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tv   Bloomberg Best  Bloomberg  May 12, 2019 3:00pm-4:00pm EDT

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♪ kailey: coming up on "bloomberg best," the stories that shaped the week in business around the world. trade talks get testy. tariff threats rattle markets as the u.s. and china tried to seal a deal. >> you have a market that was not positioned for a complete breakdown in trade talks. pres. trump: they broke the deal. >> i would rather not do a deal than do a bad deal. kailey: the earnings reports keep rolling in. they eat -- the eu issues another gloomy forecast. occidental wins a bidding war for anadarko. uber begins its ride as a publicly traded company. >> we are down a set of investors who are long-term oriented. kailey: wall street movers and shakers weigh in from the salt conference in las vegas. >> there are so many investors
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who are desperate for yield right now. >> do we want to ask those passive investors what corporate governance should or should not be? kailey: and, in an economy full of question marks, officials say policy moves are not the answer. >> i am not inclined to lower the fed funds rate. >> we think the u.s. economy and monetary policy is in a good place. kailey: it is all straight ahead on "bloomberg best." ♪ kailey: hello and welcome. i'm kailey leinz. this is "bloomberg best," your weekly review of the most important analysis and interviews from bloomberg television around the world. let's start the day by day look at the top headlines. with trade talks scheduled in washington, investors had high hopes that the u.s. and china were moving towards a deal, but
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a flurry of tweets from president trump dampened the optimism. >> president trump, ramping up pressure on china to finalize a trade deal this week. he is threatening to double tariffs on $200 billion of chinese sales to the u.s. and impose new import taxes. >> it is a shift in tone. he basically has been, he and his administration, have been sounding as though they could be close to a deal with china. there are two big things behind this. one, u.s. administration officials are concerned china might be backpedaling on its earlier agreements. the other is politics. president trump is facing pressure from china hawks in his administration who want him to keep pressing, use the opportunity with the talks to push china, and that seems to be happening. >> this week's talks between china and the u.s. are in jeopardy after beijing hits back at president trump's threat to raise tariffs.
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sources saying china is considering canceling trade negotiations that were due to begin in washington wednesday. >> the chinese have always said they will not negotiate at knife point. there will be a lot of voices in beijing saying trump tweeting he will raise tariffs represents a knife point. >> the latest threat from mr. trump is twofold. to increase existing tariffs, and, secondly, to broaden the tariffs to blanket all goods coming from china. that is where you get into the world of consumer goods and all of the rest of it. you start to hurt consumer sentiment, consumer spending. if these threats are pushed through, then economists say you're looking at de-sentiment and global growth. >> the trump administration says it will raise tariffs on chinese goods on friday, accusing beijing of backpedaling on commitments made during trade
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talks. you were at that treasury department briefing. what did they say? >> they said there had been a clear turnaround in the chinese position in recent days. and, that they had seen the chinese really try to renegotiate a number of positions they had agreed to beforehand. francine: trade talks continue as the vice premier is set to visit washington may 9 and may 10. >> there could be a few raised eyebrows in d.c. this morning that the vice premier is still getting on the plane, despite the significant threat that trump unleashed on the weekend. the chinese side have said, from time to time, they won't negotiate with a gun to their head. that is what they are doing at the moment. what is key is whether the vice premier is going to washington with anything new to say. he may stall, or he may have something new in his bag. caroline: the dow down 600 points, tech and industrials
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leading losses. joe: it has been ugly, relentless. >> most people are in the camp we are likely to get some kind of deal by the end of this week. that expectation is eroding by the hour. taylor: president trump is saying china is coming to the u.s. to make a trade deal. meanwhile, china's trade delegation arrives with reports they could retaliate if the u.s. does impose higher tariffs. what changed this morning? >> trump's tweet was interestingly timed just before the markets open. we saw that two day route in the market. he announced on sunday that tariffs would be escalated as of this friday on china, so trump had a peppy tweet saying they are coming here. at the same time, he against -- he railed against this trade deficit and introduced the idea china might be stalling because
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they might see themselves getting a better deal with democrats. democrats might go weaker if they keep these talks going on to the presidential election. francine: president trump, upping the rhetoric when it comes to trade, saying china broke the deal they were negotiating. pres. trump: you see the tariffs we are doing? because they broke the deal. [applause] pres. trump: they broke the deal. they broke the deal. francine: when the president of the united states talks about china breaking the deal, what is he talking about? >> we had a hint of it today from the foreign ministry and the "global times." they both made the point that the u.s. and china can work together on this, but also the global times made it clear that china is bracing for a fight, even if talks continue. >> china has said, "there have been various commitments made for us. china is credible and honors its word. that has never changed." that is all we are hearing from
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the chinese, ahead of the talks. >> the s&p 500 breaking below the 50-day moving average. it looks like there is no place to hide. romaine: right now, you have a market that was not positioned for a complete breakdown in trade talks. they weren't positioned for the escalation of a trade war, for the possibility we will add 15 percentage points to those tariffs. pres. trump: i did get, last night, a beautiful letter from president xi, "let's work together. let's see if we can get something done." but they renegotiated the deal. they took -- whether it is intellectual property theft, they took many parts of that deal and renegotiated it. you can't do that. scarlet: we have a decline. we have come off the lows quite a bit. it looks like we will close closer to the highs of the session. the dow losing .5%.
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the s&p is down for a fourth straight day, losing 0.33%. >> the reality is the market was pricing in a good deal at the beginning of this year, and a lot of the rally we saw through 2019 had priced in a pretty good deal between the u.s. and china, so the surprise we saw this week has continued to increase the level of uncertainty investors had in what was already a very bullish market signal. francine: let's talk uber. the company has sold 180 million shares for $45 a piece, raising $8.1 billion in its highly anticipated ipo. the price gives uber a valuation of $75.5 billion, just below its last private market value of $76 billion. even at the low end of the price range, uber's listing is among the 10 largest u.s. ipos of all time, and the biggest on the u.s. exchange since alibaba in 2014. they are more cautious. is it because of the trade war
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and concerns on the market, or they are looking at lyft and saying we don't want to repeat that? >> absolutely. i think they are looking across the road at lyft, which went off in the middle to top end of the range and has subsequently seen its value fall by 20%. that is a concern if you are an uber investor. [bells] vonnie: we have our first trade, $42.20. romaine: that is 6% or 7% below the ipo price. that is a huge gap down. >> it is a large ipo to digest. you're talking about an $8 billion ipo. at this point, it will take a while for investors to make up their mind, given where lyft is trading now. david: overnight, new tariffs on chinese imports. president trump tweets this morning that although talks have been congenial, he is in no rush to come to an agreement. after all, all those tariffs are coming into the u.s. treasury.
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overnight, we also heard from the chinese government that they are considering countermeasures. >> we didn't get any details on the retaliation, when it will come, how it will come, other than being told to stay tuned. we have seen this in previous tariff spats where china promised immediate retaliation. but, they held back a little while until they calibrated things. there is a view that perhaps they are waiting to see how the talks go in washington today. it doesn't sound like a deal is imminent, so china is probably lining up the retaliation to have ready to go. >> u.s. and china trade negotiators, wrapping up their talks without a deal. treasury secretary steve mnuchin described the discussions as constructive. no deal, but no breakdown. what is the mood in washington? >> there is public mood music, then there is the music inside the negotiating room and the u.s. trade representative's office. we are told, over the last two days, these negotiations basically got nowhere.
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the only thing we have ended up with is a threat from the u.s. side for more tariffs in the next three to four weeks on chinese goods. the rest of this $325 billion tranche, if the chinese don't bend in some way, we have no end to the trade war. certainly not here in washington. ♪ kailey: still ahead, as we review the week, an exclusive conversation with jamie dimon about what is at stake for both economies in the u.s.-china trade negotiations. plus, we discuss the next financial downturn. and, perspective on policy from richard clarida and robert kaplan. up next, highlights from a busy week of earnings reports. >> the first quarter saw tailwinds as opposed to headwinds. >> we had no assets that did not make a contribution to the bottom line. >> it has turned from a nightmare to reality. kailey: this is bloomberg.
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♪ kailey: this is "bloomberg best." i'm kailey leinz. earnings were in focus for investors this week. our roundup starts with results from german lender commerzbank. caroline: commerzbank has met estimates for revenue in the first three months. the german lender added 123,000 new retail customers, fueling better-than-expected results for net interest income. the numbers should give a boost to the chief executive after the breakdown of merger talks with deutsche bank. >> in general, the environment is difficult, as it has been for the last five years. looking forward, we don't expect it to get easier. >> you've got negative rates to
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contend with. that is a banker's nightmare. how long does that happen? is this a permanent situation? >> it has turned from a nightmare to just reality. if we examine a little bit what the ecb has said about rates going up or down, for the upcoming years, i think there is little to no belief that we will see rates rising in the next two years, at least. >> walt disney rose in late trade after earnings beat estimates. profits fell 13% in the second quarter, but analysts were expecting a deeper drop after disney's expensive move into digital streaming. what drove the results? >> theme parks did well. disney's former growth business, the cable tv business with espn, that also did pretty well, better than expected. that has always been what disney has been able to pull off.
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it has these diversified businesses, so, when one thing is not doing well, another picks up. shery: lyft shares fell after a quick pop on the heels of first quarter earnings. the ride-hailer is projecting second-quarter revenue of up to $810 million, exceeding the $782 million analysts had forecasted. lyft also reported an eye-popping net loss of more than $1 billion in the march period, which is more than it has lost in all of 2018. what stood out to you? >> what stood out to me is the company is losing an extraordinary amount of money. even though, on the call with investors, the cfo adamantly said they see themselves on a path to profitability, i have a hard time seeing it. think of it this way. they lost nine dollars per share and the stock is at $60. is that a stock you want to own? i don't know. it sounds like an awful big loss
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for a company trying to get its feet on the ground as a public company. >> softbank's uber bet paying off. they net softbank $3.8 billion. uber also had a super juicy gain on others. but, a loss when it comes to nvidia. not everything was perfect for them. >> exactly. well, it is a giant fund in terms of where the growth is coming from. the vision fund was $100 billion. he noted they are going to market for a second vision fund. it will be about the same size. these earnings and profit figures could help in terms of investor attraction for that. >> singapore's largest lender says it is seeing an improving environment after posting better-than-expected first-quarter results. >> if anything, the first quarter saw tailwinds as opposed to headwinds. on top of that, the fact that
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most central banks have backed off monetary policy tightening, and in some cases, easing monetary policy. that is always helpful to global economic conditions. therefore, for my money, i think the environment is clearly better than it was a few months ago. westpac, targeting a range of cost cuts after a profit drop of more than 20% last year. it looks like westpac was hit hard by those misconduct costs. >> it wasn't pretty for westpac, announcing a $617 million charge. that is more than what national australia bank had flagged before they reported as well. as you said, 22% drop in cash profit for westpac because of weaker business conditions, the remediation costs, and the reset of their wealth business
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following the royal commission findings handed down earlier this year. >> baric gold reporting earnings beat estimates for the first quarter, the first since the merger. the big headline was the asset sales, $1.5 billion next year. what are you selling? >> non-core assets, assets we feel are better in other all people's hands. i think, as you say, a solid quarter, and all of our assets, apart from those, are going to closure. those assets performed in line with plan. we had no assets that did not make a contribution to the bottom line. as we said, we want to focus on tier one and tier two assets. those assets don't particularly fit in our strategic focus. we are going to look to put them in other people's hands. francine: bmw's first-quarter profit slumped as the carmaker's setting aside more money for potential fines.
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last month, it revised an antitrust provision to 1.4 billion. it is being investigated following allegations it colluded to delay the rollout of cleaner emission cars. what is the story with the bmw profit fund? >> the profit, if you look at the numbers today, looked bad. it was the first automotive profit loss since 2009. if you take out the 1.4 billion in that legal provision you mentioned, profit is still lower than last year by 42%. that brings the group profit down about 27%. there are a lot of factors at play here. of course the usual culprits, trade tensions and things like that, but bmw is in the middle of a model refresh. until that happens, their profit is not hitting the level they hope it would. >> the u.s.-china trade spat is hurting japanese automakers with toyota and honda forecasting profit and sales that fall short of analyst estimates.
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i want to get to your key takeaways. >> the key for toyota is how fast is they have given us more details on how profitable their china business is. what they have disclosed is only the tip of the iceberg. they also make quite a lot of money, recorded in japan through >> the key for toyota is how fast is they have given us more lexus and royalties. in the case of honda, the numbers were somewhat disappointing, and it was primarily coming from the motorcycle business, where there has been a slowdown in the indian market. when we look at honda's two-wheeler business, they are gaining share globally, but there is pressure on sales in emerging markets. i think that was, perhaps, the weakest area of their earnings. ♪
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♪ kailey: welcome back to "bloomberg best." i'm kailey leinz. on wednesday, bloomberg sat down with j.p. morgan chase's ceo, jamie dimon, at the global china summit in beijing. when they spoke, u.s.-china trade talks were about to resume, and jamie dimon was blunt in his forecast for negotiation. >> whatever the odds were before, it is still 80% to get it done, the odds of something bad has now doubled. what ever they were before has doubled. that is why the markets are reacting to it, because they are not just afraid of the direct effect. the reverse of global trade, it can slow down global growth and hurt economies around the world.
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>> the imf already is projecting global growth for the world to be at the slowest pace since the global financial crisis, and that's with a china deal. could it be as dire as that or worse than that? jamie: the world economy is doing ok. china is growing at 6.5%, $1 trillion in growth. america is almost 3%. that's half a trillion dollars of growth. they have slowed down, but it is still active. the fly in the ointment would be that if this goes south, it could change global growth. stephen: do you feel hawks are getting a louder voice in the white house, or even here too, as there is a push back to the comments coming from donald trump? in that sense, do you hang tough, or do you haggle for a less-than-ideal deal? jamie: i think both sides should do what is in their own best interest. so, hang tough, yeah, there are
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serious issues that need to be resolved. i think they have made a lot of progress in doing that. it is good for the chinese and the americans. neither side has to do something. it is a terrible error to say because we are doing better -- just get the proper trade deal done. it may take a little bit more time to do a proper trade deal. i would rather not do a deal than do a bad deal. i think that is a bad idea for america and china. japan and europe also have a vested interest in this. we would like to see proper trade deal done between china and america, then they can support it. stephen: can they overcome getting a verifiable timetable for implementation of their pledges as well as a reversing of the forced technology transfers and some of the other big issues on intellectual property? jamie: i don't think there is anything that can't be resolved. china has opened up a lot of its industries. i think they have 100 protected industries, and we have 25.
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they have been doing that anyway. they need reform in their own markets for bond markets and equity markets, transparency, rule of law. they need that, too. i don't expect the chinese to do anything in our interest. i think they will do what is in their own self-interest. a lot of their enterprises don't do well. so while you don't want unfair competition, let's not blow it completely out of proportion. a country like china is allowed to have industrial policy. i wish america had better industrial policy. let them work it out. kailey: that was jamie dimon speaking exclusively with stephen engle in beijing on wednesday. more compelling conversations coming up on "bloomberg best," including the ceo of uber on the day of the company's ipo. and up next, exclusive insight from steve eisman of the big short fame. he says, at some point, there will be another recession, and he explains where it will hit the hardest. >> corporate debt will not cause the next recession.
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it is where the pain will be in the next recession, a subtle difference. kailey: this is bloomberg. ♪
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♪ kailey: this is "bloomberg best." i am kailey leinz. fed chair jerome powell has declared the fed will stay patient on policy for the foreseeable future, but investors still have questions about the inflation outlook and what kind of data could spur the fomc to hike or cut rates. this week, top fed officials added perspective on bloomberg television. let's start with the bank of dallas president, robert kaplan, who told kathleen hays about the difference he sees between transitory and structural drivers of inflation in the u.s. economy. robert: the part that is muting inflation is the structural part of inflation, not the cyclical, the structural.
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what i mean by that -- technology enabled disruption, and, to some extent, globalization. businesses don't have pricing power. the consumer has, in the palm of his or her hand, enormous computing power, more than most companies 15 years ago. and when a business has a cost increase today, it is likely it will erode their margins and they won't be able to pass it on. that is muting inflation. kathleen: when will you get worried about this drop in inflation? robert: the reason i highlight the structural issue, and i have been talking about this for three years, for me, it means inflation is not running away away from us, it also, in my view, is not as susceptible to outside forces or monetary policy. we just have to take that into account. we just got done talking about corporate debt. i think we are just going to have to monitor this very
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carefully. i am not inclined, at this point, to lower the fed funds rate to address it, and i'm not sure lowering the fed funds rate -- that is more effective dealing with the cyclical elements of inflation. i'm less convinced it deals with the structural elements, so i am still of the view -- i could change my mind, but for the time being, i would stand pat. >> the u.s. economy is in a good place. we had a strong first quarter. looking throughout the rest of the year, the fed views economic growth this year as coming in around 2%, perhaps a little bit above that, depending on where the data breaks. in terms of inflation, inflation has been running on the soft side, recently. we think there are some temporary factors to at least some of that, so our baseline view is that inflation will begin to move up towards the 2% objective, but we are certainly looking at the data closely. >> markets seem confident that
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2.5% is now a terminal rate, and are they correct? richard: well, again, that is one view in markets, and again, the data can break either way. it can surprise on the upside or the downside. what i would say is that we think the u.s. economy and monetary policy is in a good place right now. our focus is in sustaining maximum employment and price stability. we don't see a strong case to move rates in either direction, but, of course, as data comes, we will always be looking for indications on that. kailey: while financial markets whipsawed on trade concerns this week, many top investors gathered in las vegas. erik schatzker spoke exclusively with several of the most prominent attendees, including billionaire real estate market sam zell, who explained why he prefers active investing to a passive approach. sam: the theory of passive investing is that, when it's all
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said and done, you have no reason to believe that you can do better than the average. the etf approach or the passive approach is to try and replicate average. all of which is fine. erik: what's your specific concern? sam: but until, all of a sudden, all these passive energies started adopting corporate governance criteria, which is hardly a passive act -- erik: so corporate governance is an active approach? sam: without question. erik: so you think there's a discontinuity or conflict, if you will, between active corporate governance and passive ownership? sam: one of the reasons being that they pay dividends, they have a disproportionate ownership by passive investors.
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i don't know the answer, but i wouldn't be surprised if 15%, 18% of all of the -- are owned by passive investors. do we want to ask those passive investors what corporate governance should or shouldn't be? do we want people who are investing solely to do as well as everybody else but not better passing judgment? erik: so what do you want the blackrock's and vanguard's and state streets and other index managers to do? sam: i think they should do exactly what they say they are. they should be passive. i think they should vote the same way as the majority of the shareholders. this is not a management issue at all. this is strictly -- erik: in other words, let the active investors speak. sam: let the active investors speak. they are the active investors.
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i'm a passive investor. i should go along with whatever is resolved. erik: this is the biggest week for issuance, new issuance, in months. what does it say to you that so much debt is coming to market? >> there's a lot of people in the market. there are so many different types of investors who are desperate for yield right now, and we went through a period in december where there was zero new issuance. rates are down. the fed said it was going to keep rates down, and rates, globally, are down. there's a contest with a lot of investable capital looking for yield, so issuers take advantage of that. erik: there's not much yield in the investment-grade market. josh: there's more in the investment-grade market in the u.s. than in most non-us markets. this allows issuers to push the boundaries of behavior in terms of what kind of covenants and protections they offer to investors. erik: that is certainly something you see in your corner of the credit market.
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one of the most recent features to emerge in the collateral -- excuse me, covenant light world, is what i've chosen to call collateral light. the expressed opportunity or rights written into loan documents for sponsors, backers of leveraged buyouts, to be able to take collateral out from underneath the loan. josh: there is how you behave versus other buy side people, and whether those fighting for the scraps of food on the table are scratching each other. then, you have these difficult issues like how cds is triggered. you get issuers that have problems, and they become much, much more aggressive and how they behave toward creditors, because they know they can because creditors need something to invest in, and there's another batch of them around the corner. those are, sometimes, pushing the limits, in my opinion, of behavior that we might necessarily be involved in.
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however, when the market is willing to accept low covenants, to me, that is establishing what limits of the playing field, and it might make the whole negotiation more interesting, not less interesting, and at a time when there's a credit problem. kailey: here's more exclusive insight from a leading voice on wall street. steve eisman famously foresaw the collapse of the subprime mortgages before the 2008 financial crisis, which was chronicled in the book and movie "the big short." he joined us to share his thoughts on what he sees coming for markets. >> do you see anything in the recesses of the financial industry which worries you? steve: i don't. let me give you a statistic. precrisis, citigroup was leveraged 33-1. if you add in all of the balance sheet stuff they also had, it was probably in excess of 40-1. by 2016, it is levered 10-1.
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that's the difference from mercury to pluto. i would say that, by 2016, for the first time in all the years i've covered financials, i can say the financial system of the united states is safe. that doesn't mean we won't have a recession, and in a recession, i think there will be massive losses in the bond markets because of the lack of liquidity, but that will be the problem of the people investing in the bond markets. it's not a systemic problem. it's not a bank problem. rishaad: people don't really know what's going to hit them next when it comes to financial crises. that's the thing. steve: i want to be very clear, there is not a financial crisis. in the recession, people will lose money, and where they will lose money will be in the bond markets because they're so much less liquidity, it is harder to clear pricing, so you will see big losses and things like triple b corporate debt, high yield, but you need a recession first. the financial crisis -- what wall street did precrisis caused the financial crisis.
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corporate debt is not going to cause the next recession. it is where the pain will be in the next recession. it's a subtle difference, but it's an important point. ♪
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♪ kailey: this is "bloomberg best." i'm kailey leinz. let's resume our global tour of the week's top business stories ♪ in europe, where a new economic forecast contained more downbeat predictions for growth in the region. david: the european commission's spring report came out a short time ago, in which it cut its german gdp forecast to .5%, trimmed its euro area gdp forecast to 1.2%, and said that risks from trade and brexit remain "pronounced." >> the forecast the commission put forth today shows that the slowdown is temporary.
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germany is expected to have a pronounced recovery already next year from the low growth that is projected for 2019. we must act politically, take decisions very quickly on issues that have been accumulating in the last 1-2 years already, and we have certainly given the expectation for a better second semester. francine: iran says it will no longer comply with some parts of the nuclear deal. it has given the other signatories to the agreement 60 days to fulfill their commitments. this is in response to the u.s. increasing economic pressure earlier this month when it let oil waivers expire. does it mean iran will automatically go to uranium enrichment?
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>> no. it doesn't. not yet. iran is espousing a gradual policy. what they are doing now is stopping a couple things they've committed to as part of this agreement, and they are saying that what they want is for the europeans -- this is clearly aimed at the europeans, because americans have already left the agreement, saying that in the next 60 days, we want to see something from the europeans that shows us that it is worth staying in. then, they said, they will remove the limits on enrichment, and essentially, would be the beginning of the end of the agreement. >> occidental has escalated the bidding war for anadarko, increasing the cash portion of its bid to 78%, bearing the burden of the $1 billion breakup for abandoning the deal with chevron. this heftier proposal comes just hours after occidental struck a deal to offload nearly $9
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million of anadarko's african assets. at this stage, anadarko is still not saying we are in. how much further do they have to go to get this deal done? >> they say they will review it. occidental went pretty far this time around, 50-50, now 78% cash, giving them the right to bypass shareholder approval. they can go for it. and at the same time, they are bringing in totale, bringing in billions of dollars of these african assets. it makes sense. paul: anadarko petroleum has declared occidental's sweetened $38 billion takeover superior, allowing chevron to either boost or walk away with a $1 million breakup fee. >> anadarko's board has voted to move forward. we know that chevron and the ceo are committed to staying on the message of discipline, but now i think we are seeing that nothing can be predicted. we have seen all sorts of twists
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and turns. it is too early to say if chevron will come back. alix: chevron is taking a $1 billion breakup fee and will not raise their bid for anadarko, and instead, they will be putting it in buybacks, seeing more value in buying back its own shares than making another bid for anadarko. buybacks increased by 25% to $5 million per year. >> this is a win for chevron and for our shareholders. we came out of the deal with $1 billion, and we will return that back to our shareholders with a higher buyback. winning in any environment doesn't mean winning at any cost. in a commodity business, costs and capital discipline always matter. an increased offer would have eroded value to our shareholder and diminished returns in our capital. this was a good opportunity, but it wasn't a necessity for chevron, and we are not desperate to do a deal. we came out of this feeling very good. joe: watchers are on omaha over the weekend for berkshire hathaway's annual meeting.
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billionaire investor warren buffett found himself in an unusual position, answering questions about whether a change in approach is needed after bets on amazon and kraft heinz. we got news at the end of last week about amazon being a holding, it was one of the deputies who bought it, but in your view, does this represent some sort of drift from the berkshire style of investing, or are we just in a world where you could plausibly say that something about amazon can arguably fit in at berkshire? >> it's the latter. it is now a 20-year-old company. it is still doing interesting things, and jeff bezos is an innovative guy, but the track record is clear. those guys can now probably patent those cash flows with a reasonable degree of certainty and form a judgment that they can pay less than it's worth. alix: conflicting signals from the bond market. it was the weakest demand in a decade for the 10-year auction yesterday.
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then, the corporate debt markets had the busiest week and eight months. another $19 million sale. what is your take away? >> from the corporate side, they are looking at extraordinarily low yields, and a chance to raise some capital. if you look at where they could do it now versus last year, just 12 months ago, it is radically lower from the financial side. i think i can see the motivation coming from the corporate sector to do that. on the demand side, you have investors also reeling from relatively low yields on their high quality portfolios, trying to add a little more return. you can see where the demand is going away from the highest quality, a little bit, in part because it just doesn't give you as much. that is what we are seeing on both sides of the equation. vonnie: a former goldman sachs
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banker has been extradited from malaysia to the united states to face charges linked to the 1mdb state investment fund scandal. what's the outlook? >> this is the latest twist in the 1mdb case. he has already been arrested in malaysia, but now that he is coming to the u.s., this gives the doj a lot more firepower. we are still awaiting details, and we are still trying to figure out what were the terms of extradition. is there going to be bail, will they get him to plead guilty, but the bottom line is this is good for the doj and not for goldman. caroline: the turkish lira is falling against the dollar. turkey's highest electoral body nullifying the election results, calling for a new vote. let's put this in perspective, because there's a key level the turkish lira fell below, pretty key to sentiment. >> we saw the 50 day, 200 day
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golden cross get breached, but at the end of the day, it's just about credibility and confidence in the turkish government. it is fleeting right now. this is something we've been calling for for some time. offshore creditors need to see a little more give-and-take between erdogan and what is going on in the market. by calling for new elections, this is what's rattling markets. we have seen the lira blow through 600. i think they are at 610 basis points. these are key levels that put it on par with places like nigeria, pakistan. real troubled frontier market economy. turkey has their work cut out for them to put themselves in the right place with offshore creditors right now. >> china's mobile bid to provide phone service in the u.s., rejected today by regulators who cited national security concerns about the companies controlled by beijing adds friction to trade relations between the world's biggest economies. was this a shock?
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>> to me, after seeing this, this may have been the least surprising thing i've read this week. a chinese carrier, china mobile, amid trade discussions, amid everything going on between the u.s. and china, trying to break into the u.s. market to become a telecom provider, there was no way this was going to happen in this climate. i don't find this surprising one bit. francine: the rand gained for a third day after the african national congress looks on track for a convincing win in national elections. according to a prediction, the anc is said to win over 55% of the vote. what does it mean for the president and his reform agenda? >> a strong mandate for the president, who took over last year, would give him the strength within his party to make a lot of unpopular decisions, cleaning up the state owned enterprises which have far too many staff and large debts,
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appointing his own cabinet with people he trusts to implement his agenda, and tackling the scandal tainted officials who are still in government and are relics of the zuma era. ♪
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♪ caroline: i want to draw our viewers to the bloomberg terminal, to tliv. which really is a blog about earnings. we have it going fast, saying that they are spending very heavily before interest tax appreciation. kailey: there are about 30,000 functions on the bloomberg, and we always enjoy showing you our favorites on bloomberg television. maybe they will become your favorites. here's another function you'll find useful, ipo . it will give you detailed information on initial public
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offerings, past and present, from around the world, including this week's highly anticipated debut by uber. the ride-hailing company began trading on friday, and we spoke with the ceo on the floor of the new york stock exchange. emily: you were on the road, and the price dropped to the lower end of the range, lower than what your bankers had floated at least a couple months ago. what were investors responding to? what were they telling you? >> there was a group of investors that absolutely loved the story, the platform story, our transportation as a service platform, a $12 trillion market play, but i think how hard it is to execute on that vision, how expensive it is, how capital-intensive it is, those are all challenges. i think, the good news about the road is we found a set of investors who are long-term oriented, who believe in our vision, and now we have to execute to make sure the bet they made on us is for the best.
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emily: you have compared the company to amazon. you have some investors who think it might be more like an ebay. there are questions about how big the ride-hailing market can be. how do you deliver on the amazon promise? got to execute. and when you think about what amazon did, they went beyond the bookseller to other categories of retail. we are doing the same thing. rides are to us what books were to amazon, and we are expanding beyond rides into eats and other aspects. as we expand each category, we expand our audience all around the world. emily: lyft has struggled. how much have you been following that, and how much does that impact the pricing today and the sentiment we are feeling? dara: i think there is certainly some effect. they are a very different company. we are the global player. we are the category leader, and we are getting into a number of different transportation categories.
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while we don't think we are a direct conflict, certainly some people look at it. they have gone through a tough opening, but i think that for both companies going after car ownership, de-bundling all of these cars, takes an enormous market, and long-term i believe they can succeed and we can. emily: lyft says this is their peak spending year. when do you think you are going to get losses below $1 billion per year? dara: we haven't been specific about losses one way or the other, but we have plenty of markets that are contribution margin positive. i think that, going forward, we can grow the business and improve margins. kailey: you can find much more information at ipo on the bloomberg. you can also find it at, along with all the latest business news and analysis, 24 hours a day. can grow the business and improve margins. that will be all for "bloomberg best" this week. thanks for watching. i'm kailey leinz. this is bloomberg.
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jason: welcome to "bloomberg: businessweek." i'm jason kelley. joining you from bloomberg headquarters in new york. how boeing has focused on the bottom line, sent the company into a tailspin. the company and the decisions that led to the current crisis. flipping homes has proved


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