still too early to say. their hopes are on asia and europe to sustain growth outside of the u.s. looking for electric bikes to go on sale in august. they seem the polar opposite of what harley is known for, big, powerful engines, loud noises and so on. attempting to get into the kids market with electric bikes. that's right. they are desperate to find new markets and customers. the problem they have is their classic writer is getting pretty old, older. younger consumers cannot afford an $18,000 motorcycle, for example. so they may even sell these electric motorbikes for kids through different channels.
1:26 pm
you would not go to a harley motorcycle dealership to buy a , but there are different avenues the company is its pyramiding with to try to build a new customer base in the u.s. that is younger and more diverse. we have to leave it there, we are out of time. haset you know, the street holds on harley. details on the twitter story, next. right now, indices are higher powered by earnings. the s&p is up .9%. this is bloomberg. ♪
1:27 pm
1:28 pm
1:29 pm
mark: i'm mark crumpton with bloomberg first word news. bloomberg has learned former vice president joe biden is going to run for president. sources tell bloomberg the 76-year-old will announce his
1:30 pm
plans on thursday and follow up a campaign rally in pittsburgh next week. thewould end weeks of speculation and put biden in the crowded democratic nomination race as the early front-runner. islamic state has claimed responsibility for the deadly terrorist blasts in sri lanka as investigations intensify into sunday's attack. 21 people were killed. agency described where each of the attackers were deployed. the group from iraq and syria has made a series of unsupported claims for responsibility. held todayyers were ahead of a mass burial for the victims of the easter sunday bombing. mourners and relatives of the victims brought flowers to the funeral service and prayed with the clergy as coffins were being carried in and out of the church.
1:31 pm
meantime, the you in children's agency says at least 45 children were killed in the attacks. paris, crews are rushing to prevent further damage to the notre dame cathedral ahead of expect -- expected storms this week. professional mountain climbers have been hired to install temporary tarps over the gutted and collapsed building to offset potential rain damage. the bad weather threatens to damage the cathedral whose roof was destroyed in last week's fire. the ongoing war in yemen has set back the country's development by more than 20 years. the report from a newly released you and commission study found if the war ended this year, it would have caused economic losses of nearly $89 billion. if the conflict lasts until 2030, losses would jump to more than $650 billion and would leave 71% of the yemeni population in extreme poverty. the fighting has killed tens of thousands and has driven the
1:32 pm
country to the brink of famine. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. shery: live from bloomberg world headquarters in new york, i'm shery ahn. amanda: live in toronto, i'm amanda lang. welcome to bloomberg markets. we are joined by our bloomberg and bnn bloomberg audiences. worth an earnings report retreating. twitter todd's earnings projections, sending the stock to its best day since october 2017. netflix is returning to the junk-bond market to fund its content expansion, but will it be enough to compete with disney
1:33 pm
and apple? and there are signs oil traders are betting on further price increases after the trump administration's decision to halt waivers from u.s. sanctions on iran. let's get started with a quick check on the markets. we are seeing u.s. stocks now at a record high with the s&p 500 level.hat 2930 health care and consumer stocks leading the gains. the dollar also at a six-week high. we have better-than-expected earnings from coca-cola, twitter, and hasbro. the nasdaq also at a record high, gaining 1.25%. investors started to focus on more eco-data out this week, including first-quarter gdp numbers on friday. amanda: to your point, that is the other leg, getting earnings, but the underlying economy matters deeply. another positive sign today in the form of new home sales, now 8016-month high, a 4.5% gain.
1:34 pm
see it has not been at this level for a long time, beating all estimates. 9.7% prices fell year-over-year. as the warm weather picks up, we may see this as a place, a source of strength for the economy. we are seeing earnings begin here. it is worth noting, 80% of the s&p 500 companies that have reported so far have beat the estimates. we did a lot of talking ahead of the quarter about whether we would see reduced outlooks. for the most part we are not seeing that, but better-than-expected numbers from many companies. shery: including coca-cola, they beat comparable if yes numbers. reportede seeing earnings with a boost on better sales in china, global unit case volume also rising 2%, fueled by a 7% spike in asia-pacific. plenty more earnings coming up this week including amazon,
1:35 pm
facebook, microsoft, and tesla. amanda: and some industrials on deck, boeing this week. for a little bit more on the story about twitter, we have from san francisco selina wang, talking about twitter's numbers. this was a big surprise to the upside. how did they pull this off this quarter, in a way that was unexpected? some growing optimism around the country, several quarters of healthy gains, but this is a sign they are on the path to accelerated revenue and user growth. not only did they beat revenue expectations by a wide margin, they also beat on the monetize of daily active user growth. this is a sign to investors that all of their investment in product innovations, making the product easier to use, iterating on their core features, is having an impact, as well as their efforts to reduce spam and toxicity.
1:36 pm
advertisers are following user eyeballs. as daily active user numbers go up, advertisers will follow. shery: talking about toxic content, how are they doing in cleaning up their platform? selina: twitter has a history of ink slow on cleaning up the abuse content. jack dorsey has reiterated that this is the number one priority. one of the primary criticisms of thater, any user knows they are flooded with abusive and it, lots of spam, always relied on users, the burden of the victim to report that content. twitter said recently, 38% of the content they take action on has been surfaced by their own algorithms, rather than 0% from before, where it was completely relying on users reporting them. what is jack dorsey saying about his priorities, where they see growth in the quarters ahead? selina: in addition to improving
1:37 pm
the health of the conversation on the platform, which of their under fire for -- not only twitter, but also facebook and youtube -- and jack dorsey is trying to make the application more conversational. it can get very messy and jumbled, so they are try to streamline that. betahave also released a app. they are testing out different features, rethinking some of the core structures of the product. in addition to that, twitter still has a long way to go in terms of making it easier for those just starting on the service to follow their interests. that is another area they are focused on. they said anything about the presidents continued attacks on twitter for what he claims are discriminatory practices on republicans? for some context around that, trump is wrong on their part to reduce the spam and hateful and fake accounts on the service, which have impacted
1:38 pm
some of these high users like donald trump. he is arguing that his followers would have been higher if not for these initiatives. twitter is reiterating what it over, that it is biased, it's an apolitical company, and makes decisions based on technical specifications, not for any political reasons. shery: selina wang with the latest on twitter from san francisco. netflix is returning to the junk biased, it's an apolitical company, and makes decisions based on technical bond market to fund its push for the mass market. let's welcome in our corporate finance reporter molly smith. great to have you with us. this chart on the bloomberg showing netflix's cash burn so far. the amount ofd the money to burn through for the year, $3.5 billion. where do they plan to spend all of that fund?
1:39 pm
>> it will be on content. that has been the priority since the beginning. company -- of course, it is cash flow negative, has been for a while, but if netflix were to slow down the spending, they would be immensely cash flow positive. companythese are at or above pn many cases. .manda: which is interesting obviously, content has been so important in getting netflix growing. at some point, we have to see that cash burn turnaround. why such a big pass from the bond market? have a story showing the growth in netflix over the past couple of years. they have been a really active participant in a high-yield market. up to $10 billion in long-term debt. the company is not forecasting they will start winding down on the borrowing.
1:40 pm
the company is moving out toward more being self-funded. this year is not the time it will happen with the forecast of burning through another $3.5 billion of cash, but the company says starting next your they will taper down the borrowing. get it now while it is hot, if you want those bonds. shery: what does this mean in terms of financing needs when will that subside? molly: our estimates still show the company is expected to burn through cash in 2021. it is unclear where that spending will subside. that is the growth engine for netflix. if they stop spending on content, especially as the competition is mounting, where will the growth come from? change thes that story for bond investors because of that new competition? quite formidable in the form of disney. molly: the sources i have talked competitors these that we pointed out in the story, disney, amazon, apple. on the one hand, competition to
1:41 pm
netflix, but on the other hand, could be a potential acquirer of netflix. these are strong investment grade competitors with strong balance sheets. that would be immensely positive to netflix's creditors, if they were bought out by another company. those bonds within the redeemed in the investment grade index. amanda: great to have you with us, molly smith. jetblue and other airlines on their earnings. a preview of the stocks you need to know, next. this is bloomberg. ♪ mberg. ♪
1:42 pm
1:43 pm
shery: this is "bloomberg markets." i'm shery ahn in new york. amanda: i'm amanda lang in
1:44 pm
toronto. an offshoot of google has become the first drone operated to get government approval as an airline, a big first step that gives it the legal authority to drop actual products to customers. for now, this approval means it will serve two numeral virginia areas, hoping to expand to others. for the most part, drones are still prohibited from flying over crowded areas. it will be interesting to see how long before you see a drone delivering to your door. shery: it is interesting that you see some waivers for these companies performing demonstrations or short flights, but this is an actual certification that classifies the drone company the same as a smaller airline. it is interesting how much they had to prepare, right of a manual and so forth. we will see where the industry goes. talking about flying, jetblue reporting first-quarter earnings with adjusted earnings per share being the highest analyst estimates.
1:45 pm
will those good results plead over into the broader market as airlines continue to report? we are joined by our senior research analyst at cohen. it is ok for this past quarter but we have seen oil prices routing so much, already getting a boost from those latest moves from the u.s. on iran sanctions. how long can these positive results last, if oil prices continue to rise? >> thanks for having me on. that as oil prices will rise, sticker prices will follow. it takes about 4, 6 months after oil prices go up for sticker prices to go up. airlines are about a third sold out within 90 days, two thirds the first of any month. 80% to 90% load factor. that kind of implies that what you are seeing is that load factor, that ticket prices are
1:46 pm
going to follow. but it takes about three month for them to work through what they already have on the books. in fact, jetblue said this morning, they were about 50% sold out for me, a third sold out for june. amanda: airlines remain competitive on pricing. often hurting their margins in a way that could really put them into bankruptcy from time to time. doe they learned the way to that, be competitive without undercutting their own profitability? >> i certainly hope so. the last u.s. airlines you file for bankruptcy was a regional airline that found about a year ago, very small, based on west. most of the u.s. airlines have the lastly well since round of bankruptcies, which ended with american's emergence in 2013. that aside, the airline industry
1:47 pm
has done a very good job of matching capacity with demand. the one thing we have seen that we have not historically seen is the move to capacity up and down -- which was something that never really happened. in the past, they just kept the seats and hope for the best. that is something to consider that is different. the other thing is they moved ticket prices. with fuel prices, that is a big benefit. third, by now, they have given all of their labor increases they need to. see laborard, you'll cost increases in a 3% to 5% range. the big increases are behind them. going forward, we should have better second and third quarter than first quarter. first quarter was a tough so manybecause of unplanned, one-off events, like the government shutdown, polar vortex, the grounding of the,
1:48 pm
which jetblue has none of -- 737 max 8, which jetblue has none of. shery: how much have these airlines been affected by the grounding of the 737 max? we will find out more when american and southwest reports. they are the two biggest operators. united it was less impactful for. they reported last week and it was not very impactful because they don't have many. it is less than 2% of industry capacity in north america. westjet, aero candida, copa are the only airlines flying the max. not a big number, but it will be -- would be if it happened a year from now. in the short-term, they are managing through it with hopes that they can get back in the air. we hope within six months of the
1:49 pm
grounding, so that would imply august, september timeframe --timeframe. airplanesrt of the appeal was the great efficiency and size. do you think there could be some strategic changes for airlines past a few quarters to make changes to their fleet? that is a good question. is maybe,y the answer typical analyst answer. the key is really getting the plane back in the air. if the software fixif the softwg through the faa, caa, everybody associated with having to re-a certified airplane and get back into theif the software fix is g through the faa, caa, everybody associated with having to re-a
1:50 pm
certified airplane and get back into the air, then i think it will be fine. this is not an unprecedented event, that an aircraft is grounded, or an aircraft has issues when first installed. just look at the 787 when it was introduced several years ago. my colleague would talk to you , which was27 introduced in the 1960's, which also had issues. get past that, the plane is certified, things will be fine. amanda: great to have you with us, helane becker. stillstill ahead, saudi arabia s taking a trust but verify approach on how strict the washington enforces sanctions once waivers expire may 2. expire may 2. we will have those details. this is bloomberg. ♪ have those details. this is bloomberg. ♪
1:51 pm
1:52 pm
amanda: this is "bloomberg markets." i'm amanda lang in toronto. shery: i'm shery ahn in new york. saudi arabia is ready to increase oil production but doesn't plan any radical moves after the u.s. plans a tougher
1:53 pm
crackdown on iran's seeking to choke off their crude exports? here with us is tina davis, managing editor for commodities. no wonder we are seeing oil traders betting on higher prices. where are you seeing those calls? tina: today we have seen the market reaction has been much more muted. yesterday brent moved report 5%, the biggest one-day gain we have seen almost all year. today it is much more muted as the market digests the news from yesterday. the news they are digesting is the saudi's, as you said, are being cautious. they trumpeted yesterday that they would come and offset. aboutre being cautious how they do this. they are leading this opec delegation of allies. they need to make sure these cuts they have in place stay until it is time to look at them again. if you look at the broader
1:54 pm
market, a lot of bullish signals in the short term. december contracts this year versus next year, the premium has widened. that's an indication that traders see the chance for more short-term gains in terms of price increases. one of the fascinating things about this is the question of how much leakage there is, how much in lockstep opec members are. it seems more true today than historically. what degree of control does saudi have over other opec members? are hearing people talk about whether the u.s. is now part of this opec alliance, given the recent actions. you have russia as a part of the group. they have been quite vocal saying, at the end of the year, they said they were not sure they wanted to do the cuts. they were broadened reluctantly. giving them in-line will be more difficult now, especially as the saudi's are proposing to increase output. the saudi's have been over complying. they have a 500,000 barrel a day
1:55 pm
extra that they can still spend into the market and maintain their quotas. uae has a little extra as well. if they are looking to go beyond that, it is harder to make the case to russia and asian also not increase production, especially going into the next round of meetings. shery: what about the view that some countries may not be willing to go along with the u.s. sections on iran? china is the biggest importer of iranian oil. than china took more 600,000 barrels a day from iran in the most recent count. that is an increase from december, where they were taking about 100,000. if you think about the total amount of oil they are taking in, this is a substantial supplier. if you look at a run in total, their biggest customer has always been asia. what we're hearing from analysts and that they don't expect china to go to zero. while you may see other allies, south korea, japan adhering to these sanctions, china not
1:56 pm
necessarily. going to the now turnaround for the refineries, when they perform scheduled maintenance for the year. so they don't have as much of a need for oil imports. they may be able to import just a modest amount and survive. amanda: we will leave it there, tina davis, great to have you with us. you can catch all of the interviews you have seen on the bloomberg with the function tv . from toronto and new york, this is bloomberg. ♪
1:57 pm
1:58 pm
1:59 pm
♪ >> i am mark crumpton with bloomberg's first word news. the chairman of the house oversight committee says the white house is now" "open defiance of his panel" after a former official defied a
2:00 pm
subpoena. is chairman says he consulting with members and staff about scheduling a vote on contempt after former white house personnel security director did not show up for a scheduled deposition today. he was subpoenaed after one of his former employees told the panel that dozens of people in president trump's administration were granted security clearances despite the disqualifying issues and their backgrounds. queen elizabeth ii will hostess trump on aesident state visit in june. only two presidents were honored with a state visit that typically features a banquet with the queen. mr. trump made an official trip to the u.k. last summer though that was not a state visit. that was met with nationwide public protests.


info Stream Only

Uploaded by TV Archive on