Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  April 29, 2019 10:00am-11:00am EDT

10:00 am
it's 10:00 a.m. in new york, 3:00 p.m. in london, and 30 minutes into the trading day in the united states. from new york come on vonnie quinn. guy: from london -- from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." vonnie: a big day for earnings. of 1%, 500 just up 1/10 but we have plenty of deals to talk about today. "the wall street journal" reporting a merger. up, sendingfin is the s&p 500 to just a bit of a positive gain today. crude oil futures down under $63 a barrel this morning. we've been keeping an eye on that. we will be talking to one of our tehran correspondence this hour. we will also speak with stephen schwarzman, blackstone's ceo, from the mocon global
10:01 am
constant -- from the milken global conference. story, u.s.ntraday markets are heading towards fresh records. if you break down europe, you can see that oil story manifesting itself at the bottom end of the markets. stocks under pressure once again. it started tuesday last week and has been going ever since. euro-dollar absolutely unchanged at the moment. such a big wake for data -- a big week for data. goldilocks stocks in some ways. building up payrolls in the u.s. a little later this week . the other story. that's kind of related to that euro-dollar story -- this week. that's kindory of related to that euro-dollar story, the spanish president winning reelection.
10:02 am
down by 3/10 of 1%. vonnie: let's to get to in the next two hours. let's bring in bloomberg process at reporter, -- bloomberg cross asset reporter luke kawa. let's talk about the deals first. it is obviously a major support of the market today, and yet we are only seeing a few points of a gain for the s&p 500. luke: most definitely. when deals are happening in the context of earnings season, it does kick things over a bit. we have payrolls at the end of this week, and the fed coming up, so there's reasons to wait. there's reasons to expect that bigger catalysts might be on deck. last week the big catalyst was europe weakening and getting back into that u.s. over everything trade, but now if we are going to continue that trade, the usi probably has to do more of the heavy lifting. guy: as you say, the payroll
10:03 am
number at the back end of the leak feels like -- the back end of the week feels like the main event, and the fed doesn't. his today's data really encapsulating the situation?sprung in the pce, but week inflation? luke: exactly. i think we already had the event of the week. there's a chance that the only date that really matters right now is the pce deflator and core pce deflator. they are both decelerating. why they areof see moving. disentangling cyclical versus a acyclical- versus donetion, cyclical has absolutely nothing, whereas the three-month move in the annual parts,r the acyclical
10:04 am
that is falling at the fastest pace since 2008. this inflation drop is a bit of a mirage, but any prior increase was also a bit of a mirage. the inflation picture has been stable for so long, and it really seems like the realized inflation picture is just a much bigger input for the fed, regardless of whether it is cal or from the acycli cyclical side. vonnie: we have almost 50 percent of s&p 500 companies reporting, and several major ones this week. what do we expect in terms of earnings? luke: this market has been the story of the heavyweights pulling more weight. left,s only really two alphabet and apple, that have a chance to hurt people, so to speak. i think by and large come of the story of earnings season has been coming into it, we were most worried about tech and margins. tech is posting the highest beat rate of any sector. the reason why we are exceeding
10:05 am
expectations on earnings is complete we do to margins. thehe case of avoiding worst case scenario and pricing in weakness, it seems the market did a good job of that. it does seem we have the strong dollar, and most international stocks during the rally have been not hurt by that. that is a testament to the mystic earnings picture -- to the domestic earnings picture. i think that is a bit of a confluence that probably can't last. guy: the president once again proving that he is one of the most influential figures in the oil market. he says he wants oil prices a little lower, and ironically the russians have been helping him on this one with their problems with their refining. nevertheless, crude keeps going down. is there an expectation that this continues? obviously these big crude stocks are a major portion of many of the markets. trackedey never really
10:06 am
a lot of the rally, and now there is more takeover talk and interest in the space. maybe they can avoid getting caught up in it, but we'll, i think the story has really just been how range bound it's been for so long. the president might nudge it one way for a while, but i think you itl probably start to see start to pick up and see how this is a good thing for the u.s. economy and capex on the production side. vonnie: the treasury market is fascinating because the 10 year's at 2.25% after the pce data. the 210 spread is back up to almost 23 basis points. suddenly we are talking about a fed interest rate cut, even as the treasury and fixed income data is signaling things are better. luke: exactly. last week was insane because we talked about all-time highs, a q1 gdp report that really blew past expectations. had openmarket interest in 2019 euro-dollar, so
10:07 am
that essentially priced in a fed cut by september. traders aree betting on this 95, 96 scenario in which we have a relatively not big magnitude cut, but we have cuts just as a proactive measure to inflation that come on a realized basis, has been low forever and suggests the u.s. economy has more slack capacity. we got half of that confirmed already. we will see if the other half comes later this week. guy: big focus on the united states at the moment, but the rest of the world, what are we getting there? the data out of china are reasonably mixed. we are getting more tomorrow. we had sort of disappointing data out of south korea. that is a big bellwether. what does the rest of the world like? i put this in the context of the fed because the u.s. seems to be humming along relatively nicely,
10:08 am
but the fed is certainly paying attention to the rest of the world. if you are in the fomc, what are you seeing? luke: i think you are seeing a lot less reasons for worry then you did in january. the january minutes offered up a laundry list of worries. now the list of downside risks has come down a lot, but i think probably one of the global probably one,ink the global growth outlook has come down. you are seeing some growth in china come but the places would expect to be most immediately effected are unchanged. on the realized inflation picture, that concern has probably intensified. charlie evans said recently that core price pressure is going , and could be reason to discuss fed cuts as early as this year. we are basically there. i think basically they are going to be focusing very hard on a lot fewer subjects in this upcoming meeting. vonnie: you are concentrating not a lot of subjects.
10:09 am
kr cross asset reporter luke awa joining us. let's get to first word news. here's kailey leinz. kailey: the federal reserve's preferred gave of inflation -- preferred gauge of inflation , reinforcing the patient stance on interest rates. president trump is telling the national rifle association to stop the internal fighting. on twitter, the president warned the nra is "under siege" by new york governor andrew cuomo, who challenged their tax-exempt status. has beenresident ousted following a battle with executive vice president wayne lapierre. in spain, socialist president returnanchez is set to -- socialist pedro sanchez is
10:10 am
set to return as prime minister. he was forced to call an election when he failed to pass a budget. reach andisney all-time high after a record breaking blockbuster weekend for its newest "avengers" outing, with a $1.2 billion international open. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. vonnie: thank you. now to our first milken institute global conference interview of the show. erik schatzker is in beverly hills with a very special guest. erik: thanks very much. i am here with the chairman of bc partners, the firm active in private equity and real estate. good morning. you've been with bc partners
10:11 am
since 1992, so you've seen a few peaks and valleys in private equity. how would you describe the state of the industry today? guest: the industry is obviously much more developed today than it was a 1992. the industry is competitive and mature, and valuations are high. on the other hand, i think all of the market participants are still continuing to find opportunities to invest in. erik: let's talk about the evaluations, and everything else. prices are rich. behavior like givebacks, the absence of covenants in many financing. there's the sheer amount of capital available. what do you make of those and other signs of what people might call fraud? raymond: what people might call fraud is very often misunderstood. as far as valuations are concerned, they are high, and
10:12 am
that is driven by the global markets. veryage is high, but differently, and much lower than in 2007, 2008. interest rates are much lower, so the cushion you have from a cashless standpoint has nothing to do with 12 years ago. amount of money available, what you just referred to, what is really important to understand is that you have to compare that to the average number of years it takes to invest, and currently it is still between two and a half and three years. froth asot as much people can imagine from the outside. erik: private equity is supposed to be the disciplined buyer. how do you get comfortable paying 12 times the offer?
10:13 am
raymond: as far as i'm concerned, i think the industry is disciplined. it is difficult to do, but if you have the right set up internally, if you have the right mindset and dna, you can continue to be disciplined. you are required to know exactly how you are going to add value, and develop the business. erik: as a matter of principle come you don't have a problem with it -- of principle, you don't have a problem with it? raymond: it is no question of having a problem or not. it is a question of if it makes sense and doesn't work. it is harder than it was 20 years ago, but it is still possible. erik: are you seeking to make capital flexibility a bigger part of your financing arrangements the way that kkr has done, the way that blackstone has done, the way
10:14 am
that carlisle has done? raymond: by capital -- erik: excuse me, collateral flux ability -- collateral flexibility. raymond: you referred to comments about loser terms in that agreement -- about looser terms in the agreement. there was a study just after the financial crisis that analyzed all of this across the industry. they found that actually having looser covenants is better because it allows you to buy more time to deal with the problems you have to the extent you have a problem and avoid bankruptcy. actually, looser covenants, which i know is a bit paradoxical, is better for everyone. erik: but it takes power away from your creditors, and some are already unhappy about what is going on with petsmart. raymond: well, the litigation was settled two weeks ago, so they are much happier now.
10:15 am
[laughter] raymond: you know, it is a balance. the crisis, at the -- the creditors come at the end of the day, they don't want to take control of the company because they just want to be repaid. looser covenants, and my opinion , across the industry enables you to deal with the problems as long as you continue to pay your interest expense, to repay the debt you need to reimburse, and work it out for the long term. it is better for everyone, including creditors. erik: bc partners manages some $20 million. you are still a fraction of the size of a blackstone. where does bc go from here? raymond: have a mature business which has been operating for 33 ,ears with the same strategy initially just in europe, now across the atlantic and in north america. we've been operating in north america for 11 years.
10:16 am
we still have room to grow and mature. we manage to billion dollars in credit. we are raising funds at the moment. classes which are very synergistic, we work in private equity, and it is all about continuing to do your best and is a liver -- and deliver good results. erik: thank you for being brave enough to be the first victim of bloomberg television here at the milken institute global conference. [laughter] raymond: it was a pleasure. thank you. erik: back to you. vonnie: thanks to him as well. thanks, erik schatzker. we will have more from milken this hour, including buck stone's stephen schwarzman -- including blackstone's stephen schwarzman. guy: looking forward to that. socialist pedro sanchez is looking forward to returning to the prime ministership in spain, but he needs help from other
10:17 am
parties. who is he going to turn to? spain's lead candidate for a seat in the european elections. your candidate ruled out forming a government with mr. sanchez. however, many political commentators see such a coalition as being one of the most stable on offer. party, hard no from your or is there some flux ability here? -- some flexibility here? guest: no, it is a clear and very hard no. we have run a very clear on what we felt of the deal sanchez made with the separatists, and we are not going to joint and any sort of coalition with sanchez. we are a big political force in
10:18 am
spain, we are not going to betray any promise that that is not going to happen. guy: that means probably mr. sanchez is going to have to turn to the catalans to get 176 seats that he needs. is that good for spain? let me just first say that the catalans are a very diverse bunch. the leader of our party is a catalan himself. you mean the separatist party. he is going to have to find need.support that he will he has said he will want to go in on his own and find support measure by measure. i don't know. you will have to ask him. clearly the socialist party we made a deal with two years ago, which was a good deal for spain of them have been sent
10:19 am
to exile. this is a very different party, and not one that we are going to speak to. vonnie: your party took 57 seats, up from 32. i am curious as to what impact you might want to have on spanish fix a pop -- spanish fiscal policy given that you don't want to be in a coalition government. you will be in the opposition. guest: yes, we are going to be in the opposition. we have always been the voice of reason and moderation. we are going to make sure that 's feet to thez fire. we are always going to be the voice of reason for spain. that does not change. we've always done that. we are not going into any coalition talks. reason iss, but what necessary when it comes to
10:20 am
spanish fiscal policy over the next term? i would expect spanish fiscal policy goes back to the .ath of moderation spain's economy is growing. however, sanchez has been putting his foot on the accelerator, increasing through royal decrees without parliament tree input. probably now, he is going to have to deal with more moderation, but i really cannot tell you. guy: spain has some big structural issues it now has to deal with. unemployment is the obvious one that stands out right now. how is spain going to deal with those? to pick up on vonnie's point, how is your party going to try to influence the government?
10:21 am
if we are dealing with this issue by issue, how is your party going to try to make sure that that number comes down? view, and you can look at almost any sector in spain, is that there are a very large number of openings in spain. there are firms in the north of technology looking for qualified youngsters. the problem is that the spanish educational and training system giving the people with the qualification and training for these jobs. we have done proposals in parliament. we will continue doing all that. we will continue pushing for laws that make a very substantial, fundamental change in our training work in spain,
10:22 am
which is right now leaving people without those qualifications. we will work on those with anyone who is willing to work with us. vonnie: are things to you, and congratulations -- our thanks to you, and congratulations. let's check global markets now. here's abigail doolittle. abigail: very small moves here in the u.s. investors treading water on this monday. the s&p and nasdaq both up fractionally. we have new all-time highs for both of these indexes ahead of a big data week and more key earnings, including apple, tomorrow after the bell. the dax about flat with some wishy-washy behavior there. where we have decidedly bearish behavior is the shanghai composite in china, closing down for the third day in a row, down 8/10 of 1%. investors fearful that stimulus could be pulled away. that index is on pace for its first down month in the year of 2019. as for the s&p 500, let's put
10:23 am
the all-time high into context of the other all-time highs. this is the last more than year of trading. it is a battle between the bulls and the bears. the all-time highs sound very positive, where we have been to other times -- been two other times. it is not clear if we will pull back in that range or have a true downtrend. a lower high similar to the high and september, telling you investors are not quite as bullish, but where they are bullish on the day, financials up about 1% overall, the top sector on the day. really helped by the 10 year yield, up three points. there's not a large haven bid, unlike last week, when we saw a lot of the havens rally. as a result, we have the banks rallying on the day. vonnie: thank you for that. since 10:00 a.m., boeing has been rallying. it is up almost 1%. we are keeping an eye, with the
10:24 am
ceo speaking to investors at the firm's annual meeting. taylor riggs has been monitoring. what are they telling investors that is cheering them? taylor: so far, if you didn't know what was going on, you would think this is a very typical annual shareholders meeting. he addressed they are going through the line items on the data, looking at the proxy statement. we will be getting more details, wrapping up the conference soon, and that will be what everyone is waiting on, more details about the 737 max 8. i would caution that if last week's earnings call was any indication, we might not get a whole lot. even on the earnings call, he was pretty mum. they suspended their full-year guidance for the financials, but still not getting a ton of information. we don't really know a whole lot more, but again, we will wait and see if we hear anything today. guy: we are beginning to get
10:25 am
more information about boeing's relationship with the airlines. stporting suggests southwe was not aware of some of the changes to the technology. also some reporting out of the gulf suggesting that one of the sister airlines of emirates is considering talking to airbus. these are big changes. how big a problem is the relationship with the airlines? taylor: i am relatively surprised at how strong these airlines are sticking behind boeing. like you said, emirates are coming out. mostly positive comments. you even heard southwest say it has been a problem for sure, but they have not changed any of the 200 pending orders with boeing on that 737. heard from american airlines and united in some of the earnings last week, saying they are relatively confident that the 737 max groundings should be listed by the third quarter. i am a little bit pleasantly surprised at how strong that relationship has continued.
10:26 am
similarly from the street, even boeing has got a few upgrades from analysts, either that they think the grounding will be lifted. as you know, the financials and fundamentals look very strong, but you have to see how easy it is to switch from a boeing to an airbus. vonnie: taylor riggs will continue to monitor the boeing call. the stock is up 1.1%, and the call has just held a moment of silence for the victims of the max crash. guy: coming up, we are going to head back to beverly hills and the milken conference. we are going to speak to this man, blackstone's steve schwarzman. looking forward to this conversation. this is bloomberg. ♪
10:27 am
10:28 am
10:29 am
♪ vonnie: live from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." let's catch up with the
10:30 am
bloomberg first word news. here with the details is kailey leinz. kailey: treasury secretary steven mnuchin says the enforcement part of the trade deal with china is almost done. there are still significant issues to be resolved. talks resume this week in beijing. both sides are eager to reach an agreement, but at administration official says president trump could walk away from negotiations if you haven't satisfied -- if he isn't satisfied. joe biden has picked what might be the toughest battleground seat for the headquarters of his reelection campaign. he spoke to an organized labor crowd in pittsburgh. won the statep in tony 16. the i am -- in 2016. the trump of administration is waiversaivers is ending for countries receiving oil from iran. more than 1000 architects and
10:31 am
other experts are urging the french government to not rush the process of repairing notre dame cathedral. in an open letter, they called on president emmanuel macron to let historians and experts take the time needed. he has said he hoped it would be rebuilt in five years, which some experts say is unrealistic. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. vonnie: thank you. anadarko is planning to resume talks over a potential $38 billion takeover with occidental , a move that threatens the previously agreed deal with chevron. theing us with latest is bloomberg's lizzie fournier. with this benefit anadarko, to shove chevron aside, chevron takes $1 billion and walks away?
10:32 am
lizzie: this has been going on for a couple of weeks now. this occidental offer came under the table last week. it is a higher offer. there is a stock component here. but as you said, there's this $1 so the ballk fee, is in its court whether it -- whether chevron wants to raise the bid or decides to cut its losses and walk away at this point. guy: chevron is higher today. how should i read that? always said have that costs matter, so the ball is in their court and the get to decide what happens next. what a lot of analysts are saying is they don't necessarily have to meet this bid and go over it. they've got stock on the table. they also don't have to put this
10:33 am
to a shareholder vote. even if they don't have the money put into the bid, they might still come out of this successfully. vonnie: chevron has four days to decide. meantime, de shaw has been trying to encourage an open sales process, according to those who spoke to bloomberg. what does that mean? lizzie: the major shareholders just want to get the most value out of this. de shaw has been pushing, as reported last week, for this open sale process. what is not clear is if there is anyone else who would enter this process, the bidding war playing out in front of us. the more bids there are and the longer it goes on, the more potential value they are creating for investors. curious as to'm how this is impacting the wider ,tory surrounding m&a particularly with the permian. it really feels like there is a land grab going on at the moment. these assets are highly desirable, and people will pay
10:34 am
significant sums of money for them. how useful is what we are havi chevron fornd setting the table for what comes next? lizzie: there's been a lot of smaller consolidation, and like you said, land grabs. people can solitary -- people consolidating areas of land that are next to each other and work well together. but this is a big deal, and that is why there is a tussle between these companies. this would really increase occidental's production in the area, a game changer for them. vonnie: meantime, we have another deal, parker hannifin a $3.6to acquire lord, billion deal. is this a good deal all around? lizzie: this makes a lot of sense for parker, which does manufacture a lot of stuff.
10:35 am
what this does is give some access to a bunch of higher-margin assets. if we look at manufacturing slowing down, contracting around the world, they are giving themselves very high-margin business, these very specific sealants used in places like aerospace and defense. they can really specialize and maybe find a few more returns there. vonnie: all right. bloomberg's lizzie fournier always on top of everything. thank you very much. guy: the imf sees a risk of 50% inflation in iran on the tighter oil sanctions we were hearing about a moment ago. this at the same time oil is extending its losses. let's get a feeling of what this story looks like on the ground. joining us in london, normally in tehran, our reporter at bloomberg. good afternoon. 50% inflation. we've seen high inflation in iran before. put this in context.
10:36 am
what does it feel like right now in the country in terms of the economics? what does it feel like if you are the average iranian? guest: we are not there yet, obviously. they are saying this could happen, but before, when we had the last round of u.s. sanctions, when i committed to john -- when oxman it is at -- was akamai did and judd president of iran, this would be worse than that. right now in tehran, sentiment people are extremely -- sentiment is not good. people are extremely worried about what is going to happen. the people on how they are dealing with price rises, very recently they had a massive escalation in the price of red meat. , consumertems, basics goods. all of these things are heavily
10:37 am
impacted, pacifically -- specifically think that are exported into the country. inflows a very big problem because of its exports. because of the u.s. not extending these waivers, that is only going to get worse. but we have to wait and see whether those exports are going to get to zero and the iranian government says it is a possibility. this pressure is going to bear heavily on the economy, for sure. vonnie: what is the distribution a income like, and how will forecast 6% contraction in gdp impact the various segments of the iranian population? golnar: i think the middle classes are going to be hurt very badly. they are under a lot of pressure right now. obviously the poorer segments six heidi are always -- segments of society are always going to be hurt by this.
10:38 am
that is because of the massive depreciation in the rial, the iranian currency. it was losing 70% of its value. it has strengthened a little over the past few months, but with the exemptions on the oil imports for countries that had waivers, with these not being renewed, we don't know. it could go back again. the real could start climbing -- the rial could start climbing quite sick kelly. that really hits people -- quite drastically. that really hits people in their pockets. guy: let's translate this into what this is likely to mean in terms of policy. clearly, sanctions are having an effect on the ground. how does that translate into the way the government is going to deal with the sanctions that are being imposed? they say it can never get to zero in terms of oil exports, but that is trump's design. what do people expect from the
10:39 am
government in terms of reaction? golnar: it is a very good question. i think the picture in tehran is very complicated. from what i see, the u.s. approach so far, from speaking to people, particularly in the middle -- [applause] -- [no audio] golnar: -- and then having to close back off again. generally, there is a huge sense of disappointment with what happened with the nuclear deal. i think iranians also feel there is some fundamental, structural issue with the economy that really need to be addressed are the system. rouhani andident
10:40 am
the central bank are doing that. i hasupreme leader khamen told them to deal with corruption, but i think the people feel squeezed between extent,icy, and to an the official approach to the economy. but this in no way is bringing iranians further towards washington or the trump line of thinking. if anything, it is doing the opposite. guy: thank you very much indeed for being with us. motevalli joining us for the iranian side of the story. up, blackstone ceo stephen schwarzman joins us conference --r --m the milk or conference
10:41 am
from the milken conference in beverly hills. this is bloomberg. ♪ lls. this is bloomberg. ♪
10:42 am
10:43 am
to our-jason: welcome bluebird radio and television offices. i'm jason kelly. here with me is stephen schwarzman, blackstone ceo and chairman. we spoke recently. toreaffirmed your commitment corporation, but that has been a big deal for your stock. why? stephen: it makes good sense there are probably two to three times the number of people who can buy our stock who hadn't been able to because we had been using k-1 statements. by getting rid of those and converting to the normal 1099s, we can take advantage of that huge additional buying power.
10:44 am
logic should say that if more people want to buy you, your stock will go up. jason: what people said to you in the aftermath? are you hearing from a different class of investors? is your phone ringing from different people? steven: yes, it actually is. people say thank goodness you made that decision. we really want to own the stock. our stock is up 13% in the last week and a half, since i actually saw you. so you have a certain magic. i should come on frequently. jason: viviana: anytime --jason: anytime. the other firms have gone up as well. i think the markets are saying if that works for blackstone, probably the other firms will follow. jason: that is on the retail side of the business. what about your limited
10:45 am
partners? the pensions, sovereign wealth funds, endowments. a lot of them are here in los angeles for this conference. what is their biggest concern right now? stephen: i think the biggest concern are high prices. jason: high prices you were going to have to pay for deals. stephen: well, that everyone is paying as a result of markets going up. that is a concern. on the other hand, alternative class, private equity, real , has done so well for these investors over very time, andds of continue to increase their allocations. that is certainly good news for us, but it is a time where you need a little more caution for investing than when prices are lower. jason: if you look across the
10:46 am
suite of products you are offering to investors, is there one that seems to be drawing a disproportionate attention from the big institutions right now? i'm asking you to choose among your children, i know. stephen: it is a tough one. all of the funds sellout, so the bottom line is that we had huge because we've done so well for investors in every one of the classes. the investors themselves have more money, if you will. , when markets go up, the size of their -- when markets go up, the size of their funds are bigger. i think they are biasing things to experienced managers in a high price environment to basically protect capital and do the right thing, but also ride the cycle and be able to put money in at the right time. jason: when you think about the
10:47 am
appetite for all of these funds selling out, you talked about getting to $1 trillion in just a few years in assets under management. you are almost halfway there. how much do you worry about getting too big, that there is too much money you have to put to work? stephen: you always worry about things like that, but the nice thing is you can do something about it. youdon't want money that can't invest well. our business has gone from no assets to the largest in the atld and our asset class $512 billion because we are careful, because we are prudent, because we understand we are playing the long game. if we do poorly, the only people who remember that is everyone who gave us money. so we only want them to have a good ride, and so it is up to us not to have too much money in any strategy.
10:48 am
what we tend to do is expand not by making one fund gargantuan. we do it by inventing other strategies work going into areas -- strategies or going into areas we haven't where we think the investment is very good. we are looking at growth buyouts or growth investing in equity. we think that is going to be very good. jason: so you will raise a separate fund for that? stephen: a separate fund for that. we are also expanding in life sciences. we think that is a very interesting area with a very technically intensive group. we purchased a group that does third stage trials, invested in that area, that does the trials for big pharma. what you do that is business correlated in the growth equity
10:49 am
area, that doesn't particularly use leverage. you are buying mature companies in the tech area compared to the early-stage things. jason: so as you look around the world, one thing certainly on people's minds right now is europe, specifically germany, specifically the banking sector. what do you think is going to happen? you've spent a lot of time in that part of the world. where does this end? forhen: the movie germany has been pretty good since the 1950's. they grow slowly. they are the largest country in europe. germanyncial sector in has always been somewhat different than in other parts of the world. they have a lot of smaller regional banks, and they've had not great luck considering how
10:50 am
good their economy is, that their banking sector hasn't performed as well. bank has beensche in the spotlight for the last few years, in terms of performance, and it's tough to manage a bank when everyone is , and everybody's raising questions. germany needs a national champion. every european country believes that they need a significant credit extender. jason: so did you think it is a public solution or private-sector solution that ultimately helps save deutsche bank? stephen: i am not a deutsche bank expert. [laughter] stephen: i wish i were. i'm not going in. it is hard to do due diligence on a bank. jason: you are sitting on a
10:51 am
panel today looking ahead to the future. i would imagine, given your expertise, the focus is going to be on china. what is your one big take away from china right now? you've invested there, done a lot of fell at the p there -- done a lot of cylinder be there -- done a lot of philanthropy there. what is everyone missing on china? stimulate --ey stephen: they stimulated like they said they would. now china's economy looks pretty solid in the sixes, 6% growth. i think that would have surprised some other people. it didn't particularly surprise me. they have the ability and china to really force money into their system to create growth.
10:52 am
they are doing it, and it's been successful. jason: are you putting more money into china at this point is blackstone? are you investing more heavily, and where? stephen: we just bought a company there. i think china is a harder place to invest for outsiders. you always have to be prudent and thoughtful when you invest. we are looking in the real estate area as well. it all depends what happens and what values are there. over: kim geithner the weekend was talking about the strength of the economy. he said all we have to do is avoid a dumb mistake. what could be a domestic we could make either from a policy or market decision? i think there are a lot of mistakes you can always
10:53 am
make. i think if there is a really dramatic change in the tax area, if the democrats win, for example, a lot of the things their candidates are talking about, i think that would be a disincentive. you can have a certain psychological shock value, and logic would say that would slow an economy. that is one of the things you could do. the other thing is that the fed could increase interest rates. i haven't seen, for at least a isade, a fed that unresponsive to the real world. people worry so much about the fed doing the wrong thing. making aou start mistake and correct it almost
10:54 am
right away, which is what happened as a result of the , the fed is the guardian of the system. they are not the enemy of the system. if we have a lot of wage inflation or something else, we've seen somewhat unlikely, but they start increasing interest rates, most probably it is because it is a smart thing to do. ofis only when they get out cycle, where they think something is happening that isn't, and then prosecute it all the way, i tend not to think the people there are in the business of making mistakes. jason: stephen schwarzman, always great to catch up with you. enjoy los angeles enter time here. sending it back to you guys in new york. guy: our thanks to jason kelly, joining us talking to steve
10:55 am
schwarzman, to see what he has to say about the fed. let's carry on with that conversation. time now for futures in focus. at the cme, dan deming is joining us now. we've seen the pce data come out this morning. inflation in the united states is certainly not running away. how low does that pce number need to go before the market starts accelerating its calls for the fed to cut rates? [laughter] dan: i think we are already there, guy. if you look at the cme said watch, they say they are going to cut it at least 25 basis points, maybe 50. it will be interesting to see how they handle it in the press conference on wednesday. certainly when you look at year-over-year numbers, well below that 2% target the fed likes to look for. guy: if that number keeps falling, do we bring forward
10:56 am
some of those cuts? dan: i think possibly. there's some strange dynamic we gross in the consumer -- with growth in the consumer maintaining high trajectory. there is some concern of stag-flation. it will be very interesting to see how the market reacts to that if it does take place. guy: great to get your view, as always. that is dan deming giving us an update from cme. in a few minutes, we are going to talk to this gentleman, david solomon, chair and ceo of goldman sachs. this is bloomberg. ♪
10:57 am
10:58 am
10:59 am
♪ guy: 30 minutes left in the
11:00 am
european trading day. from london, i'm guy johnson. vonnie: from new york, on vonnie quinn. this is european close on "bloomberg markets." guy: i'm sure there is something happening in european markets, but you've really got to look for it. it is very hard to spot. stoxx 600 up by just 1/10 of 1%. brent is now positive on the session, but only just. the oil market taking away some of the earlier sting affecting some of the oil stocks. that has turned around a little bit. even madrid, which was down earlier on uncertainty surrounding the elections, is back to flat. take a look at the foreign exchange markets. just 1/10 ofs up, 1%. pretty exciting stuff. the dollar is down a little bit, but not by much. we are trading basically 1.11

52 Views

info Stream Only

Uploaded by TV Archive on