Skip to main content

tv   Bloomberg Surveillance  Bloomberg  March 21, 2016 5:00am-7:01am EDT

5:00 am
tom: francine: commodity stocks lose. the dollar eanes after a selloff . negative returns on the positives are not reaching bank lending. latest piece of the ecb puzzle. after 88 years, a united states president arrives in cuba. this is bloomberg "surveillance." i am prancing lacqua in london. tom, it's a 40 week.
5:01 am
we have lots to get through. tom: international relations is front and center. the moment as the president travels to havana. for those of us of an older vintage, it was a immense tension with cuba and russia. ofs is a really big deal people of a certain vintage. francine: this goes back to the president saying the last 50 years of isolation was not good. let's get to the news with vonnie quinn. vonnie: thank you so much. north korea has testfired a missile into the sea. south korea says the regime launched five short-range missiles. the un security council has sanctions to push north korea for another missile launch and a nuclear test. the historic meeting between president obama and raul castro.
5:02 am
firstama has become the u.s. president in 88 years to visit cuba did he will take them -- tell them to seize the opportunity to expand human rights and economic access. david cameron had his economic minister quit. theaid he cannot support policies. turkey is blaming the islamic state for the fourth suicide bombing there. five people have been detained in connection with the attack. more drama is expected in brazil. the supreme court and congress will come up away to resolve a political crisis. two thirds of brazilians want the president ousted over corruption charges. news 24 hours a day powered by our journalists
5:03 am
around the world. thank you so much. i'm going to look at the continued churn to the market. the yield is where it is. the euro is stronger. the dollar is weaker. it's not a no news, just a different news we can. oil pulls back a little bit. where are the equity markets? that is the key message today. 14.02 on the fix. i would say most people would not know where that is. fromow is 600 points record highs again. that's what i've got this morning. francine: you are right. there is nothing huge out there. there are a lot of little things that together may make a trend. i want to look at resources. this is dragging energy producers lower.
5:04 am
that is probably the two main stories of the day. tom: when do i get a cuban cigar in new york? i don't know the answer to that. that would be very cool. let's go to the terminal right now. thank you. nice of you to notice that. theollar, this does not include china. we have a little perspective. we have the long-term dollar weakness. this is the recent dollar strength. we've got a pullback. in the effective of 30 years it's like so what. francine: it has a ways to go before you get down to that line. tom: we will touch on dollar strength today. yours is smarter than mine. francine: mine is different. i don't know the smarter. we don't talk often about the gold to silver ratio. this is a chart on eight weekly basis. i have brought it back. this tells us that because it's
5:05 am
fallen below 80, the last three silverhat has happened, outperformed gold. it's happened a couple of times over the last four decades. that's something to watch out for three one of the largest silver companies says he is more bullish on his metal than gold. look at the chart. he may have a. we see the dollar strengthen and oil expand. we have guests this morning. thank you so much for joining us. it's monday morning. we have to digest a lot of stories over the weekend. we must start with the dollar. we thought the dollar rally was over. it doesn't look like it. >> the dollar has come a very long way from its low point.
5:06 am
i think local investors are adjusting to the assumption it doesn't continue on a one-way path. the rate increase was announced originally. it created a weakness that helped emerging markets. we saw this. there was a lot of risk on the road. we published a piece called it's a long road to november. there are several things that could be risk enabling. that would be favorable to the dollar. tom: i love the term risk enabling. let's point out to the global audience. snow in new york. our heads are spinning here as we look at the weather. we are risk enabling in the winter. you say we will do it or the year. i have a dow confounding the
5:07 am
gloom people. they upty markets, are for good reasons? virginie: i think it supports the fact that the markets have come back. you still have the support of some of the central banks. japan, we will continue to have a lot of choppiness because of the risk factors. when you look between now and november, we have the election, we have exit, we have politics. we also have growth that is quite weak. when you look at the recent chinese budget, it's telling us. companies keeps minting revenue and ok earnings. is that enough to support this soiree? i think it's about the
5:08 am
quality of the earnings. people don't expect too much. if you want to make sure, if you want to have dividend earners in your portfolio, make sure they can pay. you want to bet on quality. and the federal reserve were talking in paris, they said the fed doesn't want to be behind the curve. risk that because the fed has said it will wait to normalize and cut down its interest rate projection? ewan: you have to have a time above target inflation. pce has been creeping up. it's come up over the last three months. i think by the time we get to the summer, the fed will have
5:09 am
completed both of its main mandates. thisnk they are treating very cautiously. that inflation basin janet yellen's comments, i'm not sure this is temporary. that's the language of a central bank conceding its way up. francine: what is she concerned about? she seems to be fearing a recession here in -- recession. ewan: the rest of the world is not great. it's better than it was a few months ago. the perception is better. it's the external environment they are focusing on. that's unusual for the federal reserve. normally, they focus on what's happening in their own country rather than the global scene. tom: is your word -- world
5:10 am
attached to virginie's world. gloomody is going gloom gloom. i know we have challenges in international relations. ewan: we have known each other for 30 years. i think we are in a world where we are still climbing a considerable wall of worry. if the credit markets hold together and for that to happen there has to be no recession. you get a bid for carrying. the end of the capital structure. things aren't that bad. they're just not that good. i like that analogy. stay with us. we will be talking to the ebs chairman we will talk about
5:11 am
negative rates and how he sees all of this extra stimulus. he was against doing too much when he was in the job for the ecb. what does he think about the brave new world now? ♪
5:12 am
5:13 am
tom: good morning. francine is in london. did caroline hyde get back to london? good to know that. jonathan ferro is with bloomberg in new york and right now, we look for vonnie quinn. vonnie: thank you so much. monsanto is looking for deals. -- thatlooking that is is according to people familiar with the situation.
5:14 am
there will be a change in france's largest insurance company. he is leaving sooner than expected. he will retire in september. he will be replaced by his deputy. he had planned to stay until 2018. it's a deal that creates the largest paint company. sherwin-williams is buying a company forecast. increase. expand help them overseas. lectured about feldspar shellac its paint. francine: it's not all morning. tom: we are watching paint dry. this is fell's bar. boring't make money in
5:15 am
8% net income companies and the stock will jump up here to $113 a share. see in a lowwe nominal gdp environment. the only way to grow is to buy somebody else. virginie: you need to create growth. to grow. want they want to be innovative or have room to restructure or acquire. the market will only like the acquisitions if they make sense. i think you are right. the three main avenues lead to the doom and gloom about equities. returning 17% year. once again, it proves you can't make money in stocks.
5:16 am
virginie: you can make money in stocks. combiningo be long-term vision and trading and lots of good fundamental research. francine: i've learned something. i know it because it's the new thing in they'll furnish. it must be the same principle. i'm doing some research for you and we will get more on that. let's get to central banks. when you look at how much central banks are doing, i picked up something from the dft the george magnus wrote. have to realize it will come to an end. he said the economics movement is transforming the way we teach economics. change will not come with sleep. at really know what the real world is anymore. you look at how much central banks are doing.
5:17 am
are they really doing too much? ewan: there are always winners and losers. right here, we can see the losers are the financial intermediary systems. i want to make sure that we are talking the same like which. central banks may or may not have done everything they can. they are going to carry on trying because that's their mandate. bazooka did's last leave the door a little though if things get worse again. we're talking about the fed going the other way in the states. the bank of japan is easing. they are not going to give up on this game. it does not create credit. francine: are we going to see the potential for the next shock? virginie: we really need structural reform.
5:18 am
we need to support those central bankers who are trying their best. they are using unconventional tools. with some impact or little impact in a way, i think ultimately they will keep on trying. the impact is not there. it's about government leaders thinking about what structural reform can happen in this new growth world. taken unleash entrepreneurs through -- entrepreneurship. an: we haven't -- we have important conversation coming up about japan. isn: the bank of japan handing the baton back to the government. i think we will see in the next month or six weeks the plus putting of the rise in the consumption tax which is due to
5:19 am
come in in april next year. impact in record purchases by japanese insurers. they don't want to own this stuff. they only want to give up what they hold. think they have a challenge. if it starts to impact the way in which the structure of the financial system. tom: let's go back. coming up, an important conversation and a timely conversation. on the day history is made. the american president returns to havana. this is bloomberg "surveillance." ♪
5:20 am
5:21 am
5:22 am
5:23 am
francine: european stocks, little changed. basic resources are still on the downside, down from 2%. italian bank lenders are gaining. automakers are on the way up. it's a little bit of a dichotomy. the luxury groups are pulling each other and the euro dollar is important. we are seeing a little bit of a rally. tom keene is in new york. we are looking at equities. we have two great guests on set her in -- set.
5:24 am
when it comes to looking at equities, a lot of ceos are not sitting on catch. what will take them to start spending. virginie: there is a lot of angst and fear going back to november. we don't know who the next president in america could be. you don't know if the u.k. will be with europe. if you don't know where the polson geo politics is -- the pulse in geopolitics is, you might wait a few more months. ormight be an acquisition forcing to do something. francine: we talked a little bit about negative yields. that's putting pressure on certain banks. it's putting pressure on insurance stocks. today we have the news that he is retiring early. virginie: we don't know if it's
5:25 am
for other reasons. long-term, is on the if rates stay very low and negative for a long time, it's undermining the business model. it has to be rethought. there is a lot of competition in the sector. i think it's a difficult job. with old me here stodgy companies like valspar, like nestle. the valuation for persistent cash flow seems off the chart. virginie: your question is how many years? the valuation of cash flow for persistent companies seems off the charts. virginie: i think it goes back to the risk environment where people want to pay for certainty in cash flow. if you want activity, that is
5:26 am
linking to the lack of growth and visibility. should nott mean you go in structure your portfolio around other kinds of stocks. you want to make sure that they can demonstrate innovation and future growth in -- growth. tom: thank you so much. greatly appreciated. body wants me to turn into the commercial this way. for relaxing time, it's surveillance time. ♪
5:27 am
5:28 am
5:29 am
tom: we say good morning in london and new york and around the world. our first word news with vonnie quinn. vonnie: president obama is the
5:30 am
first president in 88 years to visit cuba. he plans to push castro to improve economic access. this is not stopping criticism from republicans and some democrats. donald trump's campaign will add security to its larger events. recent rallies have had outbreaks of violence. a spokesman for trumps said he does not condone any of the scuffles. belgium, the prime minister warrens of the -- warns that the fight against -- arrested friday after a four-month manhunt. the prime minister says there are hundreds more radicalized people in belgium. a dubai airline is defending its decision to land in windy
5:31 am
conditions in russia after a plane crash killed all people on board. said the airport was open and conditions were good enough to land. in australia, the prime minister is looking to call an early election unless parliament cracks down on trade unions. he wants lawmakers to pass bills to restore industry walked -- watchdogs and regulate unions. more than three years with its launch, -- japanese garden tech corporations make of the environment, we are joined from mee with the cashing it out -- thank you to much for joining us on bloomberg. and largestdest
5:32 am
company in distribution of alcoholic beverages in japan. we had a conversation and doubtless and -- we were surprised a couple of days after. they could be doing it better in your eyes, develops move your clients. we could have done better in terms of deregulating more, such as workersws, such living in japan permanently. it has been doing very well. negative thought thinking, but nowadays, people tend to feel we will be better. cancine: this is what you see in your consumer, and your ability to spend, what is the side effect of negative rates?
5:33 am
does it have leverage to push it through? >> there is no positive effect we can see, but a lot of people -- it doesg to think not create a lot of consumption. very inactive consumption, so consumption is the most important inc. for abenomics -- important thing for abenomics. consumption levels have been falling off, so we have to consider what to do with increase of consumption tax. thecine: do you believe flexible labor markets are taking more time to the implemented, or is there something the government can do to accelerate it? election, which
5:34 am
happens later, we will discuss -- weo do with mobility need to work with potential industries. is, we are now ready to discuss and start to discuss and that is a good part. people did not think that what happen. tom: when i look at the impact of suntory worldwide, it is about young drinkers and getting them to drink your classic whiskey. tell me about the general -- generational shift with abenomics and japan. withs abenomics doing younger people? >> good question. abenomics has been serving elderly people, taking care of the health care and the
5:35 am
wealthier. we are talking about kids care and working mothers and the shifting of the government toward the younger generation, because the younger generation is very important for us to see consume much more, so abenomics is now scoping not just the elderly people, but also young people. tom: i look at abenomics and the challenges, forward. what catalyst will you look for in the next three or four months? nurses should collaborate to deregulate health care as well as kid care, which means the right players should collaborate with the government for deregulation. francine: do you believe the
5:36 am
government should stop increasing consumption taxes? >> the current economy does not allow them to increase 2%, which means the prime minister is andering, what we should do how to give the impetus to consumption is up to the generation. i can't answer your question right now, but the consumption for a 2%is not good increase. francine: is there something that would be -- because you look at the real economy, you have a better sense of what people want, is there something they can implement in the next six months that would make a material difference? need to increase the labor
5:37 am
forces of women and we can do they get moreif workers and more wages, then we can increase consumption. regulations are some obstacles that government can deal with. hopefully government will get rid of those obstacles for part-time workers to work as but thereey want, so exists a persistent mindset to go back to the old days of deflation. it is not easy to get rid of deflation. francine: that is what we are hearing. thank you so much. and we talk aus
5:38 am
lot it more about the drinks industry, next. theng up, we also talked to ubs chairman about negative rates and also that bonus pool search. ubs having a bonus pool of 40%. ♪
5:39 am
5:40 am
francine: tom keene is in new york, let's get to looking at consolidation in the drinks industry. thank you so much for sticking around. abenomics andt things that would hurt you or benefit consumption in general. talk to me about the drinks business. it seems that consolidation in
5:41 am
the drinks industry has been right for years. are you looking at anything? do you have a treasure trove you want to spend? takeshi: we have no intention at this moment to apply to any businesses -- acquire any our focus iscause definitely on the integration to become the quality player in the part spirits industry. producethe expertise to quality spirits, so we want to suntory totucky and create quality products. inare not participating competition now because we did, two years ago. francine: how difficult is it to
5:42 am
integrate such a large group? you buy all of these huge companies or you did -- and you had to make sure that the values are the same or you have to streamline, is the process on track to be where you want it to be? we have the great whiskey and i would like to bring that to kentucky and kentucky has a strong skill set to produce bourbon, so to put them together and this creates a differentiation, so it makes economies, but that competition wants to be a different player with premium products.
5:43 am
what we are creating is quality products. i look at what you've done, i had a relaxing weekend with makers mark and i went to tequila and finished up with a pepsi, when i look at the chart , a shorter term chart, but it is a real example of the value of clearly tasty cash. are you going to make the shift like everybody else the water? the basic idea is the public wants water over 10 years, are you going to leave behind makers mark and do something with water? takeshi: a good question, but picture inifferent
5:44 am
industry and such as the sugar issue, health consciousness issues. we are ahead of the health consciousness issue because we have a great brand and we have a good water brand and we have been very successful in of orangina, so we have done very well to be bit -- different from pepsi or coke. tom: i like that you have orangina, it is great. how do you respond when you see the europeans doing what you did 10 years ago? i think we have to be more differentiated from european as well as american, so that is why we put more resources to rmb, to launch the health consciousness products, so we have to carry japan
5:45 am
content which means health consciousness. tom: thank you so much. in our next hour, international relations and the president traveling to havana. we will bring you ian bremmer of eurasia group. this is bloomberg surveillance. ♪
5:46 am
5:47 am
5:48 am
quinnet's get the vonnie with our bloomberg business flash. vonnie: british housing prices have passed another milestone. the average price is now more than 300,000 pounds. -- home prices in the u.k. have risen 60% in the last decades, more than twice the pace of earnings growth. homeowners in america are finding it more difficult to trade up because of the widening gap between mid-level and upper-level home prices.
5:49 am
julius is mid tier homeowners cannot afford upper-level homes. hedge fund managers can. get enough port. money managers are now the most bullish in -- francine: now to what we are watching for the rest of the week, trading week in the u.s. but also europe, apple will unveil its new smaller screen iphone and its updated ipad. tomorrow, -- will beat at -- speak in new york and also tomorrow, -- speaks on the future of europe's architecture in frankfurt. still with us, doing cameron we touched on negative
5:50 am
rates, but emerging markets, you have structural problems, they are a sigh of relief because janet yellen says we are not normalizing yet, then you have brazil, in a basket case of its own. is actually one of the best-performing stock markets of this year and the currency is very strong. thing about emerging markets is that they have near-death experiences quite frequently. thatthe years you learn when the currency is incredibly cheap, that is the best time to invest. what i mean is you start -- stop running a trade deficit in start running a trade surplus, because domestic demand has collapsed. that is the point when you start making more money as a foreign investor out of these emerging markets, but you don't make it out of the momentum in everybody
5:51 am
is frothy. francine: do you need to make a call whether the president gets impeached or not? ewen: i think the market expects her to be impeached. whether that ends up successful, no one really knows. markets -- the fundamentals underlying trend is the currency has come such a long way, more money coming into the country now through the trade account and that helps. near-deathntioned experience, that is the title of my basketball bracket and by 201 k retirement plan. do we invest in emerging markets like we used to or is there a howblack rock calculus of to get away from the near-death experience? ewen: if you give us your
5:52 am
details after the show, we would get one of our people to call you. emerging markets are still the same game plan. you made a lot of money out of buying asia are on the bottom of the asian crisis at the last century. i think there are some changes and it makes themselves in the emerging markets and debt markets. many more domestic savings groups in these countries want to buy domestic bonds. i think the issue is that emerging countries borrow too much, too quickly. we have the balance sheet adjustments coming now. opportunity can not when you see the currency is very low. tom: when you see the coupon that is so attractive, do you just assume you have to hedge the currency? think if it is really
5:53 am
low, you can take you to the and run off with it and emerging-market bond funds, we were heading at the beginning of the year and i don't know what the guys are doing right now, if the story evolves properly, then you hedge after that and let the heads do the fundslifting -- let the -- let the bonds do the heavy lifting. when you get up to war the top end of the range, the other companies start -- toward the of the range, the other companies start -- if they don't draw any new wells, the business, the decline rate, it drops to nothing. they willoing to -- put into another well and other well, it is in their nature. francine: what does this mean
5:54 am
for the likes of saudi arabia and nigeria? nigeria is still in serious problems. saudi arabia is still in serious problems. see saudi arabia global bond this year. they are having to plug the gap as they can. tom: how do i invest in cuba? ewen: go along with cigars. -- i don't smoke the stuff so i would not know. tom: it will be interesting. ewen: maybe florida real estate. [laughter] interesting to see how the multinationals go in there. one more question, what is your waiting on emerging markets blended portfolio average person, is it a lightweight five
5:55 am
or 10% or do you want to be more e.m.? more in ewen: i put all of it into emerging-market equities. francine: i don't know of we have time, what is the one thing you take your money out of? ewen: europe is going to struggle a little bit more. if the dollar weakens, then we can see the benefit, and we will go out of the way. tom: thank you so much with black rock, his perspective on emerging markets. it is going to be an interesting week, i thought the united kingdom moves over the weekend were going to be something, i will let you explain it. i think it is lost in translation, a lot of this is over pension route, the pension secretary leaving, but this gets
5:56 am
bold and into brexit, so it is just more and more messy by the week. tom: ian bremmer will join us, but first, axel drummer with paris, looking forward to the chairman of ubs. -- a good time to speak with dr. bremmer. ,ooking at the data, futures up dow futures up, it is a four-day work week, stay with us. ♪
5:57 am
5:58 am
5:59 am
tom: david cameron end of it spent over welfare in this hour
6:00 am
on briggs it and donald trump, ian bremmer of eurasia group. stocks advance in the low economic growth world. it is distant from 1961 and they of pace, the american president travels to havana. this is bloomberg surveillance, live from our headquarters in new york, it is monday, march 21. i am tom keene with francine lacqua. cameron andt david brexit, what does the weekend been for the prime minister? toughne: the weekend was for the prime minister because you see a conservative party that is more and more divided. iain duncan smith, one of the biggest advisors against cameron, resigning because of cuts to disable people. theent on to criticize
6:01 am
style and management of the government, so that is no good for cameron, at a crucial time when they try to get the people of this country to back him and stay in the eu. tom: not on division but showing the flag, here is the first word news. vonnie: there will be a historic meeting between president obama and cuba's president, raul castro. obama is expected to tell castro to seize the opportunity to improve relations by expanding human rights and economic access. for the second time since friday, north korea has test fired ballistic missiles into the sea. they launched five short ranged missiles today. earlier this month, the u.n. past sanctions to punish north korea for another missile launch. u.k., more turmoil for prime minister david cameron and his conservative already.
6:02 am
-- cannot support custom welfare benefits while taxes for higher earners for -- in other companies are being lowered. turkey is blaming islamic states for the bombing -- suicide bombing killed four people and wounded dozens in istanbul, saturday. five people have been detained in connection with the attack. more drama expected in brazil, the country supreme court and congress are trying to come up with a way through the crisis. two thirds of the population what the president out over allegations of corruption. the president out over allegations of corruption. tom: let's get to the data before to our esteemed guest in paris. the euro is still elevated, oil is a little light over the last 24 hours. francine: european stocks are
6:03 am
reversing some earlier losses, so they are actually gaining now and we understand the council companies are on the higher side because of potential m&a activity. simply an intuitive bond, there is no way to with it, axel weber is that it in economic and that ubs and ite chair at is great to have you with us on bloomberg. listen to the speech upstairs and he said it is like groundhog you turnaid every time up to a meeting, they cut growth rates. you identified two of the longest term risks to market, what are they? excessivegraphic and debt, but demographics are the
6:04 am
bigger picture at the moment that drives a lot of the difference as why growth rates aren't what they used to be. >> we also heard from the bank of france's governor and he made -- in that mix of policy, we have new negative rates and we have new lending, targeted lending, is the target lending going to subsidize negative rates? axel: no, but it is helping in the current environments. the time will rise for years, basically provides funding and security to financial institutions, so i look at it much more as an insurance tool to make sure that banks are well-funded and liquid, rather than -- it also does that, but rather than be in a subsidy to the lending. >> are they too generous? axel: they are quite generous with negative rates.
6:05 am
thanks to next to get these funds that a negative rate which is a subsidy to credit creation and i think despite that subsidy, the real issue is, since it is new operations, will be the new map for it, so i see more important is the long-term funding security that it gives, rather than the marginal change in the conditions. >> you used a phrase, pushing on a string and i said taking a horse to water, you can't make it drink, what do you think in terms of the european story, are they pushing the string with that continuity? axel: you have to look at the targeted and general credit policy. one thing it does is able ease credit conditions in europe, but the overall impact will still be muted by the phasing in of the regulations. at the banks, we are now much more concerned in general about
6:06 am
deleveraging, rather than putting new exposures on balance sheet and that is really to measures that come in might help to soften and provide more orderly leveraging, but it will not break the trend in the leveraging balance sheets. the alternative to doing nothing would have been this on crediting -- credit, this on lending, you wanted to do something which is investment in infrastructure, give me a scale of infrastructure in -- investment that you would advocate for european growth. up to 20 plan provides billion, less than -- leveraged with a factor of 18, i think it would be much more important to have less leveraged, more funding to go there because what the eib is doing in this program is taking on huge investment risk on behalf of taxpayers because they take it for slush funds.
6:07 am
bestrope, we have the trained workforce, we have an economy that affords to have the young outside workforce and programs that bring young people into the workforce, programs that drive investment into the new technologies that will be much better than prolonging some of the existing infrastructure to be perpetuated by negative interest rate. >> give me your thoughts in terms of this move, they focus on the transition mechanism and a lower euro, do you accept that? is there a shift away from the ecb? axel: i think the biggest surprise for the market was the targeted euro. in terms of the perception of the last policy meeting, that is clearly what the market felt, but i don't believe it is correct. the ecb already has a program in place and the main focus of what they are doing and continuing to do will be purchases and that
6:08 am
will provide through the risk-taking channel, a lot of impact for taking risk in the european economy. the claimant is not their main objective, but it is an important variable that can help ring growth back to europe, and that is the bigger part of the package and the more important one. >> deutsche bank signaled it will be a tough year, this is the quarter when banks make or break, are you'll be -- will you be able to put it back in q1? axel: i will not give any guidance on the market. as what our ceo said what he said was clear and we talked about that or he went to the investment conference, so the signal we wanted to send is in the market. it is going to be the business model, even in adverse market environments, we see that our business model is holding up. long-term, i think we have a model in place that will help us
6:09 am
grow and be profitable and that is what many competitors look at to put in place in their own institutions, a business model that is efficient in the current environment. >> thank you so much for joining us. back to you, tom. with low nominal gdp and mergers seem to be in order, here is another with vonnie quinn. vonnie: ihs and markets are going to emerge and the deal is that ihs will own 50 p.m. percent of the combined holders of ihs shares will get about 3.55 six chairs of the combined company and the share -- the chairman and ceo of ihs will become chairman and ceo of the combined company. tom: what is interesting to me is it is the advising business
6:10 am
and maybe a 45% gross up, ihs is that much bigger. vonnie: the transaction is more than $30 billion revenue. tom: it helps to have someone on the desk, ian bremmer will address cuba in a moment, but we have this news about merger, somewhat in your world and it is this endless search for expertise driving your eurasia group and in the market as well. is been seen as one of the top global forecasters as well as analysts on energy issues, created cameron's energy which was picked up by ihs, almost a decade ago as the business gets larger, it is very hard to maintain that level of focused expertise in their background field, but it is the
6:11 am
place for global energy folks to convene and has maintained a very specific branding. tom: how do they keep the troops from walking out the door? the capital was up and down the elevator every night? . the larger it is, the harder it is to maintain culture. it really creates the strength of the team, on the other hand, a lot of resources and a lot of have withissue i human capital firms as they get larger is they get more undifferentiated and that means that those people are more .ikely to just go along with a unique we have perspective on the markets with the former blank -- bank of england governor who will speak to us, talking about brexit, what he sees in this new monetary policy that is at 2:00
6:12 am
p.m. in new york. ♪
6:13 am
6:14 am
reversal,look at the european stocks advancing and investors talking about potential m&a activity. resources are down, chemical companies -- euro-dollar playing out at 1.60. let's get straight to the bloomberg business flash with vonnie quinn. vonnie: monsanto is exploring possible deals with the fire of germany. they lost out in the battle with top chemical maker sent into.
6:15 am
they will be change of the top of france's largest insurance company. -- will be replaced by his deputy. staynally, he planned to until 2018, no reason has been given for the change. a deal that creates -- german williams has agreed -- represents a 35% -- the deals expected to help german williams expand overseas and that is the bloomberg business flash. tom: this is really quite a day. it is stunning, the images of the president in havana. the one volume primer on this. if you want to get smarter and the president has been handed the book, julius walkup the council on foreign relations owns the one volume primer landscape for cuba. i cannot say enough about this
6:16 am
book. it is one that ian bremmer is familiar with. he gets way out in front of the president in search of tough-minded diplomacy. in 1961. what kind of diplomacy do we need now? win.for cuba this is a this should have been done years ago. cuban-americans are no longer concerns with sicking into the castro regime's and many of them were thinking they would like to go back and start their own businesses. we are the overwhelming economy, 90 miles from yuba and obama going not just by himself or with his family but also bringing a bunch of ceos, the money that can go in the -- as the multinationals front and center?
6:17 am
ian: right now, the headline -- the first one is not that obama is resurgent, it's that you might just it rested, they rounded up and arrested a bunch of dissidents, so why would the american president go and be embarrassed with that? it's true that they have done that, but the way you get rid of this regime is overwhelming the cuban people and the cuban andrnment with capital clearly, that is a much more likely outcome than 50 years of sanctions which did nothing but allow these guys to prop themselves up with isolation. francine: can economic ties become stronger without actually addressing human rights issues such as the arrests of political opponents? ian: i can't imagine how they would with the united states and china, the americans do extraordinary business with the chinese. our corporate cannot help themselves but to go in, but the
6:18 am
human rights situation in china has not improved at all over the course of the last decade. the difference is that the u.s. a reasonablye equivalent of not of leverage in terms of the impact we have on each other's economy. when it comes to the u.s. and yuma, -- and cuba, it is asymmetric and vastly asymmetric. the issue is, do we have any prospects of changing it? the answer is limited prospects. if the cuban government does not stop it from happening, then i would say the impact amerco is going to have, not just in terms of investments but our ideas and culture is going to be overwhelming and fast and the cuban government does not have much of a choice. ,eep in mind, oil price is low they don't have the money to do so anymore, cuba lacks a
6:19 am
protector and the cash. who else will they turn to? francine: what are the business ?pportunities beyond hotels what is the most immediate thing that a u.s. company can come into? ian: i would say infrastructure would be the most interesting thing after tourism. obama gives a license to airbnb and immediately open up thousands of cuban private homes to. americans having to resume is going to be overwhelming in cuba. you have fairies going over, cruise liners will be allowed, they just have to get the modalities done, but agricultural companies have been lobbying the u.s. for a long time to get cuba to open up. you have the potential for offshore oil. tom: we have ian bremmer with us
6:20 am
and he will talk to grammar about a negative rate growth. i get a royalty when he says she negative. coming up, david arrow of the green bay packers will speak about investment in japan and that -- and investment abroad. ♪
6:21 am
6:22 am
6:23 am
6:24 am
francine: tom keene is in new york and i am in london and we are talking about the eu turkey accord. this is out of the ft. eu -- it is not easy to make a surely rational case for the brexit, but when the eu loses its moral high ground, they should not be afraid to question what they stand for. us inemmer is still with new york, what do you make of the deal? it seems a bit fuzzy. ian: i thought it was a wonderful quote, very much right at the time that they did this turkey's president said democracy and the freedom of
6:25 am
law, these words have no value any longer. who talks about the eu and democracy anymore? who talks about the social fabric that brought these countries together, it is all about what do i need politically for myself right now and my party and that is precisely what she did with the turks, she got herself into a box with no support for bringing these refugees on. it is not enough and it's not going to work, the deal involves less than 100,000 being resettled. you have well over another million streaming into europe this year. if by some time and will make the brexit referendum a little more likely because to the brits what the prospect of these a free travel for turkeys tens of millions of citizens going through the eu? tom: i can't figure it out. ian: the capitalists would love to be in europe, but they have
6:26 am
nothing to do with president erdogan on. tourism has been tremendously, what we are seeing is the middle east and the conflict around it is bleeding into mainline europe and turkey is a way station. it's, the refugee camps, europe wants to stop it at turkey and that will be supported in europe. tom: we will come back with ian bremmer on a gery -- g0 world. down futures are up, stay with us. ♪
6:27 am
6:28 am
6:29 am
tom: a conversation on economics, finance, investment. international relations.
6:30 am
we will get to ian bremmer in a moment. first word news, vonnie quinn. vonnie: the first american president in 88 years to visit cuba. president obama meets with raul castro. obama plans to push castro to improve human rights and economic access. that is not stopping criticism that the president is meeting with a man who puts political opponents in prison. i'll trump's campaign will add security. recent rallies have in march by outbreaks of violence. a spokeswoman says the front runner does not condone any of the scuffles. she says protesters use profanity to provoke responses. in belgium, the prime minister warns the fight against islamic militants does not end with the arrest of one of the suspected terrorist attackers. salah abdeslam was arrested after a four month manhunt. prime minister says there are red -- hundreds
6:31 am
more radicalized people in belgium. an airline is defending its decision to land in a windy airport in russia. three other airlines diverted flights to other locations. the ceo says the airport was open and conditions were good enough to land the boeing 737. primus to malcolm turnbull is threatening to call an early election unless the senate cracks down on trade unions. turnbull says union activity is slowing down growth. he wants lawmakers to pass bills to restore the building industry watchdog. global news 24 hours a date powered by 2400 journalists in 150 news bureaus around the world. francine: what a weekend it has been for david cameron? his conservative party has split even more. the pension secretary began duncan smith resigned over pension benefits being cut. he went on to say that he disagrees with the way that the style and focus of the government is going.
6:32 am
ian, this plays into brexit, people here in the country are saying the conservative party is split every day more. does it mean that this country actually has a chance of voting for brexit? ian: of course it does. as an as you decided to host the referendum it made it more likely. it created political incentives for people on the other side. they see being able to defeat cameron as very useful for their own careers. we see that with iain duncan smith. london mayorith boris johnson and there will be others. what does cameron look like on 23rd? considerably weaker than presently. we have to hope that the rational concerns, the economic concerns and the uncertainty around what will happen to
6:33 am
british industry and britain jobs if they vote to leave will be sufficient not just to swing the majority of hearts and minds but also look at those people suitably passionate to turn out and vote. the one thing we do know is that the opposition to europe in britain, the emotional opposition, is very strong. you will get a high turnout. on balance the brits will bow to stay in but that is not a safe bet. anybody that is thinking about their corporations, their banking, the rest, they have to be doing the what am i going to do with these guys vote out on june 23 because it is reasonably likely. francine: the problem is that when you follow debate in the u.k., the facts, the figures and the emotional concerns all get blended into one. how should people view security concerns and the refugee crisis? if you look at the tabloids it is saying it is because of europe that we have a refugee crisis in the u.k. this is sibley not true. ian: the french
6:34 am
president has said if they vote for brexit the french are no keepingoing to uphold their refugees on their side of the border. in other words, really trying to show there is going to be a lot of pain not just economically but also directly on the refugee front. i'm not sure that plays very well for brits staying in. they don't want to feel threatened. it is very emotive. i think that what you're going to see over the course of the next three months is very strong focus by the government on the facts. you are also going to see an enormous amount of uncertainty. the thing that will get the brits to vote in favor of union is less the economic realities than the fact that there is a decent chance britain itself will vote to split up. at the scots are gone from the u.k. if the brits are gone from the eu. i think that is a significant argument you will hear so much more of from scotland itself
6:35 am
over the course of the coming months. , if i look ater brexit as a european decision, how much do the ghosts and shadows of the 1950's and 1960's, how much do they pervade overthinking? ian: i think less than you would like. tom: a generational shift. ian: it really is. an economist interviewed me -- tom: you mean we are behind the economist? ian: this is all their focused on now. theid i thought britain was coming etc. and they said how can you say that and i set tom: -- the economist said that? ian: there's not a single person in this debate talking about why europe needs britain. tom: thank you. 20 to 30 years ago if you had a debate the brits would have said, our leadership is
6:36 am
needed. the idea that british leadership is important to the europeans is not play for cameron or anyone else in this debate and that shows how much the brits are saying we should work with the chinese, americans, does not really matter but we are not relevant. tom: you are more riled up, francine than i have seen you in six months. francine: i am a little bit flustered. the problem is if you look at the european union without the u.k. it becomes the germans, the french, they don't really have this ideal of the anglo-saxon work ethic or labor flex ability. you cannot tell me the u.k. politics and government is not important for angela merkel or francois hollande. ian: it is enormously important. britsnt is the don't care. the fact that the europeans really need british leadership in europe does not play out one iota. tom: will that change? ian: i think british leaders
6:37 am
understand that so they are not bothering. that is an indictment of the british nation today. francine: one of the big arguments here with pro-europeans is that we are better off, a little like the u.s. in cuba, we are better off at the negotiating table. they do care being part of the bigger eu leadership. the probe brexiters say it doesn't matter if we are there are not. ian: it is hard for me to make this argument is an american because no one is talking about the fact that the syrians need the united states and where are the americans? the canadians are doing more to bring the syrians in that americans are. in both of these cases, from a geopolitical perspective, these countries are paying very little attention to their historic roles. it is sad that we could lose britain precisely because the brits do not care that the europeans need them for the continuation of their project. tom: we will come back with ian bremmer. the foreign policy of mr. trump. mr. trump speaking to the
6:38 am
israeli lobby today in washington. the american israeli group. that is supposedly going to be more than contentious. harooomberg radio, david will join us particularly on investments in japan. that on bloomberg radio coast-to-coast. ian bremmer, next. ♪
6:39 am
6:40 am
francine: tom keene is in new york. can't get the vonnie quinn for our business flash. housingbritish prices have passed a milestone. more than 300,000 pounds for the average price. moves, home rights
6:41 am
prices in the u.k. have risen 50% in the last decade, more than twice the pace of earnings growth. american homeowners are finding it more difficult to trade up because of the widening gap between mid and upper level home prices. that is the conclusion of a trulia.y mid tier homeowners cannot afford bigger homes and that is causing stagnation and higher prices. a big transaction in the financial information services industry. ihs will own 57% of the combined company. the deal is valued at more than $13 billion in terms of implied equity values. the company will be called ihs markit and will be headquartered in london. that is our bloomberg business flash. tom: merger of exports. like daniel yergin and others.
6:42 am
vonnie: vice chairman of ihs. --should say this is interesting because it is another consolidation of the financial industry after -- infrastructure industry. we saw 10 days ago with the london stock exchange. interesting that four months before we had this referendum they decide to base it here in london. for me, that is maybe a sign of confidence that we will not leave the eu. vonnie: $2.38 billion is the revenue forecast. today, apple is expected to unveil a smaller iphone, bucking trends. with a movement a difference to the coming's bottom line? joining us now is brian white. we do not typically get an iphone upgrade cycle in march. it has been brought forward from june.
6:43 am
people upgrade when they have not been upgrading. will it work? brian: i think what apple is trying to do is attack the midmarket of the smart phone area. we have an iphone seven that should come out in september. here we are today with the i think will be priced $500. it will tap into a market that the iphone 5c could not. vonnie: a bit lower than previous phones. brian: the iphone success is 6:49. 5c came out,n they launched limited exactly the same time. i think consumers walked into the store and said, i am not going to get the 5 c. i think they will be able to expand their addressable market. there are some people that like a foreign screen -- a four inch screen. tom: let's bring up the chart again. brian white, so good at the
6:44 am
igloom that is out there. we are all gone and i. push against that. brian: i look at this company here and their market share is still very small. 15% market share in smartphone market, 10% in mobile phone market. tablets over 20. market share is very small. they have this ecosystem no one else is going to be of emulate. hardware and software together. tom: are your spreadsheets vectors that continue to grow bored do you believe there could be a stumble on any of the lines on your spreadsheet? brian: i don't expect a stumble. what we're seeing right now is late stages of an iphone 6 cycle. & lee keeping it a float. -- i am personally keeping it afloat. brian: this is not going to be a
6:45 am
gnocchi a. -- this is not going to be anokia. it is nine times x cash. 39% a year for eight years. who are they hoping to sell the cheaper device to? brian: some people like a four inch but there are some people that are moving into the middle class in the developing countries and i think that is -- tom: the new phone they are coming out with was built for cuba. they are going to throw in at&t or verizon will go down to cuba and this thing will be priced at half or about one third. ian: 400 to $500. to me that they are ready for the global middle class. i am wondering do you think that the privacy debate, that they really decided to put their foot down on with united states, is that affecting any sentiment in
6:46 am
terms of apple shares? brian: i don't think it has impacted sentiment. it is a debate that will have to be played out. today's event is a media only event. they want to betray a message today. francine: the apple auditorium as opposed to them taking over a big show. what about the ipad? they seem to think they will still replace the pc. is that happening? brian: the ipad pro came out in november and it is a great product. i think what they are going to do today is shrink the formfactor and instead of having the ipad -- vonnie: it was not as po popular as apple's ". brian: i think the replacement cycle is longer than people thought. ipad last forever. tom: go ahead, francine. francine: i want to come back to something. i thought apple had already won because they are going to change and make software in the future
6:47 am
that you cannot have access to, right? brian: what apple has always done that is different is the develop hardware and software together. tom: tell me about samsung. i look at the microsoft store on fifth avenue. it is empty. tell me about samsung. are they making traction? brian: we have gone to china 60 times and i can tell you the momentum of samsung in china has deteriorated in the last two years. once iphone came out, the 5.5 off. an samsung fell a lot of mid-level guys in china. vonnie: they have to find someone new to copy. tom: thank you so much. we will continue this discussion. we have an apple special to give you perspective. apple's road ahead. look for that at 1:00 p.m., 5:00 p.m. in london.
6:48 am
the road ahead is to take more money out of my checkbook. ♪
6:49 am
6:50 am
tom: front and center last week, for exchange.
6:51 am
111.49. dollar weakness, the usual. i put in the euro because i'm try to be european. francine: you are european, most of the time. coming up shortly, bloomberg go. stephanie joins us now. stephanie: we have to talk china. with the easing of margin requirements, we are seeing the shanghai composite hit the 3000 for the first time in months. we will be talking to the chief strategist at goldman breaking that down. we will also talk cuba. president obama in cuba the number of executives, even the rolling stones are there but it is not all diplomacy and shaking hands. starwood pending the first sale we have seen from a major hotel operator. tom: let's get to our single best chart on europe but also on america as well. this says something about the
6:52 am
anger out there. the white line is u.s. nominal topline gdp and there is france. ian, i put it in there to show the struggle of certain nations to keep it going. if there is political tension in france or other countries in europe, why the anger in the united states if the u.s. line is pretty good? so many of thet americans have experienced flat wages through that extraordinary productive growth and the second is that america, the fabric of america, is changing. younger americans are more multicultural, more secular, more socially liberal on issues like same-sex marriage legalization of marijuana. there is a significant minority of americans out there bank that feel they no longer identify with the country america is becoming. that plays into the support we are seeing for the donald as president. tom: from your study of political science, where does
6:53 am
growth come from? if we all aspire to a better economy, how you get there? ian: growth right now comes from extraordinary technological gains and productivity. gains anding a lot of productivity. a lot of companies are performing well but you don't need the workers he is to and it is not just in tech companies. google does not need what at&t did. big pharma companies have 50% the employees they had 20 years or so. across the board you look at the number of laborers that are actually required to generate the kind of returns companies have, they are a fraction of what they used to be. if that continues you will have to have radically different social policies for government or you will have to have incredible social instability or authoritarian states. there is really no way to square that circle. vonnie: if we go back to tom's chart, nominal gdp, it is the distribution of wealth we need to look at. nominal gdp can grow but if you
6:54 am
distribute it always to the wealthy and the rich, you get the gap and you get votes for the donald. ian: keep in mind, this is happening in america despite the fact that energy prices are much lower so the average american has gotten a significant effective tax break. it is easier for them to go back-and-forth to work. prices right now are pretty low. that does not matter. i think the economics are one piece of this but i think the identity politics or another and they play in europe and the u.s. let's also recognized the rise of social media which has fragmented and polarized demographics in these countries. that is driving our presidential campaign in a way that it never has before. francine: do you think france is a problem child in europe when you look at not only the rise of extreme parties but also the fact that we don't really have any structural reforms? ian: it is certainly one of the countries where i would expect
6:55 am
greater tell risk. it percent of the population is muslim. you have done no job at all of integrating people into these countries. the violence is growing. the focus on security, the inability and unwillingness to do any sort of reform economically all placed together . where are the productive sectors in france? make theot enough to average french citizen under 30 think they have a future in the country. that kind of systemic and endemic malaise in a country does nothing for your trajectory. tom: is there a trump doctor and? ian: there is not a trump doctor and. when you are seeing is a lot of americans who want to blame people for what has not happened in their own country. it is so easy to blame mexicans for raping women, blaming the chinese for ripping off everything that is not bolded muslimsame the wa for wanting to blow us up. the europeans for taking advantage
6:56 am
of our security. the trump doctor and is blame and unilateralism. one thing i promise you, where you to see a trump president, but you will not -- and you will not going to, if the a lot more g0. alliances would fall apart. tom: dr. bremmer will continue with us on bloomberg radio. francine, thank you so much. bloomberg go, next on television and coming up, david herro on international investment will join us on bloomberg surveillance this morning. dow futures up 24. this is bloomberg surveillance. ♪
6:57 am
6:58 am
6:59 am
stephanie: goldman sachs standing by a stronger dollar. president obama arriving in cuba with u.s. executives intel ready to make deals. of 140 characters.
7:00 am
twitter celebrating a milestone while many question its future. welcome to "bloomberg go." bloomberg world headquarters. i'm stephanie ruhle with jonathan ferro and david westin. happy monday. david: welcome guy haselmann. we have a lot to talk about capital markets. jonathan: this for day trading week. before we get started, let's get a check of the headlines. a look into pimm fox. david: welcome. made instory will be havana today. a meeting between the bomb and raul castro.


info Stream Only

Uploaded by TV Archive on