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tv   Bloomberg Daybreak Americas  Bloomberg  May 24, 2019 7:00am-9:00am EDT

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a im today announcing that i will resign as leader of the conservative and unionist party. david: prime minister may will leave june 7 without getting the brexit she sought. investors brace for what is next. global markets calm down today after running away from risk yesterday as investors come to term with a possible long-term trade standoff. opening the door a crack. president trump says huawei poses a danger to the united states, but an overall trade deal might take care of that problem. we talk about whether this move could reignite the dormant trade talks. "elcome to "bloomberg daybreak on this friday, may 2 any fourth. i'm david -- may 24. i'm david westin, here with lisa abramowicz. alix steel is off. you have to feel a little badly
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for her. she had one job, and it was an impossible job, perhaps. you can see in her face. lisa: she said, "a matter of deep regret." if we want to take a look at markets more broadly, there is a sigh of relief that there isn't another escalation of the trade war, with a little bit of a reprieve yesterday after a very ugly session. em currencies getting a bid and crude getting a bid after what was the worst day of 2019. david: it is time now for bloomberg first take. we are joined by sarah ponczek and marty schenker. we have to start with theresa may and a short look back on her tenure as prime minister. pm may: her majesty the queen has asked me to form a new government, and i accepted. do we have a plan for brexit? we do. united kingdom's permanent representative to the eu handed a letter to the president of the
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european council on my behalf confirming the government's decision to invoke article 50 of the treaty on european union. brexit does mean brexit. there shall be no general election until 2020. we need a general election now. every vote for me as a vote for strong and stable leadership. strong and stable leadership. i am working to get a deal that parliament will support. i've reached a deal with the leaders of the other 27 eu members states. it is clear that the house does not support this deal. we are now at the moment of decision. i fear we are reaching the limits of this process in the house. we will now not leave on time with a deal on the 29th of march. it is slipping away from us. we risk losing a great opportunity. i will shortly leave the job that has been the honor of my life to hold. , butso with no ill will with enormous and enduring gratitude to have had the
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opportunity to serve the country i love. can't get thatou without thinking she gave it her all. marty: she gave it her all, and maybe it would have been better to just run that tape rather than have the last two years of brexit. [laughter] lisa: harsh. marty: we could have saved ourselves a lot of grief. but she's obviously very emotional. she tried her best come about her leadership just didn't cut it. the question is whose leadership will? david: and where will lily lead? -- where will they lead? does this increase the chances of having a brexit without an agreement? marty: the reading in our top live blog is basically that the chances for a new deal brexit increase. obviously a lot of talk centered around boris johnson, who is a brexit hardliner. the question really is have any of the circumstances fundamentally changed from
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yesterday or from two years from now? dividedstill is sharply on what they want and how they want to get there. unless some leader emerges with some brilliant idea, i think we are going to be going through this again. lisa: this is so interesting to me because markets are basically saying they think that this possibly could be a more optimistic scenario. you see a little bit of a selloff in u.k. 10 year yields. you see the pound catching a bid versus the dollar. this seems to indicate that traders think there is a greater chance for a second referendum, not a hard brexit. try to square this with what we are hearing. sarah: that is one way to look at it. i got an email from a trader that said i wouldn't expect this to last much longer. enjoy the relief rally while we can. the pound just fell 14 straight days against the euro, it's worst losing streak ever, so this wasn't really unexpected.
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however, those i speak with on the trading front are saying this does bring no deal back under the table potentially, and we are probably just going to see more volatility, as if that is anything new. lisa: it is so strange because a relief rally, for what? relief from what? meanwhile, this uncertainty you are talking about has been pervasive throughout the week. hitting their lowest levels since 2017. some strategists saying they are expecting yields to go down to 2% in the next few months. sarah, there is a question. how much of this is driven by the global low yield environment we are in, and how much is it being driven by true fears of recession globally in light of the trade war? sarah: it is really difficult to quantify the impact exactly. you have to take into
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account that yields are extremely net low or negative around the world, so we do see more demand in the united states. however, we really saw this exacerbated when everything started coming out on the trade front, yesterday when we got the week pmi data. those onspeak with bonds right now, you look at the treasury market and it is telling you a story of potentially recession odds, or at least lower global growth, which we are facing. they are looking at everything happening with trade and saying this could really dent growth, especially in the u.s.. it is a different story than what we are seeing in the equity world, but you have to take the divergence into account. david: if you look at the chip stocks, we can show on a chart how they have really gotten clobbered. it can't be a coincidence. marty: it is not a coincidence. we talked yesterday about the
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g20 and the fact that donald trump and xi are going to meet. there's a lot of expectation that there will be some breakthrough on trade. i think the likelihood is just as easily that there won't be, and then there's $300 billion more tariffs on chinese goods, and that will really hurt the economy and consumers. draw ind that monthly sox is the worst drop since 2008. david: a monumental year. lisa: there you go. david: sticking with the subject, it has been pretty glum only trade front, except president trump yesterday may be opened the door just a crack. listen to what he had to say. it was interesting. pres. trump: huawei is something that is very dangerous. you look at what they've done from a security and military standpoint, it is very dangerous. it is possible that huawei would be included in some kind of a trade deal. if we made a deal, i can imagine huawei possibly being included
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in some part of a trade deal. david: let's put aside why it is less dangerous if it is part of a trade deal. let's put that aside to a moment, if we can. is this the president trying to reach out a little bit with an olive branch in advance of that g20 meeting? marty: my reading of the body language of the president there was that he was basically freelancing. i don't think that that was a result of a carefully considered strategy he has on trade. somebody asked him a question about huawei, and he gave an off-the-cuff answer. the markets, if they are trading off of those comments, good luck. lisa: honestly, good luck in general because they have been trading off of a lot of comments and tweets. today's noteder, of optimism does seem like the -- does seem like it came off of that more than anything else. sarah: we have constantly seen the market coming off of those comments, whatever it may
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be. we can look at the optimism today. maybe some investors are saying at least we know if we do get a deal, huawei will be a part of it. that will help u.s. chip companies, companies in the u.s. that do business with huawei. at the same time, we saw a pretty steep decline yesterday, and now we are seeing a bit of a comeback. david: sarah ponczek and marty schenker, thank you for being with us. coming up later on in this half-hour, we are talking to the chinese ambassador to the united states. he will be here with us come alive in studio. on monday we have an exclusive interview with the ceo of huawei , the chinese company at the center of the trade dispute. we look forward to hearing from both of those people. and they are trying to raise money right now at a time when investors are selling debt. it will be very interesting. david: and his daughter is in jail in western canada, the cfo
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of huawei. under house arrest. she is in detention in western canada. lisa: that is going to be an interesting interview. u.k. primemore on minister theresa may's recognition -- theresa may's resignation and its impact. this is bloomberg. ♪
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david: earlier today, british prime minister theresa may stepped on camera outside 10 downing street and made it official. pm may: it is now clear to me that it is in the best interest of the country for a new prime minister to lead that effort. i am today announcing that i will resign as leader of the conservative and unionist party
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on friday, june 7, so that a successor can be chosen. david: and so begins the process for choosing a new tory leader and ultimately a new prime minister. we welcome now on the telephone the paris-based senior fellow of u.k. initiative. has she advanced the ball on brexit at all? whoever inherits this, do they have a direction they are going with brexit, or are they starting from scratch? guest: the answer to that question is yes, they have a direction to go, but they are starting from scratch. they can't go in any particular direction. the only thing that parliament has voted on with a majority is to say that they don't want a no deal brexit. the only thing that a future prime minister could hold out and say i am going to do differently from theresa may is a no deal brexit.
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a withdrawal agreement has been negotiated. it was negotiated by the european union with the legitimate british government. is nowthdrawal agreement open for renegotiation. so they aren't starting from scratch in that sense, but politically within the united kingdom and within parliament, they have to start from scratch because everything they have done has not worked. lisa: the interesting thing i hear from you is that a no deal brexit seems to be more on the table because that was the only thing that wasn't an option for her, so perhaps it could be an option now. do you think this materially increases the chances of that hard brexit? nicholas: i can't see that for two reasons. the first is that parliament, the only thing that parliament has a majority for is not to have a no deal brexit. minister woulde
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have to defy the will of parliament and the only majority they have been able to achieve on this whole brexit question. the second reason i don't see a no deal brexit is that the now recognized, in contrast to three years ago, as disastrous for the united kingdom. there would be no political advantage to a prime minister to put britain in a position where economists, politicians, analysts, say that the united kingdom would come out considerably weaker. my conclusion is that we are going to have this uncertainty. the one thing we can be uncertain -- we can be certain about is uncertainty. it is going to last a very long time. macron, who has called for getting brexit out of the way for the progress of the european union, will have the thorn in his side for a long time.
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david: there is a bit of a relief rally right now. from what you say, that might be misguided because the one thing business and investors want is certainty. as you say, we are not any closer to certainty. nicholas: the relief rally, you and i know that markets move on short term sentiment, not on long-term historical trends. rallyuently, the relief is not seeing that theresa may has taken the decision to do what we've been expecting her to do. it is the relief from that uncertainty. in terms of the long-term uncertainty, her resignation actually increases the larger -- largerand he uncertainty even though it may provide a little relief in the short-term. david: really appreciate you being with us. oft is nicholas dungan
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the atlantic council. let's talk to jordan rochester in new york. guest: before i came on set, i did a piece yesterday that this is a classic buy the rumor relief rally. over may going away, sterling has been the under performer of the month in the g10 space and across most major currencies. it has outstripped the selloff in china thanks to the trade wars. there is a lot of positioning and what we call the fast money space. the rumor, sell the facts. gains, to lock in those but i think ahead of what is going to happen now, next week is a very quiet week for u.k.
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data, and we are going to start to see the leadership campaign pickup even though theresa may has not yet formally started that. that comes when she does resign on june 7, so we will see a lot of posturing. those leadership candidates for the conservative party will only have a chance of winning that leadership contest if they go to the right of center and try to offset the brexit party's view of a no deal brexit. you're going to see folks coming out saying they want to renegotiate the eu and really emphasize it a lot more than theresa may did. let's put brexit to the side. the biggest threat really is the chance of an election because yes, there is the brexit threat, but parliament would stop it. so therefore, how does a hard brexiteer get hard brexit? they call an election. the risks i find are the leadership contest getting pretty ugly, the data won't bounce.
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the bank of england won't get any more hawkish than they already are. i am usually one of the folks who come on here and talk about the reasons for sterling upside, which is the balance of payments looking healthier, but i am running out of positive reasons to talk about sterling upside. we are seeing short-term profit taking, and sterling will probably carry on and make new lows as we go into that contest. we've got another two months before we find out he was the new prime minister. david: jordan, thanks so much. you're going to be staying with us. we want to talk about what is going on for the bond market, and oil as well. this is bloomberg. ♪
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lisa: bonds very much and focus. 10 year treasury yields hovering sinced the lowest 2017.
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inflation targeting has proved to be very difficult. a myriad of macro and geopolitical risks remain. momentum in this market is in favor of the bulls. still with us from london is jordan rochester of navarra. -- of nomura. do you agree? jordan: i do. essentially, a bunch of folks think that the data is taking a turn for the worse. i look at how china feeds into this, too. we saw a big slowdown in china and a recent bounce back. indicates that the pmi was correct. it should go lower, and perhaps the ism as well should continue its slide. isin, u.s. treasury 10 year just much more attractive than buying the bund where liquidity is pretty bad, the carry is
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dreadful. that is where the world is going , slow down in the u.s., china and europe. in every g10 economy, i am struggling to find a positive story. if we the trade wars, expect quite a negative situation, which is tariffs across the board for most imports from china into the u.s., that is going to drag on growth. it is going to have a short term inflation impact to the high side. long-term, that means it is much harder for the fed to raise rates. the market is pricing fed cuts. we don't think they cut anywhere near as much as the market prices, but things aren't looking good. it is pretty gloomy. david: let me try to push you into positives, if we can. [laughter] what isf you look at really going on, we hear from a lot of people that the u.s. economy is fundamentally sound. you may have some pmi softness, but as you look at a lot of indicators, it is really going along quite well. the consumers are any good
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space. china growth has stabilized, it appears. it is not trailing off. how much of that is the possibility that the market is ahead of itself, anticipating what is going to come? jordan: i don't think the market is ahead of itself in terms of direction. in terms of the aggressiveness of the fed pricing, i do agree it is a bit too aggressive. you've got something like 45 basis point of cuts over the next year. when the fed does cut, it tends points. in 50 basis in terms of getting ahead of itself, no. growth is solid now, the market data is solid now, but every forward indicator globally are all pointing south. so i don't think the market has got ahead of itself. lisa: real quick i want to bring up the r word, recession. we are looking at a fed funds
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rate which just rose above what we are seeing in the 10 year yield in the u.s. do you think we should be paying attention to this as a recession signal in the way that it has in the past? jordan: absolutely should pay attention to it. that's what everyone focuses on. when they do invert the treasury curve, it has always been an indicator of a recession in the next year or two. it has not yet inverted. it is painfully range bound, but nearly inverted. you are are witty seeing -- you are already seeing recession trades playing out. is not sold off that much if you think back to december, but folks aren't very optimistic on growth, so you will see equities come under pressure as well. definitely keep an eye on the yield curve. david: have we ever seen a
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recession when central banks have been this accommodative? well, we are in a new world. we have seen it if you think back to the euro crisis, but that was driven by a credit event. central banks were very accommodative at that time. ecbecb at self -- the itself wasn't as accommodative as it is now, and the fed isn't. david: jordan, thank you so much. jordan rochester of nomura will be staying with us. coming up, we talked with the chinese ambassador to the united , right heretiankai in studio. this is bloomberg. udio. this is bloomberg.
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a little bit of a breather after a brutal session yesterday. let's get a sense of what is going on across assets. you've got a similar kind of trade going on, but it is meager. this is not a huge relief rally. you've got commodities trying to get a lift after yesterday's awful session. the dollar gaining a touch against the yen. david: now we turn to viviana hurtado, who is here with first word news. viviana: british prime minister theresa may is stepping down on june 7. she will leave her successor with the job she couldn't finish, finding a consensus in parliament on how to leave the european union. pm may: i will shortly leave the job that has been the honor of my life to hold. the second female prime minister, but certainly not the last. , butso with no ill will with enormous and enduring gratitude to have had the opportunity to serve the country
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i love. viviana: and emotional prime minister there. until a stay on successor is chosen. president donald trump may employ a rarely used maneuver to clear arms sales to saudi arabia despite congressional opposition. declarenistration could an emergency requires sales to go through immediately. congress wants the saudis held accountable for the murder of journalist jamal khashoggi and emen'seir role in y civil war. concern that huawei is helping the chinese government with espionage. on monday we will talk about the huawei blacklist in an exclusive interview with the company's ceo at six clock p.m. new york time
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-- at 6:00 p.m. new york time here on bloomberg tv. 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 viviana hurtado. this is bloomberg. david: thank you so much. president trump has now at least opened the door for a possible resolution of the huawei dispute. pres. trump: huawei is something that is very dangerous. you look at what they've done from a security standpoint, from a military standpoint, it is very dangerous. it is possible that huawei would even be included in some kind of a trade deal. if we made a deal, i could imagine while possibly being included in some part of a trade deal. david: for a sense of whether this might provide a way forward, we welcome now the chinese abbasid to the united states, his excellency -- chinese ambassador to the united cy cui, his excellen tiankai. when you listen to something like that, is that possibly a
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crack open in the door to resolve the set of disputes? amb. tiankai: i think what is happening to huawei is rather unusual. thesee the mobilization of state power against the private company. what are people really up to under the pretext of national security? we don't know. stop to really technological progress? can they really deprive people of their right to benefit from new technologies? i don't think so. and do they really have the interest of the american people in mind? i don't think so either. for the trade talks between china and the united states, i think these talks have to be based on mutual respect and aim for mutual benefit. it has to be a balanced approach. david: one of the things you said is huawei is a private
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company. that is an issue of some contention. there are allegations that there is ownership from the chinese military in huawei. from the chinese government's perspective, is that inaccurate? amb. tiankai: this is a groundless suspicion. people never come up with any evidence. huawei is owned by its own staff. it is really a privately owned and held company. it has been there for so many years. lisa: one thing that i am struck by is there is a great deal of uncertainty about how the trade talks they resolve, but the businesses in china have reduced their investments in the u.s. dramatically. i am wondering how much their attitude toward the united states has changed that is perhaps irreversible in the short term. amb. tiankai: i think that the uncertainty about the trade talks between our two countries is very much a result of the
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frequent change of position by the u.s. side. we have been consistent all along, but they have changed their mind overnight so often. as for chinese investment in the united states, there is such enthusiasm among chinese business to make investment here , but they are facing increasing restrictions. a lot of barriers have been raised against them. i don't know why. david: you talk about the united states government changing his position. the reports out of the united states side was that what broke down the talks most recently is that the chinese delegation came back and marked up a draft, and took out and changed language and changed its position. what do you think led to the breakdown in the talks? amb. tiankai: you see, the talks have been going on for quite a few months, and of course there is naturally discussion of all the issues, a back-and-forth
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exchange of views. everything was in the process. there was no agreement yet. but if we look back what happened last year, for instance, in may last year we did have some agreement. the two sides even issued a joint statement. then there was a change of mind on the u.s. side overnight. lisa: does china believe it could win a technology war with the united states? amb. tiankai: we should not have technological war with each other. we should have cooperation and collaboration between us. lisa: what about a trade war? amb. tiankai: i never believe that a trade war is a good thing. and yet, as the united states has put tariffs on a much china has felt the need to respond with tariffs. we have not yet had a response other than language to the huawei situation.
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amb. tiankai: we will do whatever is necessary to protect the legitimate interests of our companies, of our people, and our country. david: and what might that be, sir? amb. tiankai: we will just wait and see. [laughter] david: when would we find out? amb. tiankai: we will see. if things are moving in the wrong direction, then you could see a response very soon. if we could work together in the right direction, then things will get better, of course. lisa: do you think that things have materially deteriorated in the past two weeks, making it much less optimistic for a trade deal? amb. tiankai: we still believe that communication and consultation is the only way out for any disputes between us. we are still committed to that. lisa: do you think that president trump has proved to be a reliable enough actor for china to deal with?
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amb. tiankai: we are ready to deal with the current administration and president trump, and for the last couple of years we have made good progress. david: when you talk about talks, at what level? vice premier our trade abbasid are taken it -- our trade ambassador taken it to that level? amb. tiankai: we want to be able to conclude that work and present the outcome to the two heads of state. of course, the presidents always provide guidance to the relation. lisa: is china doing everything it can to de-escalate the situation with north korea? amb. tiankai: over the years we have made a great deal of effort
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to cool down the situation on the korean peninsula and make real progress towards the goal of denuclearization. we feel encouraged that president trump met with chairman kim twice. we will do whatever we can to help them make further progress. david: do you expect president xi and president trump to meet in osaka at the g20? if so, do you think the teams will have moved far enough along to get to a tentative deal at that time, or will it take longer than that? amb. tiankai: so far there is no official discussion about possible meetings between the two presidents, but the possibility is always open. lisa: so what is your message right now to the united states? amb. tiankai: our message to the united states is very clear. we want to establish a good relationship with the united states based on coordination, cooperation, and stability. are areas forre
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cooperation, so we should expand for mutual benefit, but of course there are always differences between us. we should manage them on the basis of mutual respect. david: in a very broad sense, china has been a remarkable success story. i don't think in the history of the world you have seen a country come that far, that fast. does the chinese government agreed that the situation between the united states and china must be revised? the relationship between a country that is really small and struggling is very different from what we have now in a large world power. is it time to reset the terms of trade between the two countries? amb. tiankai: china has made remarkable progress over the last few decades, mainly because of our own hard work, but this is also possible because of our cooperation with other countries, including the united states. we don't believe china can develop and prosper in isolation.
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we want to remain open and seek more cooperation with others. hopefully doors will not be shut on us. david: thank you very much, your excellency. we are glad to have you here. , chinese andiankai to the united states. lisa: with us still is jordan rochester of nomura, focusing on how markets react. do you see the likelihood of some sort of resolution in the near term between the u.s. and china is getting dimmer? jordan: it is dim. it can maybe get a bit dimmer, but it is already pretty dim in terms of market sentiment. we have seen selloff already from reaction to that trump tweet. in terms of what would see the market changes views, things get worse before they get better, so imagine the s&p selling off another 5%. remember in october last year, president trump suddenly had a phone call with xi jinping about
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trade talks, and that gave a bit of short-term boost to sentiment. i think that is what we might see if this continues. the u.s. may give some tones that sound a bit warmer to help markets glide through this. ultimately, demands from the u.s. side are pretty large. this is a pretty odd trade negotiation where things have gotten worse during talks. they have escalated. usually things get better as they go on, and they take years, usually. the best we can hope for is the u.s. puts a pause on the tariffs going ahead in july, and hopefully that g20 summit we see that pause, but our view is that demand from the u.s. is so large it is likely those tariffs will go into effect. so it is quite risk negative. i think the remember -- i think the renminbis will continue to
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underperform. it will be a bit more of a slow grind. there's a bit of pressure. it will take up some of the longs we have seen in the fast money space, but ultimately the trend is for further weakness. lisa: thank you so much. david: on monday, we have lots more on the trade relationship with an exclusive interview with the ceo of huawei, the chinese company now at the center of the united states trade dispute, one that their ambassador just said is most unusual. lisa: that is going to be interesting. how do you present yourself as a private company when you are at the center of the biggest trade dispute of our time? david: in the united states and china fundamentally -- and the united states and china fundamentally disagree on the facts. is u.s. believes huawei controlled by the military, and china says that is not true at all. lisa: how do you negotiate with
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creditors trying to borrow money and operate as a company? david: it is a fascinating story. we will have that important interview monday. we will stay with china, and that is trying to sell a megayacht to chinese billionaires. you may want to rethink that if that is your job. we will look at why the chinese staple of thehe wealthy. this is bloomberg. ♪
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viviana: this is "bloomberg daybreak." coming up in the next hour, gary managemento global senior managing investor. ♪ viviana: this is "bloomberg daybreak."
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asset manager legg mason is streamlining its executive committee. the job cuts come just days after the firm added an investor to its board, whose firm acquired a stake in legg mason. he's pushed for cost reduction. the first major hollywood agency to announce plans to go public, filing for an ipo. it is the firm led by ari emmanuelle. endeavor runs sport leagues and fashion events. facebook purging fake accounts at a record pace. the social network says in the first quarter, it took down 2.2 billion fake accounts. one point 5o pulled million posts promoting or engaging in drug and gun sales. a facebook executive says the company is tackling the issue on a global level. >> when i hear people asking questions about whether we are too big, i think a lot of them
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come from concerns about whether we are doing our part to be responsible. responsible about safety, about privacy. that is why we are doing things to show people we are being responsible. viviana: that is your bloomberg business flash. lisa: 2.2 billion accounts removed. that shows you the scope of how many accounts they actually have. david: the bad news is they had 2.2 billion fake accounts. lisa: absolutely. amazing story. we turn now to businessweek, where we profile stories from the most recent issue of "bloomberg businessweek." secrecy was in samsung come up with the chairman incapacitated since 2014. no one knows what will happen with the country's wealthiest man, as well as his heirs. joining us now is the cohost of "businessweek" carol massar. good morning. david: we start off with marc benioff.
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impetuous, but successfully impetuous. this is a lovely story. apparently he spent about $7.5 million on this, and he seems to like it. he likes all things hawaiian. fast-forward, and some experts are concerned about the promenade. they think it might just be a $5,000. lisa: what i thought was interesting is the diffidence -- is the dissonance between this failure and a lot of his successes. carol: this is a company that thateen around for decades is selling more like a younger tech startup. he tends to trust his gut. he will have a meeting with a
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partner, and all he is like i want to buy you guys. to the prize -- to the surprise of his company sometimes, and to the of prize -- to the surprise of the partner. david: inarguable success. lisa: we also can't argue with wealth. we can wonder what is going to be the fate of the wealthiest man in south korea, the chair of samsung. we don't know whether he's alive or dead or what is going on with him. carol: he's been missing since 2014. he had a heart attack. there is an obsession in south korea about where he is. what is interesting is that his estate will have to deal with a whopping estate tax of about $7 billion upon knowledge of his death. his wealth is about $15.5 billion. the question is what they will have to selloff of that family
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wealth and what it will mean for their control over the samsung empire. you are talking about a $300 billion entity with many different moving parts. he only holds a certain amount of control, but a lot of that control has been in his great relationships with the various partners. his sons, not so much. david: let's talk about china and yachts. lisa: it is boating season. it is warmer. david: you would think they would be buying yachts, but they are not. china has minted more billionaires in the past decade than anywhere else in the world. they've been buying art and sports teams and other things, but not megayachts. these are 79 feet or more with a professional crew on board. president xi doesn't love show he wealth -- doesn't love showy wealth. he's had that major
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anticorruption campaign, and you can't really hide a got. -- hide a yacht. this is one thing they drew the line on. carol: i do a bit of boating, and if you have a crew, that is six people. so six of your closest family and friends. david: if you want to buy a nice apartment in monte carlo, that is your business. if you want a yacht, you can't hide it. carol: and some who do buy a yacht are parking it on other chores. david: many thanks to bloomberg's carol massar. check out the latest issue of "bloomberg businessweek" on the stands right now. coming up, we take a look at hollywood powerhouse endeavor's plans to go public. this is bloomberg. ♪
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david: it is everything you need in one sentence. ,ollywood, are you manual endeavor. toeavor is going public now do all of the things they are doing, which goes well past representing talent. lisa: what i think is interesting is in some ways this is unique because of the entertainment aspects. on the other hand, this falls exact into the script companies raising billions and billions of dollars in private markets before trying to cash in on public markets. this company has raised more than $4.6 billion in long-term debt, including from private equity companies. david: one of the things they had to warn about in their papers to go public was the packaging fee. they have a lawsuit against them by the talent they represent.
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if they lose that lawsuit it could affect profitability, so it draws back in the issue with writers and producers who are not happy right now with ari emmanuelle and his agency. lisa: maria sharapova, dwayne johnson, bobby flay. this is not a no-name place. david: we will go ahead and look forward to what we have coming next. we will talk about the markets ann and matthias -- with matthias from vanguard. this is bloomberg. ♪
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at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. ♪ pm may: i am today announcing that i will resign of the leader
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-- resign as the leader of the conservative and unionist party. david: theresa may makes it official she will leave office june 7, without getting the brexit deal she sought. markets calm down after running away from risk yesterday as investors come to term with a possible trade standoff. and president trump says that while way poses a danger to the -- that way way poses a danger danger toawei poses a the united states, but may be included in a trade deal. this is "bloomberg daybreak." theresa may made this announcement with such emotion, in tears. lisa: she failed, and she is leaving things arguably more uncertain, so really a lot of emotion. you have to think markets are trying to digest whether we are getting any closer to a non-hard brexit deal. david: let's go to our colleague anna edwards in london to talk
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about the aftermath now that we know that prime minister may is stepping down. what comes next? may was-anna: teresa famous for saying that phrase, "brexit means brexit," but we still don't really know what brexit means. june 7 she goes. june 10 we start a new leadership contest for the party and ae new prime minister for the united kingdom. that will take until the end of july. it is a two-stage process that starts asking the number of with askingand ends for the decision of the members of the conservative party, the people in the community who belong to the conservative party. they are known to be very pro-brexit, and they are known to not be averse to a no deal
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brexit. statements could move the market around no deal. lisa: in the meantime, is theresa may completely out of it when it comes to all negotiations, or sc -- or as she does this transition, will she be playing a role? anna: it seems the brexit process is kind of on hold right now. until the end of july, we will have a caretaker prime minister. interestingly, she is going to have to be that caretaker prime minister when president trump comes to visit. to some extent, all policymaking will be in limbo as the party tries to work out who is going to lead from here. president trump will becoming the first week of june. that is one of the reasons why we think she stayed on until june 7 because you obviously want to have some sitting prime minister when you get a visit from the president of the
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largest economy in the world. he has not always kept his thoughts to himself on the subject of u.k. leadership. perhaps he will weigh in on the competition, which will no doubt spice things up and add interest. david: such a good point. he has in the past expressed a view on boris johnson, who seems to be in the running. thanks to anna edwards, reporting outside number 10. lisa: the relief rally we were talking about earlier seems to be fading. joining us from pennsylvania is anne mathias, vanguard global rates and ethics strategist. do you expect the patent -- and ethics strategist -- and fx strategist. do you expect the pound to weaken further? anne: it seemed this morning there was a little bit of a sigh of relief, like sometimes in the markets when uncertainty clears a little bit, even if the outcome is more negative. you have a better pricing
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ability, so you had a little bit of a respite this morning, but things seem to be falling off again in the pound. this is not a great development. it is something we anticipated. theresa may had been hinting this for some time. there is a view it might come after this weekend's european elections. stepping aside now, it doesn't really change the dynamic. i think the outcome is still probably tilted a little further brexitmaybe not a hard definitively, but the odds of a hard brexit rising. but all of this is a political process. i think we have to remember that, that nothing is done that can't be undone yet. lisa: we are hearing from every side at this point. some people say this makes a hard brexit more certain, while some saying it takes that off the table. anne mathias of vanguard, you are sticking with us. let's give you a sense of what is happening in markets.
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there's a fading rally ahead of the u.s. open. 10 year yields down, so very much a safe haven kind of play. em currency catching a bid, but not as much as before. same story with oil. d massive bid into treasuries leaving markets to question just how low they can go, and why they are going there. >> we are into a new lower range because of geopolitical concerns around trade. >> this is all about trade at this point. that is starting to scare markets a little bit. >> the fear factor is rising. >> people get nervous when they start to see big declines. >> we don't want to overshoot in either direction. >> we are seeing a reflection in the bond market of the uncertainties. as long as those remain, we will see flow back between investors heading to safe havens such as bonds, and heading back to risk assets. >> i still think the more likely direction from here is because it is not really justified.
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with bonds where they are at the moment, we think equities are going to be bonds over a 24 month period. lisa: joining us now is sarah ponczek, bloomberg cross-ice it reporter. anne mathias -- cross asset reporter. anne mathias is still with us as well. do you think the 10 year yield is going lower? anne: i think between now and the end of june, they may bounce higher occasionally, like they started to yesterday night and this morning when there was a tiny bit of positive about trade coming out. trump made a statement that he would meet xi at the g20 meeting, and that was enough to send yields a different direction, but i think we will be bouncing around here for a while. there's a limit to how low you can go because you have the fed
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sitting on the fed funds rate, so the curve is s-shaped at this point. lisa: what is the limit? anne: i think probably the limit -- the two-year is about 2.14. i think the 10 year is maybe 2.35. it is hard for the 10 year to rally much further because the rest of the curve is holding. we were a little worried yesterday when we saw yields falling as much as they did, that prepayments would cause this to go down even further. it seems like we have stabilized this morning. a lot of the bad news on the trade front is already out, but i think it is going to be a bumpy road until the political process works its way out over the next few weeks. david: it is notdavid: just bonds that moved yesterday. it was also stocks.
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let's put up a chart right now because something came across the bloomberg late yesterday. basically, what it said is transport stocks have been taking a leg down, and maybe that indicates something about growth. sarah: you look at small caps, transport stocks, and semiconductors, those are seen as proxies for the u.s. economy. when you see these three areas taking the hardest hit, that doesn't really bode well for what some market watchers will take away from that. they will look at this and say if the most sensitive areas of the market are getting hit, maybe the rest will follow. these are leading indicators. we saw that in full force yesterday. when you see these areas of the market almost in a freefall on a day like yesterday. lisa: how much of this is just trade issues, and how much of
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these rallied earlier this year and are now cooling down now that a trade deal looks less certain? sarah: especially when you take into a type -- take into account semiconductor stocks. semiconductors really take a hit here. similar with small-cap stocks, last year small caps where the safe haven play when it comes to trade. now a lot of people are backtracking on that and saying maybe we saw small caps rally in early 2018 more so because of the tax-cut benefit. at the same time you think about the trickle-down effect. small caps are many time suppliers to large caps, so you can see that trickle-down. transport is an area you wouldn't think is so tied in with china. rather, that is the economical standpoint. david: this is a really great point lisa is making. what about the bond side? it looks like the trade dispute is going on longer than we thought. it is not that material in terms
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of the global economy, much less the u.s. economy. have we really decided that the trade issue could drive the economy that much, or were people nervous about growth to begin with and this is an excuse? anne: i think the former. what happened yesterday in the markets was right when the market manufacturing pmi came out very negative. there were a lot of breathless headlines about how bad that was, but it did serve almost at a confirmation signal that may be the trade dispute is actually starting to have some effect on the real economy. in our active funds, we are trying to balance our credit risk with some rates positions to provide a little bit of underpinning in case that is the real story. i think right now the fed has told us they are data dependent. i think the market is getting really data dependent in the sense of trying to see if there is confirmation that trade tensions are actually causing real economic damage.
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i think the durable goods number is going to be very important in market moving. david: sarah ponczek, thank you for being with us. anne mathias of vanguard will be sticking with us. live from new york, this is bloomberg. "bloomberg daybreak -- this is bloomberg. ♪
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♪ viviana: this is "bloomberg daybreak." piper jaffray says shares of amazon could hit $2000 within two to three years, about 65% above where the market is trading now. he rapidly growing cloud business would help the other areas of amazon. bloomberg learning by global
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payments discussed a potential deal with total system services. both companies are based in georgia. -- warning largest that a tariff war will likely hurt its company. it says they could cut growth by 1%. for now, merck is sticking with its full-year guidance. that is your bloomberg business flash. david: markets appear to be getting used to the idea of a protracted trade dispute, even as president trump appears to be open to resolving things as part of a larger deal. the prospects of a meeting at the g20 remain. still want us is -- still with us is anne mathias of vanguard. believed that the term trade war is a good one. trade is about mutual benefit.
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war is about mutual destruction. how can you have two very different concepts in one term? we still believe that collaboration and consultation is the only way out for any dispute between us, and we are still committed to that. sure we arene, i'm relieved of the chinese want to talk more, but is there a possible resolution here? are the markets learning more about this conflict that is truly hard to resolve? anne: i think we should all go back and start reading about game theory. that is where we are right now in these negotiations. this is a political process. the national security issues around some of this intellectual property are real, but to use them in the trade context i think is a leverage tool. -- aredes are amp in up amp in up the size of their
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weapons, hitting harder and harder. eventually we get closer and closer to the cliff, and then it becomes about who has the biggest asymmetric downside risk. who has the most to lose if this trade dispute cannot be resolved. it is a tough decision. china has things on their side. u.s. has options, too. i think in terms of timing, the chinese can hold out longer. their main concern is probably currency valuation. market access is important for them. what we might see as a potential step towards resolution is some separation between goods trade discussion on the of the one hand, and security issues like huawei on the other hand. lisa: you mentioned the currency. this is a big question right now in the markets. will the yuan cross that threshold, seven per dollar
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level? do you think we will see seven? if so, how significant is the reaction, in your opinion? anne: i think there are two parts to where we see seven. the government of china definitely is trying to keep it under seven. if the move towards seven and beyond is really rapid and uncontrolled, our chinese economists are telling us that is something that would really diminish or degrade domestic confidence. it would make it harder for the to domestic economy in china to continue to stabilize and recover. it would put a lot of pressure on china capital controls rules. that is something that the government and pboc want to avoid at all costs. we will see them using the tools to try to manage the exchange rate to keep it in a stable range and not shooting up above
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seven. i don't think seven is a magical threshold. i think the speed of a move up and above seven is the thing to keep our eye on. i think that is a scenario the government will try very hard to avoid. david: you referred to game theory and asymmetry. i wonder what asymmetry you are looking at that involves the currency you are just talking about. the united states has the world was serve currency, which gives it some maneuvering room in terms of borrowing an advantage over china. on the other hand, china does not have to deal with a congress , with pesky journalists and things like that. does that change what we are looking at as a practical matter? anne: that is right. in the u.s., you saw what happened when there was a combination of trade war concerns with some additional sort of evidence that there might be some economic damage being done. you had an extremely risk off
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day in the markets. that is not something that the u.s. economy or the political climate in the u.s. can tolerate for a very long time. could you imagine if we had day after day after day like that? that is something that keeps our timeframe in terms of downside a little bit tighter. i think that is something that politicians and economists and investors like vanguard are very focus on. lisa: if we don't get a trade deal, how many times do you think the federal reserve will cut rates in the next six months? anne: that is a really interesting aspect. right now, based on the shape of the yield curve, the market is pricing in two or more rate cuts. there's a pretty big gap. i think if we don't get a trade deal and we start to see more actual economic damage from the
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tariffs, you could see the fed start to move towards a rate cut. it is our view at vanguard that we don't get a hygiene cut. some people talk about that, that the fed would just do a small rate cut to assuage the market. i don't think so. they don't have enough room on the downside, so i think they are not going to start until they are really going to go further. i think that makes it a little bit harder for the fed to really start. vanguard,e mathias of please stay with us. we had a big interview coming up monday with the huawei ceo, really the focal point now of the u.s./china trade dispute. lisa: they are a major technology company in the crosshairs here. says: coming up, the faa discussions about the boeing 737 max 8 planes have been productive. more on that in today's bottom line. this is bloomberg. ♪
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david: time now for the bottom line, where we took a look at three companies worth watching. coffee just did an ipo ended well, and now not so well. people are worrying that they are spending money to expand in china at a time that is so rocky with trade. lisa: the initial reaction could be a knee-jerk, down by another 7%. meanwhile, looking at beer. the beer industry is blaming trade disputes for the loss of 40,000 jobs. what i find interesting is it seems like a pretty convenient excuse. the are saying aluminum cans just cost too much. they are not mentioning that consumption is down 1.5%. david: finally, boeing. brooke sutherland is here to explain.
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have they gotten this fixed yet? brooke: they have not. they do have a software fix ready. they have to file paperwork to submit that to the faa to get that plane recertified. the faa met yesterday with regulators from around the globe and said there is no timetable for giving that plane -- forgetting that plane back in the sky. they are not in a rush, which is the right approach here. you want to make sure you are doing your due diligence. the faa needs to rebuild its own reputation here. that does not bode well for boeing, especially as you hear rumblings from airlines wanting compensation for these groundings. david: they are weigh into this crisis, and do not have a timetable of when they will have an answer is a little troubling. brooke: boeing was promising they would have the software fix by early march. i think they were trying to rush things. we are seeing that this is a bigger deal than boeing made it seem initially.
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i think it is may be healthy to be taking a step back, but that is not what you want to see as a billing investor. lisa: one -- as a boeing investor. lisa: one thing i find interesting is the levels of cost boeing is incurring. it is not just compensating for lost airfares. simply storing these airplanes cost $2000 a plane. forke: it is a huge expense over 300 planes that can't be used. that does add up over time. we were so fixated on when regulators approved the plane to go back into the sky, but you can't just throw them back up into the air. it is this whole process. they have been sitting in a desert for over two months. you really have to do a lot of maintenance. david: and where is boeing in premarket? it is up. boeing stock has not been hit that hard. brooke: it really hasn't. i think investors are sanguine about it because this is a duopoly of boeing and airbus.
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in terms of where you are going to get planes, you really only have two options. they don't see this mass rush of cancellation of orders. it has primarily been focused on indonesia, which had the first crash of this 737 max 8. i think it will be very interesting to see what happens in paris at the airshow, whether or not boeing does get any orders at all. david: you know who is winning? the lawyers, as always. brooke sutherland, thank you so much. april's goodsl numbers get a mixed picture? this is bloomberg. ♪
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♪ >> this is bloomberg daybreak. i am beside abramowicz. alix steel is off today. is eating that down off about a half percent -- we're seeing the
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1%.off half of the ftse 100 still positive, in the green. looking at across assets, yields are lower even though we have this risk-on feel in markets. and you are getting commodities with a bid. that getting breaking news, the durable goods orders of the united states declined more than previously expected, a negative reading. worse than people had hoped for. and you are seeing reaction in the 10 year yield, going lower. the prior month was revised toer, 2.6%, it was revised 1.7%. not only did the most current reading come in the war than expected, but the prior month's reading was also revised lower, indicating an ongoing softening in expectations? david: not good news in terms of capital formation, for sure. wells fargo's senior economist
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.s joining us sarah, initial reaction to the .urable goods numbers sarah: mass uprising, a pretty better number. we were expecting a larger drop, in part due to the net cancellations you had for boeing orders. we are seeing hints of broader weakness in the overall capital goods area, in large part caused by the uncertainty due to the trade situation. lisa: looking right now at the index, showing in part of people still are not getting a sense of how slow the economy actually is, it is a bit concerning. would you view this as an opportunity to buy more u.s. treasuries in light of the ongoing softening? sarah: you know, and not sure that i would just rush out and be reactive to the data.
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>> i think in terms of being an active investor in fixed income, we need to think about where the pockets of opportunity are. time when youly a want to have treasury allocation to offset credit risk, but there are credit sectors that are interesting and more defensive. we are positive about media and telecom, health care and pharma, things like industrials and agricultural chemicals, even, due to the trade war. those are things that are bit more concerning, things like technology. but i don't think it is time to run for the hills yet. a lot of the data. , especially as wells fargo mentioned, some of it is due to the problems with boeing and some of it is due to sentiment. businesses are holding back. the question is, do they hold
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back so long that they cannot release of the economic impulse once of the future traded clearer?is for at vanguard, we don't see ourselves as a variant. it is definitely a negative durable goods report and it is important to dig underneath it and see what is really driving it? david: sarah, you heard and say yet not time to run for the hills yet. we caught up with the st. louis fed president james bullard and this is what he had to say in terms of our timetable on when fed really needs to take trade into account. >> for this to affect fed policy, it would have to be about six months? david: there you heard it, six months before the fed has to start doing something about it. is that accurate for you? we were hearing that by the end of this year, there was start looking up. >> i think you see put positives
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out there. consumers remain in pretty good shape. if the tariffs stay in place, it could weigh on consumers' overall spending. the morning we did concern, though, is the prolonged uncertainty and what it does to the investment plans. businesses are having to think ahead in this situation. if you see the pullback in investment, the fed might have to react a little bit before that, just given the overall hit to growth but that can cause. add that businesses are getting more cautious about investment, they are also probably getting cautious about investment plans and about could also fit into consumer spending. lisa: currently, 10-year yields are the lowest is october, 2017, 30 year yields in the u.s. the lowest since january 1, 2018, definitely very much of a slight to bonds go ongoing.
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aside from bonds, where also the havens right now? anne: this is an interesting thing i wanted to mention, actually. i was talking with our emerging markets team, we have an active emerging markets bond fund, and we were talking about alternatives in terms of equity allocation. if the u.s. equity market is starting to become concerning, an alternative idea is hard currency emerging market sovereign debt from higher-quality emerging-market countries. because if you think about it, if the fed is on hold, and may even start cutting rates in the future, that actually creates a more easy environment, in terms of financial situation five emerging markets. the u.s. is important for emerging markets but it is not the be-all and end-all. emerging markets are much more integrated, there is much more intermarket trading and intra-asian trading.
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david: thank you both, very much. from laste numbers month for durable goods, down. transportation is also flat. ex-air, the nondefense, down more than 1%. disappointing numbers. the vienna: president trump says huawei technologies could be part of a trade deal with china. earlier this month, the u.s. banned the chinese telecom equipment maker from buying supplies. we will talk about that and more with an exclusive interview with the company's ceo on monday. there has been a tentative
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settlement in civil suits related to hollywood producer harvey weinstein's sexual conduct. according to "the wall street former" weinstein's study of board members and the new york attorney general's office have agreed to a $44 deal.n most of the money would go to his alleged victims, former employees, and of the studios creditors. british prime minister theresa may is stepping down on a june 7. she will leave her consensus with our job -- she will leave her successor with our job she could not finish. >> i will surely leave a job that has been the owner of my life to hold. the second female prime minister, but certainly not the last. will, butth no ill with enormous and enduring gratitude to have had the opportunity to serve the country i love.
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viviana: she will stay on as caretaker prime minister until a succession is chosen. the front runner is former foreign secretary borris johnson. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am viviana hurtado. this is bloomberg. david: there you side, a defeated theresa may. lisa: and the question is next. he had jeremy corbyn coming out and saying that her strategy has not worked and everything falling apart for the tory party? david: talk about taking her out the door. lisa: and talking about uncertainty, this just heightens that. we don't even know who the successor it? david: and then they have to figure out who the prime minister is. coming up, the vast and growing world of revit equity. we speak to a asset management next.
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-- asset managing director. next. this is bloomberg. ♪
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♪ viviana: coming up later today on balance of power, republican representative tom cotton of arkansas. ♪ viviana: i am viviana hurtado with your bloomberg business flash. is cutting 120 of its staff and streamlining job activity. a hedge fund owner acquired a
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stake in legg mason and has pushed for cost reductions. the fast major hollywood agency to announce plans to go for public, and ever is filing an emmanuel.by ari and one investors got burned luckin coffee. shares soared 50% on friday. but they now fallen 39% from their peak. thestors are rationing company's profits in favor of a cash burn strategy. that is your bloomberg business flash. david: we have breaking news, the chinese premier has said that they will expand tax cuts to take care of the chinese economy. so there you have it, fiscal stimulus to keep their economy going, despite richard problems. lisa: and we are seeing the yuan
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strengthen just a touch over the dollar. people were expecting a strengthening touch from earlier in the day, but people were expecting more stimulus from the chinese government. the question is how much will be enough to offset the slowdown? david: and the other question, what to expect from the u.k. boris johnson has come out and said the way to get a good deal is to their for a no-deal brexit. not a. big surprise. he has been the brexiteer in chief, almost. get into power, given the disarray the tory party is in? right now we see the dollar rising versus the pound, which is what you would expect? david: that will not be over for a while in the u k, i think. lisa: you think? david: now, a deep dive into the stories making headlines with key insights from industry veterans and insiders. we take a look at the fasting growing world of private equity as seen through the eyes of what
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some have called a legendary investment banker who has now moved into private equity, gary parr. evoke him him to bloomberg. welcome to both of you, good to have you here. perspective. investment banking, moving over to private equity, how different is it? goy: investment bankers across a lot of different clients around the world, including governments. and now, being in one firm is a focus on building the firm. how the firm grows, what the strategy is, and then being a principal, of course, is very different than being an advisor because you live with the decisions. lisa: and it is coming at a time when private equity is in the crosshairs in a unique way given how much money has been raised. take a look at what warren buffett had to say on the private equity industry. would have seen proposals from private equity funds where the results are not committed in a manner that i would regard as honest, it is not as good as it
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would look. what is your response? gary: a very much depends on wha which firm you look at, how they report their numbers to lps. there are a lot of different practices used by a lot of different firms. i am aware that there are firms which report the way he is talking about, and i would just observe that that is not everyone and that is not the way it is done. i think there is a transparency, as long as client see how the calculations take place, that is important. 's you have been a banker banker for years. what worries you most when you look at the financial industry today? gary: 10 years have passed since the financial crisis that is not the issue of the day. well-capitalized, there is more liquidity in the system, i would say that the issues are profitability. a number of lines in business banking are not very profitable,
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returns on capital or low. that is problematic. i am still separating out winners and losers. a number of banks. prior to the financial crisis of trading desks and big trading positions, operating like hedge funds. they did not have great client relationships. so the last 10 years have been really subverting out the firm's, if they had client relationships, they did well, those that did not continue to lose ground. lisa: are you speaking of deutsche bank? gary: i am talking about a number of institutions -- they did fall on the side. they vote up a very big balance sheet before the financial crisis based on taking a lot of risks and other aspects, but did not have this deeper client base as say morgan stanley or goldman sachs? david: you are in investment banker advising deutsche bank, or if you are in private equity, what is -- is there an opportunity there? gary: i will pass on both.
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i will say, the ceo has one of the hardest jobs in the world. never mind just financial services. it is a very difficult situation. there is no easy answer, looking from the outside. you could look sa, maybe there is some of this or some of that -- you could look and say, maybe there is some of this or some of that, but it is very hard to say. >> what happens next? -- limit just keep unraveling? to deutsche bank specifically, but in europe, which is an acquisitions is not the answer to solving problems and institutions. i would look for more concentration rather than consolidation. this additions have to pick which lines of business, where do they have market share and profitability and exit other lines of business? that would apply to deutsche bank and other banks as well? david: you said banks are in better shape than non-banks. we hear from regulars, we heard
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from some traditional banks as well, but there is a lot of stuff going on outside now that traditional banks would have done and that is not regulated. gary: the issues to look for when you look for financial risk and systemic risk is how much capital you are backing, is a leveraged? most of the asset management away from the banks are as it managers of one type of another who invest third-party money. it does not create a systemic issue and it doesn't create something like what we saw before. there's not that much access leverage across firms. you can go back many years ago, long-term capital was highly levered, and it got into major problems. but it was a singular instance. when you are less related, someone can go bad but it doesn't mean there is a systemic problem,. >> at the same time, u.s. banks are doing their biggest deals
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since the financial crisis. at one point -- at what point are they too big? gary: regulators have shown that the are willing to consider mergers, large bank mergers it has been a long time since that has been the case. so that the guest to open the door -- that begins to open the door. a lot of banks are feeling the pressure of high interest rates margins. those two dynamics, there is a lot of logic to merging banks. having said that, there will be caution, but i suspect merger activity in banks to increase. regulators are beginning to say, -- although suntrust and bb&t has not been approved yet. lisa: is that concern you, how much money has been raised from private equity? gary: there is still a small amount of private equity. when you look at equity markets and say, where our companies?
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have an interesting discussion, what is that mean for investors? but in and of itself, that has not been a grand scheme of the global markets, it is still a rather small part of the marketplace. >> you had something they started apart from apollo, you started a chocolate factory. how does this come about? gary: i think it was a lot of fun, think it would be a good business. matchup with consumer has become much more sophisticated in the last 15 years -- the chocolate consumer. people not talk about dark versus milk, and what percentage of cacao. what is important is how the -- where the beans come from, how it is made. we would not be the biggest, but we are focused on selling really pure chocolate. like from star starbucks, mccarthy, that the israeli
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matter. that also matters in -- the beans really matter. we will see if that matters this in a chocolate. lisa: has been the head of a so deeply invested in the business day today, changed your view on anything that you had before, in terms of running a business or how you view business? david: is it harder to run a business than to advise a business? gary: it is different because you live with it longer. yes, when you are an advisor, the of course, you care deeply about things but you are not responsible. when you are an owner or building a business, it is a different mindset. deeper.un -- you run advisors by necessity are good globaling a lot of trends and a lot of interactions across a lot of countries, governments and other things. as an owner, you go deep into one business at a time, so it is just different. it is an expertise that runs horizontal versus radical.
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>> how have you colleagues felt about this venture you are doing on the side? gary: so i have chocolate in my can come andople not only have a meeting about whatever subject might but i can also offer them chocolate. what i do a chocolate is instead of playing golf. a lot of people play golf. i don't play golf. so i do chocolate? david: gary parr, apollo senior managing director, and our bloomberg reporter, thank you so much for being here. lisa: coming up, doris johnson was a pragmatic brexit. -- boris johnson once a pragmatic brexit. that is next. this is bloomberg. ♪
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♪ lisa: the way to get a good deal
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is to prepare for no deal. that is boris johnson. i am watching brexit. the pond weakening against the dollar given his comments, basically reigniting concerns about a hard brexit, saying that he will leave the e.u. on october 31 without a deal? to gethe said, he wants out and he is appealing to his base in a very fundamental sense. signaled he also would be going back to the e.u. to discuss a backdrop. remember, boris is perhaps the leader on the tories. but the tories are in disarray, we don't know who the potential front runner is, so his words carry that much more clout as a result. david: and i did not know this before, members of parliament are part of the people who elected and you had of the party the other people are in the hinterland. it does notthat, make him a prime minister
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because they are not the majority of the coalition. the bloomberg open with jonathan ferro, gabriela santos, j.p. morgan asset management global market strategist will be here with jonathan. live from new york, this is bloomberg. ♪
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♪ jonathan: from new york city, i am jonathan ferro. the countdown to the open starts now. ♪
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jonathan: coming up, investor anxiety around trade lingers. huawei might be used as a bargaining chip, the president says it could be part of a trade agreement with china. and prime minister may making plans for her exit, stepping down in two weeks. 30 minutes from the open this morning. good morning. positive atup 14, 5/10 of 1% higher. the euro-dollar 111.95. we begin with a big issue. what will it take for the fed to change course? >> i think it will stay there until the hand is a must forced. >> nothing in the data is forcing their hand. >> the bar for the

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