tv Bloomberg Markets Americas Bloomberg March 28, 2017 2:00pm-3:31pm EDT
scarlet: we're live in bloomberg world headquarters in new york over the next hour, covering stories out of los angeles, washington, and beijing. we want to focus on policies from president trump as he gets set to sign an energy independence executive order this hour. it seeks to lift a ban on the and of new coal leases reverse the clean power plan, and and obama era regulations aimed at combating climate change. for more, we're joined by kevin cirilli, who is at the white house right now. as we await those executive orders. kevin, which one here is most representative of trump's agenda to push back on some of the climate influence regulation? afternoon,r this president trump is going to unveil sweeping executive action aimed at reversing former
president barack obama's energy executive orders. the bottom line, this is all about coal. he previously campaigned on the campaign trail, promising to extend several of these executive actions in several key states in the working-class voters he was able to attract, particularly in coal states like west virginia. it also provides a political opportunity to reach across the aisle to work with more centrist and moderate democrats, like heidi heitkamp or senator joe manchin, democrats in particular who visited at the white house the previous week, talking with the president on coal policy. this is a big win for that industry. they lobbied heavily against the obama administration and now they seem to have gotten some results with president trump. scarlet: to what extent will democrats be on the stage are part of the optics of the signing of the executive order? foremost,st and democrats are criticizing this aggressively, including several environmental groups that have already been flooding the
airwaves as well as your in washington, speaking out against it. it has rattled them to say the least. the second point i would make is this is a white house that wants to reach across the aisle because last week, they were not freedomget the house caucus on board for their policy initiatives on health care. this is a white house that need the policy win and is also a white house that is looking to begin to make that move across the aisle on a host of issues. energy reform is one of them because it's more democrats having to bend to them in the states like west virginia as well as the dakotas. if it's a broader policy initiative, this president taking sweeping energy action, and has approved several the pipelines in addition to the energy executive orders and we are awaiting this hour. oliver: there might be some pushback, executive orders by the president have happened before. is it going to be legal battles? environmentalists will
definitely take this to court and look to stop him in any way they can. however, the math isn't there for them in the senate, let alone the house of representatives are in a particularly in the senate as they look to block this, they can't, because there is that contingency of democratic lawmakers were with the president and republicans on this particular policy front. oliver: kevin cirilli, we will be checking back with you later. on how: for more president trump executive order on energy will affect the industry, we're joined by nick akins, chairman and ceo of american electric power. one of the largest generators electricity joins us from columbus, ohio. it's great to see you, thanks for speaking with us today. will the president's efforts worked when natural gas and renewables are so competitive? existings an opportunity to operate, and obviously, coal needs to be a part of the portfolio.
with natural gas prices so low and renewable pricing coming in even lower -- i would also add, technology. the way it's developing around the smart grid and efficiencies that can be driven out of the grid, including transmission and distribution, there's a lot of resources today that we didn't have previously. you are seeing a rebalancing that will occur across the country from a fuel standpoint. coal will remain a part of the picture. this illumination of the clean power plan focuses on existing coal and continuing to operate around that framework. it could be helpful to cold. coal. scarlet: do you continue on that trajectory, or do you recommit to coal? mr. akins: that trajectory will continue because of the rebalancing. if you look at the resources in the future, with natural gas
prices being so low, the advent of shale gas and the improvement inefficiencies of solar, wind, other forms of renewables, you are seeing that movement occur, that will continue to occur because from a shareholder perspective and from a customer perspective, there is a need to be more movement to a cleaner energy environment. the will still be a part of picture, existing coal continues to operate, but you will see additional resources being added that are clearly within the natural gas and renewables framework. out, your you point business has shifted away from coal to renewable energies and it does seem like a lot of that is intrinsically motivated by the benefits of that type of energy. thewondering as we now face rollback of some of this regulation, does it change your business? do you revisit the timelines from winding down coal plants or decide to extend the longevity? mr. akins: it's possible it is remanded back to the epa, there
will be additional discussions with the states, because initially was the state's requirements associated with a clean power plan and we obviously follow the states in terms of what the resource plan is for that particular state. you going to continue to see that kind of evolution occur. but again, it will all be within the framework of existing technology for each individual state lies in terms of its ability to attract additional resources. i don't see a lot of change in terms of that dialogue with the states. it will give them the opportunity to focus on the existing maintenance of coal-fired generation and make those kinds of decisions. when you think about coal-fired generation decision, it to 30, 50 or decision. that's difficult to make in this environment with technology changing the way it is. rollback ofh the these obama era regulations, it will make a literacy markets much more competitive and much more brutal as well. i wonder if you can gaze into
your crystal ball and gives a sense of what that landscape will look like in five years, 10 years from now. how competitively be and what does that mean for you? mr. akins: we see natural gas being more prevalent throughout the country, from the shale gas flippers that occur across the country. the ability for that cutting knowledge in place very quickly as opposed to a call unit that takes longer to permit, longer to construct, to make those kinds of decisions by going to be very difficult to make. any long-term capacity decision for coal or nuclear to a certain extent is very difficult to make within the framework of natural gas and renewables, and other forms of resources, including transmission and smart grid activities. you are going to see a lot more development of those activities. itl will continue to exist, will continue as smaller fashion that it has in the past, not 50%, to could be more like 25%
to 30%. you will see additional additions in terms of requirements for new resources to be in that natural gas renewables and energy efficiency type of framework. oliver: i want to talk about your own breakdown for energy and how it affects your fundamentals. i have a chart here charting your operating margin versus your ups and growth over the past 12 months. you are excelling over your peers when it comes eps growth over the past 12 months. when it comes operating margin, you are pretty far behind around 7%. and what your take on how potentially either this is going to change unrelated to the legislation, or whether or not perhaps a shift towards cheaper energy could potentially open up those margins for you guys. a shift to cheaper energy is an opportunity for us to invest in the grid. you are seeing from an efficiency standpoint that continues to improve. we largest transmission provider
in the country, and because of the advent of transmission, the advent of shale gas activities in the advent of other forms of technologies, you're going to see our company continue to progress from that state of not looking at generation resources, per se, but looking at resource requirements across the board that support the wires related to transmission distribution, quality of service to our customers. that's what we're focused on. as you look at our future, and you see that from the capitalnts, the deployed, we're talking about $9 billion over the next three years in transmission. $1.5 billion from a renewable standpoint and $4 billion relative to distribution. the result of that is we reduced carbon emissions since 2005 by over 35%. from 2000 over 44%. you're going to continue to see that kind of evolution occur. oliver: one final question, we are thinking about markets and we have you on the line. when you talk about natural gas
prices we just entered a bull market recently. and he thought how the direction is going to go from here? mr. akins: i think natural gas will continue to be steady. we see it as a resource of the future. you are seeing more production, you are seeing the wellheads continue to improve. efficiencies continue to improve. natural gas pricing where it is today is here to stay. oliver: he think that run could continue higher? i think he will remain relatively steady. it changes somewhat based on storage that's occurring during the year, and we have a late winter, so storage is high. variationse to see in that, generally speaking, natural gas prices will remain low. scarlet: nick akins, chairman and ceo of american electric power. thank you. oliver: let's check on the bloomberg first word news with mark crumpton.
mark: speaker paul ryan said today he is going to give republicans another chance at overhauling america's health care system. with the hopes of getting a bill that would pass the house. white house press secretary sean spicer told reporters today the administration is listening to lawmakers. but has no plans to repeal and replace the affordable care law in the near future. >> have we had discussions and listen to ideas? yes. are we actively planning a media strategy? not at this time. mark: spicer added the president is willing to listen but doesn't want to make a bad deal. there could be a showdown in the senate over president trump's supreme court nominee. there are now 20 democrats on record opposing judge you gorsuch. senator dick durbin of illinois and michigan's to lawmakers debbie stabenow and gary peters announced they would vote against judge gorsuch. republicans are intent on getting the judge confirmed
before congress is two-week break in mid-april. the opposition raises the prospect of senate majority leader mitch mcconnell using the so-called nuclear option to get the judge confirmed. the british government is standing by his initial statement that now isn't the time for a scottish referendum. the may administration repeated today there will be no negotiation on the matter in the focus for now is on brexit talks with the european union. scottish lawmakers voted today on a new referendum on independence to be held within the next two years. the scottish parliament voted 59-69 to back nicola sturgeon's call to ask for an independence vote. the united nations calls of the largest humanitarian crisis in 70 years. three african nations, south sudan, somalia, and nigeria, are on the brink of famine. u.n. officials say 60 million people are risk of dying -- 16
million people are at risk of dying within months. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. scarlet: thank you. let's get you a check of where stocks are trading right now. we have been looking at small moves in equity indexes over the last day. big gains for the dow, up 173 points, the s&p 500 gaining .9%. the nasdaq up by .75%. this is bloomberg. ♪
session highs. abigail: we are looking at a nice rally. the best rally since march 1, a big relief rally from last week's selloff. it's really being propelled by the technology sector, by apple along with the banks. apple trading at a new record high. we got out of washington where president trump is speaking at the epa. [applause] trump: thank you, very much. [applause] president trump: i guess they like what we are about to sign. i knew they were going to like this one. thank you very much. i very much appreciated, and thank you to our great vice president, mike pence.
i'm thrilled that everybody could be here with us today. toant to give special thanks administrator scott pruitt, secretary ryan safety and secretary rick perry for your remarks. i told rick i said run it the way you ran texas, because it's going to be a great operation. did a great job and we are honored to have all three, and really honored to have our vice president, because mike pence has been outstanding. hasn't he been outstanding? [applause] president trump: together, this group is going to do a truly great job for our country. we have a very, very impressive group here to celebrate the start of a new era in american energy. and production. and job creation.
the action taking today will eliminate federal overreach, restore economic freedom, and allow our company and our workers to thrive, compute, and succeed on a level playing field for the first time in a long time, fellows. it's been a long time. i'm not just talking about eight years, we are talking about a long longer than eight years. you people know it may be better than anybody. thanks as well to the many distinguished members of congress who have taken the time to be here. i want to thank all of our industry leaders who are with us , and who share our determination to create jobs in america, for americans. and shelley, thank you very much. i spotted you in the audience. thank you. is all about,this bring back our jobs, bringing back our dreams, and making
america will see again. -- wealthy again. i want to thank the dedicated public servants who are with us this afternoon. you are doing important work to protect our health and public resources. so important. finally, i want to knowledge the truly amazing people behind me on this stage. the incredible coal miners. [applause] miners.our coal [applause] thank you. great people. over the past two years, i spent ers all overn america. in one case, went to a group of in west virginia, and i said how about this? when we get together and go to
another place and you will go to another place and get another job. do you like that idea? and they said no, we love to mine, that's what we're going to do. and i said that's what you love to do, that's what you're going to do. they love the job, i fully understand that. i grew up in a real estate family, and until this recent little excursion into the world of politics, i can never understand why anybody would not want to be in the world real estate. believe me. so i understand it, and we are with you 100%, and that's what you're going to do. ok? [applause] president trump: the miners told me about the attacks on their jobs and their livelihoods, they told me about the efforts to shut down their minds, their communities, the very way of life and i made them this promise. we will put our miners back to
work. [applause] we've already eliminated a devastating and cycle regulation , -- anti-coal regulation, but that was just the beginning. today on taking bold action to follow through on a promise. my attrition is putting an end to the war on coal. we will have really clean coal. with today's executive action, i'm taking historic steps to lift the restrictions on american energy, to reverse government intrusion, and to cancel job killing regulations. [applause] president trump: and by the way, regulations not only in this industry, but in every industry. we are doing them by the thousands. every industry.
we are going to have safety, we are going to have clean water, we're going to have clean air. but so many are unnecessary and so many are job killing. we are getting rid of the bad ones. one after another, we are keeping our promises and putting power back into the hands of the people. first, today's energy independence action calls for immediate reevaluation of the so-called clean power plan. perhaps -- [applause] perhaps norump: single regulation threatens our miners, energy workers, and companies more than this crushing attack on american industry. second, we are lifting the ban on federal leasing for coal production. third, we are lifting job killing restrictions on the production of oil, natural gas,
clean coal, and shale energy. and finally, we are returning power to the states, where that power belongs. states and local communities know what is best for them. they understand it, they get it. they've been doing it for a long time. it was taken away from them and not handled well. they are the ones we should now, and will now, and power to decide. my action today is the latest in a series of steps to create american jobs, and to grow american wealth. we are ending the theft of american prosperity and rebuilding our beloved country. we have the permit to finally build the keystone xl pipeline and cleared the way to completion of the dakota access pipeline. thousands and thousands of jobs. [applause]
president trump: we've already created .5 million new jobs, and the first two job reports. if you notice today, ford announced massive new spending on three big plants in the state of michigan, a state which i love very much. do you ever what happened in michigan -- do you remember what happened in michigan? exciting8 was an evening. ford just made that great announcements, it means jobs, jobs, jobs. we are going to continue to expand energy production and also create more jobs and infrastructure, tracking, and manufacturing. this will allow the epa to focus on its primary mission of protecting our air and protecting our water. together, we are going to start a new energy revolution, one that celebrates american production on american soil.
we want to make our goods here, instead of shipping them in from other countries all over the world, they should be in, take the americans money, take the money, go home, take our jobs, take our companies. no longer, folks. no longer. those magnificent words, made in the usa. [applause] president trump: we will unlock job producing natural gas, oil, and shale energy. we will produce american coal to power american industry. americanransport energy through american pipelines, made with american steel. made with american steel, can you believe someone would actually say that?
[applause] this came upmp: little bit coincidently coincidentally when i was signing the pipeline deals. i got them done. folks, that steel is from foreign lands. that's no good. who makes it? who makes those beautiful types? they are made outside of this country. i said no more. i added a little clause, that you want to build pipelines in this country, you're going to buy your steel and have it fabricated here. [applause] president trump: together, we will create millions of good american jobs, so many energy jobs, and it will lead to
unbelievable prosperity all throughout our country. rick perry is going to have a lot to do with it. thank to just bank -- everybody in this room. in particular, i want to thank the miners. these guys haven't had enough thanks. they had a hard time for a long time. [applause] scarlet: that was president trump speaking at the epa before he signs an executive order to roll back some of resident obama's environmental initiatives -- president obama's environmental initiatives. he is going to reevaluate his
predecessors power plan and lift the federal leasing for coal production. actually, he is speaking some more. president trump: thank you, fellas. god bless you, and god bless america. thank you. scarlet: and there we go. the final thank you to his audience. primary mission is protecting the air and water, and with this action today, it will bring that agencies tasked back to that primary mission. let's bring in tim loh and jennifer dooley. jennifer, we know the president has said he plans to roll back his predecessors clean power plan, but he hasn't said anything were committed anything when it comes to the u.s.'s role in the pairs hyman agreement. -- the paris climate agreement. theifer: he didn't address
paris accord at all, because there is some discord within the administration for the best approach there. you have secretary of state rex tillerson advocating the u.s. keep its seat at the table. you have his daughter pushing the state in the accord. there some pressure from conservatives. feels like an old industry, but very much so, there are people who work in coal. can you give us some perspective how big is this industry still and where are the people he is addressing? what do they want to do that they haven't been able to do? cole is not dead, it still provides about one third of the electricity generated in the u.s.. there's also a component that makes the coal in the steelmaking process, so when you talk about from utility perspective and also steel for the pipelines. oliver: beautiful steel. tim: they fit together.
the majority of the coal is produced out west in my domain, montana. you have a significant amount in the heartland of illinois, indiana. the image that we have in the has been the stronghold for a lot of his support and that has kind of in the target audience for a lot of his rhetoric. , in appalachia, the economics are very difficult and whether he is able to stoke new demand for that region, that is the real hurdle and that is where coal mining is more labor-intensive. if you are looking to create more jobs, you really need to push for that area. coal as a topic is politically potent. it is a throwback to when the
industry was in so much better shape and an entire region's livelihood really depended on it. this is a prominent part of the president's campaign. he went through west virginia with a miners helmet. he channels the frustration that coal miners felt throughout the rust belt and throughout west virginia. he channeled that on the campaign trail and you heard him use that same rhetoric today, saying thank you to them. he made very clear as he was campaigning for the presidency that these were the kinds of changes he was going to make. he is making them today. oliver: when we talk about the president bringing back coal jobs, perhaps if the industry is suffering next to renewable
types of energy, what's the definition we should be using? is it extending the life of the coal industry or giving them another breath to keep going? not bring if it is back jobs or is it in fact bringing back jobs? suspectederal analysts this will stave back some of the decline. retirement hasn't been announced, maybe they will be able to see their lives prolonged, but the long-term trend is running against coal used for power generation with or without the clean power plant. they're looking not just into renewables not because they are cleaner and meet other pollution requirements, but because they are increasingly cheaper. those headwinds will not be changing here.
have things much changed for the coal industry since obama took his action? everything was stipulated by 2030. how much movement do we really see from the private sector? in terms of the industry itself, there's been a 40% change in the volume of coal mines and baked into that, you have a rash of a group sees, you have a lot of job losses, but a lot of that is also coinciding with the shale business and chief natural gas has been the primary killer in that share of the market space. some of the regulations like ,resident trump mentioned today lifting the moratorium on federal coal leases, that has a longer-term component. that particular policy, if the
u.s. would stop giving leases to coal miners on federal land, that would not have an impact until 10 years or 15 years down the road. scarlet: thank you so much for joining us. we just wrapped up with president trump signing his executive order to roll back some of his predecessors initiatives on the environment, especially on energy. coming up, carnival cz upside of price increases. ,here optimistic forecast coming up. from new york, this is bloomberg. ♪
oliver: this is bloomberg markets. i'm oliver renick. scarlet: i'm scarlet fu. the pace of tax increases in the u.s. were the topic at the credit squeeze conference in hong kong today. glenn hubbard says the fed is to accommodative. our reporter asked how the trump administration can avoid topics that lend to the financial crisis nine years ago. >> we need to do a pause until we can do further cost-benefit analysis and stopped too big to fail. all of those are things the trump administration team has talked about. will deliver ain package and that is when it can grow. >> with health care, we have learned that reality can bite. big number on these
wall street regulations? >> i think it is neither. i think it is a real look at what are the benefits and costs of regulation. rather than mindlessly promulgating regulation, say which one can help and which problem are we trying to solve. you mentioned in terms of the fed and in terms of monetary policy, perhaps it has run past its shelf life. sayings like they are early but gradual. is that the right approach? havee fed should normalized earlier. the fed is not on life support. i don't know why we had the policy we had for as long as we get. the fed is taking the right steps and looking at the right variables and i think monetary policy is getting back on track. that otheraged central banks are saying if the fed is shifting that maybe we should also. i think that's a healthy
development. >> does that mean three hikes or r?r -- or fou >> i think we are finally on the right path. >> we heard from neil cash kari that there is no theory on why the fed needs to be gradual. do you think the fed could actually execute such a strategy? a theory behind that. the fed cannot fix structural problems. we have been depending on the world of structural banks to do that. we need better tax policy to boost growth, not holding down interest-rate and allocating capital. >> when do you think asia will really start doing the bite from the fed? >> it depends what other central banks do. bigtax bill could be a very
change in the value of the dollar. i don't expect that to happen, but if it did, that would be a risk to watch. scarlet: that was a hubbard speaking from the credit suisse investment conference. you will want to tune in to bloomberg tomorrow at 2 p.m. eastern time for our conversation with the federal bank of boston oliver: president. let's head to abigail doolittle for our sector spider report. abigail: financials are leading the rally for the major averages since march 1. the xls up sharply and having it this day since the first of march. groups.e among the top some of the banks boosting the dow, we have bank of america and wells fargo trading higher. the banks have been down since the federal reserve raise rates.
today, we have the 10 year yield, three basis points shown in red. help to explain the rally that we are seeing in the financial sector. as for what is next, we hop into -- this is the xls and on it is the chameleon indicator. by one of our colleagues on the equity team. this is a combination of many technical indicators. green is bullish, red is bearish and the in between colors show uncertainty. we do see that it is below the 50 day moving average in yellow. we also see the chameleon isicator could suggest there
more weakness had for the banks despite the rally today in the financial sector. scarlet: thank you so much. oliver: carnival is raising its profit forecast and passengers are willing to spend more at sea. we have more on this story from los angeles. some of the cruise liners have been struggling but it looks like at least going into the earnings report, investors are feeling good. tell us about the enthusiasm. guest: it is a pretty good time to be in the cruise industry. repeat cruisers are up and they are paying higher prices for tickets and they are spending more when they get there. it's kind of the best of both worlds. scarlet: which region is doing the best? have been a lot of concerns that there would be less demand for cruises in the european region because of fears of terrorism. is still true a bit. the real strength is in the
caribbean and alaska. markets inding new cuba and china and there's a broader trend here and that is people are still traveling despite of the terrorism. you see it in las vegas and in orlando -- americans have disposable income and they are willing to spend it. some of these consumer focus companies and a fit when americans have more cash in their pockets. how do we suss out what is particular to carnival and what they do right as a company and whether there is a benefit of a growing economy in the u.s.? one of the things that they have done is they have for tv shows. have a new one that's all about a bartender traveling around the world making drinks, so it's a subtle promotion of cruising. that is certainly working for
them. i think we see a bigger trend in the industry. there was a focus on waterslides and zip lines and other schist a refocus on the customer experience, rolling out wristbands that will allow you to open your hotel room and order drinks quickly. royal caribbean is doing away with traditional balconies and making the cabins bigger. there's an emphasis on customer experience that is paying off. for a while, it was about the pump and glamour, but basically there is the forward thinking and patients on behalf of the chief executive officer up is taking a route in approaching capacity and feeding. to's talk about his approach demand before upping the capacity on the ships.
for -- ithink there think that if there are rough seas ahead, there are a lot of ships being built. they see that after withdrawing some ships for the next four years, that is ready hefty. that means they have to grow their revenues by more than that. i asked the ceo about that and he said we are flexible. that's one of the nice things about being in the cruise business. they can retire ships if they are less profitable and demand is not meet the supply growth. that is something to look out for. oliver: i'm looking at the earnings history for carnival. it's pretty incredible. you have tobeats, go back a couple of years but it seems like optimism is a high. big changes under ceo arnold met donald.
they are just getting all the 10 costs and its resulting in savings and that hits the bottom line. oliver: thank you so much for bringing the scoop on carnival. now going to hand it over scarlet with a special report. scarlet: lululemon is set to report its earnings and there is eager this to move past the executive side. lululemon'scheck on progress. back in january, the company raised the lower end of its revenue earnings cast. the ceo pointed to a strong holiday season and you can see a boost in the sports apparel industry. 's own same-store sales rose 7% in the third quarter. as with most retailers, online
sales growth, which is the white line there, is outpacing sales at brick-and-mortar stores. e-commerce makes up for 1/5 of the revenue. direct innovation and supply chain should have bolstered these results further. income is generated by fully owned stores. while the lion's share comes from those states, the expansion will provide sales to asia. gross margin expansion will be critical in reaching the 2020 goals. you can see how gross margin theth has improved since down years. investors will be looking for any updates on the men's side of the business. expect men's sales to increase to $1 billion by 2020. we will be following these
oliver: this is scarlet: bloomberg markets. i'm oliver renick. scarlet:i'm scarlet fu. let's turn to china where the leaders in banks are more confident about the economy than any time since 2014. yesterday, we talked about china's outlook with the founder of ever core. he says china is facing serious challenges. and at somea mess point, it's going to blow up. they have a ton of debt, which is unsustainable, but the money supply in china is $23 trillion.
$13money supply is trillion. $10 trillionnother and it's like 11%. it has increased $2 trillion in the past year. joe: this view that china will blow up or have a truly hard landing, as long as i have been following economic are gets, people have been saying that. why do people keep hitting the timing wrong? guest: the issue's debt keeps growing faster than the economy. 11%.deposits are growing in the past month, back -- bank loans are up 13% and gdp is growing 10%. the economy continues to go up and the same is true here. we continue to have debt grow faster than gdp. newly created jobs in china
-- how many people every year getting good paying jobs, adding $13 million per year? what does this new source of demand mean? guest: it's pretty obvious what it means. last year, they created the teen million jobs. we created 2 million jobs. have a much bigger population than we have, but there's no law that says we have to create the jobs, but 13 o.llion, we created tw we have 13 million more people to fill autos and consumer spending. joe: you talk to all these multinational companies. they are feeling good. guest: they are feeling better, not good. who wins out? where do you look for the winners? guest: everywhere. everyone is a winner.
every other economy in the world is a winner. they had howard schultz on your show last time i was here and he said china is going to be our biggest market. if you are adding 13 million people a year, you would create that and they are coming from very poor to not so poor income levels. when someone goes from making eight house and to $9,000, they get their first starbucks cup of coffee. we gone through every income trigger. myrlet: joining us now is "what'd you miss?" cohost, joe weisenthal. the story got an incredible amount of interest from our readers on the bloomberg terminal. eventuallyiew that china because of all of its debts and imbalances in the
market is going to have a reckoning has been around for a while. , the story hee told right now in the u.s., china and europe is that there are no real weeks spots currently in the market and the global economy is seeing some self reinforcing momentum. gdp is off what it used to be and is still pretty strong. at what point does the china hard landing call become wrong? joe: it's never wrong, it's just early. whatever caused people to not be predicting that -- we continue to see private debt in china. it doesn't look like there has been a ton of transition away from the economy, so i think the only way people will come off it is if we were to see signs of deleveraging and transition
without a major slowdown. want to look ahead to tomorrow's because we're hosting a special on populism. it obviously creates a lot of greats and losers, and lineup of gas, jean-claude tree shake, the former prime minister of italy -- joe: we talk about what's going on in politics and in europe and really taking it to the next level of what it means for economics and markets, we have had this extraordinary time of 30 years of globalization's -- mobilization, the freer movement of labor and we have had these conditions that have been in place for a while. economicallymean if the momentum starts to fade? scarlet: speaking of momentum, talksow is when the u.k.
on brexit. oliver: it's hard to say that there's not a bigger topic than that right now. what did you want to address joe:? there has been a lot of complacency about the idea that it's only economics and that if only the economic growth were better than some of these movements would go away. my hunch is that it is not so simple. scarlet: it usually is on. my thanks to joe weisenthal and be sure to tune in tomorrow when we consider how the rise of opulence is changing the dynamics of the country. that is at 4:00 p.m. tomorrow. this is bloomberg. ♪ show me academy of country music awards.
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oliver: we are live at bloomberg world headquarters in new york for the next hour and we will be covering stories of detroit, washington, and athens. here are the top stories we're covering -- one hour left in the trading day and stocks are rebounding. the dow is on track for its first positive close in nine session. in consumer confidence and a day of higher treasury yields. trigger article 50 tomorrow starting britain's divorce from the eu. we will look at whether it is priced into the market. general motors setting itself up with a five for david einhorn, snubbing the proposal to offer a second class in the stocks for the company. abigail: this is a serious case of by the dip. the dow and s&p 500 and nasdaq are all trading slightly higher,
on pace for the best day since march 1: being helped by the banks which are rallying in a major way. the dow is on pace for its first update, perhaps snapping a bearish streak there. , on pace for its worst monthly performance since january of last year. oilher tailwind for stocks, off the highs that bullish and trading higher. lots of momentum around the idea that opec could extend the supply cuts through the second half of the year. libya was seen cutting shipments apply out of libya. we hop into the bloomberg and morea look, there could be bearish trading action ahead.
this is oil using the chameleon indicator. it combines lots of different indicators. in green, those are bullish areas. lots of red over the last few years. yellow and pink, uncertainty. there could be more downside ahead and very quickly, taking a look at car stocks, gm, ford and tesla, we are looking at a rally. we are looking at a proposal to create a second class of common stock that was rejected. 3%.a, up nearly tencentlly for tesla as is taking a 5% stake in the company. staying with the
markets, u.s. equities entering their final hour of trading. if you come inside the bloomberg , this is an intraday chart and only j and j is declining. you look at other asset classes, the dollar coming back up, oil higher and treasuries are down. concern that the reflation or was rolling over. is this proof that it hasn't? there is a significant expansion postelection. focused on much been reflation and the trump factors. something very powerful that is happening which is globally synchronized growth and that's starting to get more front and center. let's not forget on the s&p,
nearly half of the revenues are overseas. as it relates to the s&p as it relates to emerging-market equities, the s&p is going to fight a very and either you are trying to grope for the upside catalyst to really grow into these higher pes, it is not obvious with trump factors getting mitigated and water down. oliver: let's talk about what the market needs to do. i've got to simple things going on. i've got earnings expectations where at the beginning of the year, it was 130 bucks per share. at the beginning of the year. we are talking closer to 129 but it is still in line with
double-digit growth. is it within the realm of possibility -- we are getting close to april. how much longer can we go with this assumption that we are going to get to a forward multiple with that earnings growth? generousen if you are on all of the market friendly factors happening in a timely happen, if those interest rates will be higher, grow into lower pes and the offset is you have bigger earnings. if you have corporate tax relief, that could be a huge part of it. when you think about what is happening after friday, this is a big ask and you have to go back to the other factors of , higher yieldn it's for bank earnings and
going to be harder to grow into that. ahead intoen we look how investors are positioning, people moving into emerging didn't that lead to more volatility stateside? guest: if you look at volatility and the vix for europe and the vix for japan, they correlate very tightly. stability isrowth a backdrop helping to keep all these metrics very low. it's supposed to be a tough long but it's a great performing asset class this year. the volatility was really creeping into fresh lows there. all of these metrics are moving together globally synchronized growth is there.
the 10 year treasury yield is behaving itself. is going to make it hard to see a lot of expansion in other volatility metrics. lookr: i can't help but today after we have had some weakness, i can't help but inice only the second day two weeks that there is a meaningful move up. it marks a substantial difference from rallying bonds. is that more important to the banks than what is happening with the trump agenda? at the end of the day, it seems like what higher yields they are looking at. the correlation between the 210 curve and the xls has been super tight. tight and youry
are trading that to 10 curve. i've been short the xls based on that and i think it's time to cover that from a truly tactical point of view. going into a tightening cycle going from second gear to third gear. the short and typically sees the biggest expansion in rate increases, but what is even more powerful today is that at least for the moment, our 10 year treasury is importing a lot of quantitative easing. that is going to be tough if you are bullish on the heels curve. it doesn't mean financials are dead, the xls trades at a discount to the s&p 500. market,in a warped
after that rate hike, just in the immediate aftermath, how do you go about adding to something like that? guest: very tactically. everyone has been short treasuries and it's going to moderate by how quickly yields go up on the backend. the positioning is at the 10 year. variable isy swing not just bangs on the 210 curve, but the key linchpin security. bund cracks through 50 basis points and you get followthrough on european ifnomic data to the upside, you get a more hawkish tilt out of mario draghi, that will list the 10 year yield of more so than trump factors. scarlet: thank you for your time. let's get your track on the headlines with mark crumpton. president trump today
signed an executive order that will roll back many of former president obama's efforts to curb global warming. the president spoke at the environmental protection agency. mr. trump: we have a very, very impressive group here to celebrate the start of a new era in american energy and production and job creation. the action i am taking today will eliminate federal overreach , restore economic freedom, and allow our companies and workers to thrive, compete, and succeed on a level playing field for the first time in a long time. it has been a long time. mandate aorder will reorder of the clean power plan and lift a 14-month-old moratorium on new coal leases on federal lands. a lawyer for former deputy
attorney -- attorney general, sally yates, claims the trump administration tried to limit her testimony at congressional hearings scheduled to focus on russian meddling in the presidential election. the hearings, which included former cia director john brennan james klapper and later canceled by devin nunes. house democrats have called on the it is to resign. the white house denied ever tried to block the deputy ag. south africa's finance ministers as he has not resigned but maybe on his way out. president jacob zuma told political allies that he plans to fire gordon according to people with knowledge of the matter. zuma ordered him to cancel meetings and return home from london. global news 24 hours a day powered by 2600 journalists and
you can see gm's returns have lagged behind the s&p 500. since the company emerged from government control in 2010. they say guaranteeing a event could compromise its it rating. this sets up for a battle between the company and david einhorn. what do we know about high -- about how stubborn david einhorn is likely to be when he digs his heels in? david: he's usually a short seller, not an activist investor. we don't have a track record of taking on. lehmanim to fame was brothers and he was short on that before they fell on tough times. we'll see how much he wants to dig in, but it will be on the balance of the proxy. management has agreed to do that. we could have a vote come spring when the annual meeting comes around. oliver: let's look at green
light's position here. you can get a quick glance of where he is. it is a smaller portion than i thought. you can see the green line -- that is his position. it has been steady the past couple of quarters but ultimately, less than 1% of the company. wants some shares and there's a dividend play as well. reddoes the dividend play and? david: he had some options and he wants to exercise a theory that some people by gm because of the earnings power of the company and they keep ratcheting up their profit forecast while other automakers are pulling back. they have a strong dividend with a good yield. investors either by for the and buy into gm to get
what they want. you would not have them buying a part of gm that they don't want and that would unlock a bunch of value. you don't see a lot of dividend-based stocks. you usually get the preferred were some kind of mechanism like that. work, you're stuck with these stocks any have more liquidity in the value goes down. you are locked into paying this dividend for the other stock regardless of what happens with the economy and auto sales. paying a dividend to long is what got them into trouble. oliver did a good job of playing out greenlight capital is not as big a shareholder as you might think. have other shareholders falling -- fallen in line?
no one has come forward and said this publicly yet. when harry wilson, the former treasury department official who oversaw g.m.'s restructuring, he worked with some hedge funds that pushed gm for a share buyback and a bigger dividend. even then, warren buffett did not back and even though they were successful in getting a buyback, so there isn't a great record of people falling in line with activist demand. you did not see a lot of people falling in line with the demand this companies merge, so will be some uncharted waters in terms of what people are going to want to see in terms of helping people unlock some revenue. the creditdy's said negative and standard & poor's says they would treat it as
debt. scarlet: thank you so much. oliver: time for the bloomberg business flash -- a look at the biggest is the stories in the news right now. management asset unit is considering raising as much as $1 billion for a private credit fund, according to people familiar with the matter. the size of the fund could change depending on customer demand. they recently moved the fun to its asset management unit to a private bank so i can widen access to institutional investors and high network -- high net worth clients. the london stock exchange group will likely not follow on the same -- followthrough on the french clearinghouse according to people familiar with the matter who say they agreed to sell the clearing unit as part a the effort to approve merger. the planned takeover has all but collapsed. an official regulator of each
show of the deal is expected this week. the dutch coatings company will unveil a plan to drive growth by breaking up into two businesses. the plan will be unveiled next month. they say that will open up ways to improve profit margin. a hostile takeover is still an option. that is your bloomberg business flash update. scarlet: still ahead, with the postelection rally in stocks looking fragile, investors are putting the most money in years in etf's. we will follow the money in today's options insight. this is bloomberg. ♪
oliver: scarlet: this is bloomberg markets. it's time now for options insight with abigail doolittle. joining us is the equity strategist from macro risk advisors. thank you for joining us. we have stocks higher and we have a case of by the dip but our hand. is this the right thing to do? right it has been the thing to do and a lot of institutional investors we talked to are underinvested right now. generally, that has been the feeling -- this unexpected rally since the election has not been taken to kindly and businesses have not been participating as much as we would like them to. abigail: last week was the worst week for the major averages this year. has this brought more action for you and your clients were still some of the quiet action we have seen? guest: when you get stuck at excitedge of you get
but in the grand scale, it's a very small move. we did see a pullback in financials and industrials, and i would call that a little bit of profit taking. what are you telling your clients to do and what are they asking about? guest: right now, given that we see volatility remaining low in the short-term, we are looking slightly had in the future, .ooking at european elections the french elections have been a big topic we are discussing, specifically how much risk european markets are pricing in compared to the u.s. they are pricing a significant increase in volatility around the second round of voting in the french elections compared to the u.s., which is not pricing in much of anything. abigail: in terms of going into whether orcare bill,
not president trump will be all to spur the economy, that has not been spurring the options target but the election season is? the u.s. options market are quite anemic in general. you really see a big uncertainty priced into europe and that is where i get into my trade, that the european economic data has been taking a sharp turn upwards. we have seen european -- a seeing how much risk europe is presumably, if marine le pen loses, you could see european equities take off. abigail: how do you play that? fed's we like buying the
may 30 call and it protects us from loss should marine le pen win and the rail the rally. abigail: thank you very much. very bullish on europe. ahead, a look at the state of retail and where things stand when it comes to retailers -- are they at ground zero for the next credit crisis? this is bloomberg. ♪
white house spokesman sean spicer told reporters the administration is listening to lawmakers but has no plans to repeal and replace the affordable care law in the near future. >> have we had discussions and listen to ideas? yes. reactively planning an immediate strategy? planning antively immediate strategy? not at this time. a house democrats accuses the president of trying to silence media voices he believes have either been critical to him or his team. that is after a move by the administration to cut funding for public broadcasting. under the budget proposal released earlier this month by the white house, the 50-year-old bbs corporation will lose all federal aid. pbs will lose all federal aid. a federal judge has approved a deal to replace water lines at