tv Whatd You Miss Bloomberg January 26, 2018 3:30pm-5:00pm EST
has to be leveled when it comes to trade. president trump: we cannot have free and open trade if some countries exploit the system at the expense of others. we support free trade, but it needs to be fair and it needs to be reciprocal, because in the end, unfair trade undermines us all. said thatpresident american economic growth promoted by his policies would .elp the rest of the world the united nations security council is heading to washington on monday for lunch with president trump and to see missile remnants that the u.s. says is proof that iran is arming rebels and yemen. the trip was organized by ambassador nikki haley. took journalists join anti-debt hanker near a military base in washington dc fragments from missiles recovered from yemen. the u.s. leaves they were
supplied by iran. after six weeks of reviewing evidence, police confirmed that the death of a millionaire couple was a double homicide. they were found dead inside a home on december 15. police say the couple was targeted, but there are no signs of forced entry into the hall. no suspects have been named in the case. yet addressed members of parliament in with this tingling today. them a -- in northeast england today. >> this relationship goes both ways, as we move from being a member of the european union to its closest to her. -- closest partner. it is one that will endure to our mutual benefit for decades and generations to come. mark: the u.k. will not be involved in crafting new eu
laws, but the bloc could make the country accept new ones during the transition period. global news 24 hours a day powered by more
than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ♪ julie: live from bloomberg's world headquarters in new york, i am julie hyman come in for julia chatterley. scarlet: i am scarred through. joe: i'm joe weisenthal. julie: stocks are in the green but the dollar has had a rough ride. joe: the question is, "what'd you miss?" scarlet: gdp reports speedbump for the dollar. growth seemed out of reach in the fourth quarter. harassment allegations against steve wynn taking its toll on wynn resorts. the billionaire many is denying
reports he sexually harassed a number of women. another pocket of winter weather is heading for the u.s. ironically, rising temperatures around the world may be responsible for an increase in the
winter cold snaps. what'd you miss? it has been the dollar's worst start to a year since 1987 and could get a lot worse, regardless of whether the trump administration wants strong u.s. currency or not. the plunges preaching technical barriers that have stood as the proverbial last line of defense against the significant gap lower. ise to explain his global -- a global macro strategist. let's leave all of the back-and-forth and the rhetoric out of davos aside for a moment. when you talk about technical barriers, what are we watching? >> the bloomberg dollar index, things just started to snowball. the dollar was in a downgrade even before we got to this week with the comments from mnuchin adding fuel to the fire. trump locked it back, and no one
is giving that a lot of street credit. fallollar continues to commended kuroda through some more grease on the fire. i talking about the moving averages you are watching on the dollar index? they have broken through the third standard deviation from the average mean from which is a really stretched over valuation. 's ridiculously oversold. if you are looking at this at a normal time, you would think it is a great opportunity because it is overdone and keeps on going. momentum traders lead of the way . potentially we are in a situation where this is a trend which we have not seen the currency markets for a while. julie: that is happening in stocks as well. scarlet: yes, it is. it is not in isolation. bloomberg just pulled up the dollar index. which is the biggest driver of the dollar weakness? is it the yen?
is it the euro? vince: hard to say. yen has been a main driver of it. it was the key driver today, for sure. the other day it was the euro. a lot of people were thinking draghi would walk back the rise in the euro a little bit. in some ways he tried to. but as a proper central banker -- a drifted off a little bit and then the market just went with it. joe: do you have a favorite three for why people are selling the dollar? it is a combination of things. you have fiscal policies, you have tax incentives coming forward which suggest we have major repatriation, should be buying the dollar, should be good for the u.s. economy. at the same time, you have the administration talking trade wars. trade wars are protectionist and
eventually creates a scenario where growth slows because people avoided dealing with you and at the same time you get inflation. make them stop giving money back to the united states until they get a better picture. it creates more uncertainty. scarlet: it should create a wash at the veneto of the day. vince: suppose you think the dollar will depreciate over the next two years. what good is a 10% tax benefit going to get you if the assets you are going to get back will depreciate by 20%? minus molly huddle the time is right when you think the move is over and waning and then you can andthe best of both worlds get the dollar -- forget currencies back when they are strongest against the dollar. joe: is there any reason to think that corporations making those decisions are good market timers or traders? vince: they are usually pretty lousy at it. earnings-per-share would have been 5% or five cents higher if not for foreign exchange.
scarlet: fluctuations. vince: i always look at that like it looks like a want ad for foreign exchange manager. julie: when you look at the effect of trade wars could have with this potential stagflation environment, that would take a while to come to fruition. when you are looking at the dollar, how far out is it discounting these various scenarios? vince: the problem with the dollars you have these other countries creating trade pacts and basically bypassing the u.s. administration. if the rest of the world involve themselves in multilateral, bilateral trade without us, it puts us in the backseat and andr countries in the fore, we could get to the bad place a lot faster than anyone else in terms of economic growth. scarlet: the trump administration has put out a multitude of statements, steve mnuchin most notably, saying the weak dollar is an actress.
-- is in our interest. but have walked that back, nonetheless they all talked about the benefit of a weaker dollar. vince: if you look back to the rubin administration, it was such a sweet spot for the u.s. in the late 1990's. conservatives working together with clinton and thing and yet you at the stronger dollar and inflation was under control. stock market, bond market, housing market -- these are the things that propel u.s. economic growth. when you start to look at the weaker dollar and protectionist issues, that pushes money outside of the u.s. and looks for another place to go. julie: how does that -- joe: how does that fit with incredible rally we have seen in equities, which doesn't look like a market where people are nervous about the u.s.? vince: i honestly could never figure that one out. [laughter] vince: i think people are
placing their bets that the earnings of u.s. corporations are going to muscle through regardless of what happens. if the repatriation doesn't come, doesn't come from overseas as well, it keeps the stock market going. julie: at the same time, matt winkler of bloomberg wrote an interesting opinion piece when he said the stock market has been up a lot, but the other global stock markets have been up more on the relative basis. in that sense there is money flowing here, but there is perhaps more money -- scarlet: relative underperformance. even the numbers on their own are pretty impressive, the president likes to trump that. no pun intended. global macro our strategist for a wild week for the dollar. wynn shares down this afternoon as the company faces calls to investigate chairman and founder steve wynn over allegations he essentially harassed numerous
settlement to one of the women featured prominently in these reports we are talking about. how is he circling that square, so to speak? >> well, we had written about the settlement before. we had identified it as a multimillion dollar settlement. wynn never denied paying it. he just said that the women's -- woman's allegations were false and that is still his position today. otherticle had a lot of allegations, the history and pattern of this, and it is a big problem for steve wynn. certainly in the short run we will see cancellations of events and conventions at things like that at wynn's properties. we are expecting some follow-up announcement over the weekend from the wynn for taking some sort of action. investors are calling for an investigation outside of women's advocacy groups who are calling
for him to step down. the lasis, how did vegas gaming control board -- what kind of purview do they have to look into stuff like this when it comes to wynn's gaming licenses something like that? chris: they always look into this stuff, they read the papers . they have a little more leeway with somebody trying to get a license, and you have to prove yourself worthy and it is very rare that they revoke somebody inino license, particularly a situation like this where steve wood has not been convicted of anything. he is such an important, beloved ,igure in las vegas and nevada the commission would be taking its time before reaching a dramatic conclusion. julie: chris, all of this came out as a result of steve wynn's acrimonious battle with his ex-wife, who is trying to retake some of her voting shares of the
company that he got because of the prenuptial agreements, this whole complicated situation. that is how news of this settlement we are talking about first came out. he is saying that she place to these stories. how do we get to the truth of it amidst all of the back-and-forth between them? chris: the truth is it is always very difficult in these , whether these things happen in massage rooms or his office at the wynn resort. no doubt that you lane -- elaine 's case looks a lot stronger. she has said that this company and the board in particular was asleep at the wheel and allowing things to happen to endanger the business, and that seems to be the case today. bit aboutalk a little who would be second in command if steve wynn needs to step aside or if the board asked him to take leave of absence. should the allegations continue
to haunt him? chris: he has always been sort of a control freak as the chairman and ceo and everything at the company. his name is on the buildings. but he does have a president, i number two, a young -- 41 years old. he has been at the job and the company a long time and is respected in the industry. if the board were to take action to have steve step down from i would not be a surprise -- it might be a situation where they bring somebody else as chairman and him as the ceo. julie: steve has become increasingly prominent in the political world. he is the chairman of the finance committee of the republican national committee. have we heard commentary from that? what is the expected effect on his political influence? not publicly from them. remember, this was a group that last year was going for the democratic committee to return all campaign contributions from
harvey weinstein when allegations about him came out. they have not said anything about their finance chair. steve is not actually a huge giver himself. to the republicans is he is able to bundle and make a lot of phone calls and get other people to give. we have not heard of any movement internally to oust him from that position. no doubt this would be a topic of a lot of conversation the next two days. julie: chris, thank you so much, and we will count on you do keep us posted on any developments in this story. it is time for the bloomberg "business flash," a look at the biggest business stories in the news. paul singer's elliott management is taking a stake in the uk's sky plc. the headphone has a 1.09 interest via derivatives. this is shareholders prepared to vote on the potential deal. 21st century fox's offer for sky awaits clearance from u.k. regulators and politicians. a final decision is expected in june.
almart is joining forces with japanese company that will bring and e-book catalog the u.s. stores later this year. it includes a revamp of walmart's online grocery service in japan, which will roll out in the third quarter. that is your bloomberg "business flash." scarlet: investors could be gearing up to make some changes in the coming weeks. it could make it harder for 2017 -- excuse me, harder than 2017 was for asset managers. erik schatzker sat down with mary callahan at the world economic for it in davos for more on this. >> 2017 was a good year for net inflows and markets and for almost every market. 2018 is going to be a little harder. you will get this connection in stock versus bond markets. flows will continue if the first couple weeks of the year are any indication. people want to put money with people who know how to get it to
work, and we happen to be a recipient of that, and that is a very great honor that clients continue to give us those assets. working hard to do that. i just think where you do it and how you do it, you have to be a little more particular rather ,han -- there is a lot of perhaps more luck and momentum last year in just about everywhere you put the asset. erik: here is maybe what you are getting at -- treasury yields are rising, there is more and more talk of inflation. our clients starting to pull back on fixed income it? mary: we have seen some just in the early read at the beginning of 2018. i don't think clients will pull out of fixed income and todo. i think clients will reassess long-duration portfolios. a lot of these smart fixed income managers can go long and short and don't have to be bound by a particular duration of an index.
that is what people say, i don't want the income, i don't want the yields. this is the part of my portfolio i don't want part. help make think about how i get that yield to go anywhere in the world, anywhere in the structure, but be careful on the duration. have you seen anything yet to suggest that the outflows from equities are going to stop? we continue to see inflows in the active products. in general around the world, people often found passive portfolios might be easier here. thinking about ways that i can deploy my money quickly and let it rest. you have seen a lot of money shift hands. you have seen a lot of money, out of active managers who have not delivered what they promised. you need to add above and beyond your fees to provide those insights to clients. active managers today -- you look at 2017, across the board
the great active managers of our .ime have had a phenomenal year you are not talking about 20, 30, 40 basis points of extra performance. you're talking about 2% or 3%, real alpha. now people are saying, hang on a second, it is not just that you have a fiduciary obligation, you have a fiduciary obligation to think about in those asset classes where alpha is of such great importance. think about emerging-market equities as a perfect example. it is really important that you have somebody who knows how to navigate is markets and allocate that to you. scarlet: that is erik schatzker speaking with mary callahan erdoes. coming up, as bitcoin falls, short-sellers increased bets against cryptocurrencies. this is bloomberg. ♪
scarlet: i am scarlet fu. what'd you miss? in the early days of 2018, it is clear the market trends in place -- like a volatility and markets moving in one direction. at some point that has to funny to. perhaps steven mnuchin's call for a weaker dollar marks a turning point. when this speaks, as it has recently, amy the data is eating economist -- beating economist'' estimates. today we have fourth-quarter gdp data that missed and new home sales that also fell short a get. the bottom panel is the monetary policy uncertainty index. it is holding at a new low since the bull market began. up just a little bit. 20 devices that these historically preceded a reversal. we know that the vix started the
month at a record low of nine. getting close to 8, perhaps. well below the historical average of 19. remember those days? julie: vaguely. what might make investors pretty darn confident right now, they have more money in their pockets. if they are holding stocks, they held them in january. we saw a 7% gain in january, which on a historical basis is nowhere near a record. but on a dollar basis it is. we're talking about $2 trillion added to u.s. stocks during the month of january, as we saw this piling-in phenomenon for u.s. stocks. more investors are finally saying, all right, fine, i'm going to buy stocks because they keep going up and that has led to this big surge here in u.s. stocks on the dollar basis. to chile dollars -- $2 trillion.
is lookingonomy good, volatility is low, money is pouring into stocks. one area that is seeing a breather is decrypted. we know the various cryptocurrencies have come down a little bit since their highs last year and early this year. remember those stocks that were calling themselves crypto stocks -- dubiously, in many cases -- well, they are not doing so good. the shortine is interest. people are realizing, wait a second, maybe a lot of these companies are not going to make crypto fortunes so easily. maybe people were bullish in bidding them up. pretty significantly for that basket of names. although they are still a lot higher. coming down but not all the way. ofrlet: still no pets.com
stocks closing higher this friday. all three major averages are at record highs. but the dollar did resume its slide today. julie: i am julie hyman, inferred giulio chatterley. scarlet: i am scarlet fu. joe: i am joe wiesenthal. if you are tuning in on twitter, we welcome you. we begin with our market minutes. u.s. stocks closing at record highs. the dow, s&p and nasdaq climbing to new records. i know, i know, broken records. yesterday., earnings helping to drive these new gains. certainly was not on the gdp report, which came in weaker than expected. joe: still pretty solid, personal consumption was solid. the idea of the economy is coming along silently. julie: a broad-based rally today. all on the s&p 500 higher. stocks rising for everyone
that fell. a good ratio. let's look at stocks on the move. not everything was raising. we have been talking about win resort and that alleges sexual harassment from steve wynn, allegations from numerous women over a period of years. and at calls to oust, the very least, investigate his actions. uber shares, renewed speculation that there might be an acquisition target. whenok further of a leg up research said it was a buyer of the stock. bombardier shares rising after it won a court victory, a ruling by a u.s. trade court that said series jets toc delta airlines will not hurt american industry.
there had been a proposed 300% tariff. to a 17 year 10.5% high after giving a quarterly and annual sales forecast that beat estimates. showing that even despite that issue with vulnerability, it is not seemingly affecting the business. joe: let's take a look at the government bond market. rates up today. a classic risk on today because we have the selling of treasuries. two-year yield up to 2.12. we are solidly above it. this continues to power higher. the long and moving, as well. 10 year yield up to 2.65%. scarlet: the story of the week has been the dollar. the biggest one-week drop since july of 2016. almost a relentless plunge. thursday being a little bit of the exception when the president
said his comments about steve mnuchin were taken out of context. the gllar is weaker than 10 currencies such as the aussie, the pound, the looney. canada had a report that said headline numbers slowed in december. but, a quickening of inflation. let's take a look at dollar yen. it is a big reason the dollar remains so weak. the bmj said it saw progress on wages and prices. on alert for any signs be o.j. make take steps toward ending qe. woulds not matter kuroda look into ending expansionary policies. joe: let's take a look at the commodities. above $66 a barrel on west texas intermediate. gold, selling off a little bit. lumber futures up another 2%. this is a 24 year high in lumber.
a cyclical commodity associated with housing, all that kind of stuff. in itself, a decent sign for the economy. and those are your market minutes. scarlet: "what'd you miss?" the world's biggest economy doing fine, despite missing estimates. oftained 3% -- how the goal 3% growth might be. let's talk to a chief investment officer at oppenheimer funds. 2.6% print for the first quarter. that is the first estimate, versus a consensus estimate of 3%. is this the u.s. perhaps slowing first before the rest of the world? >> no. if you look at the final sales numbers, they were pretty good. at the end of the day, that is the core of the u.s. economy. inventory and trade took a little away from the headline number. i think the core strength in the economy is there. whether that would be the case
in the second half of 2018 is an open question. most ominous, the sign is the savings wage, which has come down meaningfully. that does not mean growth will be constrained, but people would have to be taking on a lot more debt. after the financial crisis they were not doing that. but now they would have to. joe: to what do you attribute lack of savings? people are feeling good, will have their jobs for a while? krishna: i think it is straightforward. wages are not going up as much as consumption is going. if the economy is going to maintain its course, at some time, wages would have to go up in a meaningful way, and that is not taking place at the moment. julie: that does feel like an ominous sign of people are not earning enough for what they want to spend, and therefore, are saving a lessor dipping into their savings, right? krishna: absolutely. when sales were hit reasonably
high, you have that cushion. that the savings rate would provide you the growth rate and consumption without significant income growth. but we are eating through that question really quickly. joe: what does it mean for the fed outlook for this year? we have incredible sell off continuing in the short end. 10 year yields, higher. pretty decent economy. what do you see how they approach the early weeks? krishna: today's number does not change anything meaningfully. headlinehe fact the number was lower. core strength continues tightening for the foreseeable future. the key for them to accelerate from the path they have laid out, three tightening's to four tightening's some people are expecting, you have to see some sign of inflation. do notdata, you still have any sign of inflation. yes, they could tighten four
times. does not mean they are not tightening over the next few quarters. reporters, one said the mood of there is euphoric. that euphoria is evident across assets, right? you look at the stock market, other risk assets right now. given your outlook for the fed and inflation, is all of that euphoria justified? krishna: i think if you are toking for signs of euphoria give you indications as to what the economy is going to do, go in reverse and see if people are -- who are employed are feeling euphoric or not. at the end of the day, consumption will drive the economy higher. investment can add to that. theat the end of the day, investment of the component of the overall economy is significantly lower. increaseage growth or in debt growth rate for the u.s.
consumers has to take place. it can come about, but we have to see signs of that. scarlet: put it all together and tell us where that leaves the bond market. is the bond market going to enter a bear market? is it there yet? or another false sign? of the: i think the talk bond market that is highly exaggerated, in my view. the day, the talk at the end of the bond market is a cliche. about cyclical issues and secular issues and confusing the two. from a cyclical standpoint, synchronized global growth rate does not require this level of stimulus. haveg said that, we still significant secular issues. the glut in asia, the demographics, technology, all of those issues are with us. and inflation is not rising because of those secular issues. from a sick -- from a cyclical
standpoint, we do not need accommodative policy, so the fed will tighten. but expecting the bond market to to solve ourr more return problems, i do not think is happening soon. joe: what does the bond bear market look like? usually we are thinking stocks, 20% klein, 30% decline. decline, 30% decline. krishna: that is the crux of the issue. in the current circumstance, can bond yields go to 3%? they certainly could. we could see that in a short. bang of time -- we can see that in a short period of time. existed in the marketplace before the financial crisis. if we get to that level, we could have the death of the bond
market has happened by then. that would be a true bear market. getting rates up to 3% is not a bear market. it is reflecting the cyclical recovery we have seen in the global economy and u.s. economy in particular. julie: thank you so much, great perspective. krishna memani, head of fixed income at oppenheimerfunds. we are focusing on trade, the fate of nafta. we will be live in montreal, next. from new york, this is bloomberg. ♪
he just left switzerland after addressing the world economic forum. foreclared the u.s. open business, as he pitched his america first agenda as beneficial for the world. he held talks with the leaders of britain, israel, switzerland and rwanda. next week he will have his first date of the union address. the spanish government is challenging the candidacy of catalonia's fugitive ex-president to lead a regional government. the parliament of catalonia will debate and vote next week on whether to reinstall carles puigdemont as the leader. the deputy prime minister said today as a fugitive, preached puigdemon cannot be reelected. in paris, thet seinnes river is at record levels, close to a 34 year high. dozens of residents have been forced to read -- leave their homes, after heavy rains.
parisian authorities have closed several tunnels and the bottom floor of the louvre museum. accusedby's legal team of destroying critical evidence they say could've helped the 80-year-old comedian's defense. he is accused of drugging and molesting a woman in his home in 2004. lawyers said prosecutors waited until the last minute to mention an interview when the accuser said she was never assaulted, but could make money suing the comedian. the case ended with a hung jury. they wanted thrown out before the retrial scheduled for april. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. julie: "what'd you miss?" president trump joining median and mexican officials with an upbeat tone on nafta. they expressed hopes on talks in
montreal saying, we're advancing, having good technical project -- progress. and theyet to analyze discussion continues. let's get the latest from bloomberg's economic policy correspondent in montreal following the talks. mike, in the past some of the president has been like, maybe we will keep it, maybe we won't. is this a change in tone? be, no one knows exactly what is going on at this hotel. of there is a with -- whiff optimism here. the question of whether nafta could even be renegotiated. hearing negotiators talk about the possibility of extending the talks, possibly by a couple months, and suspending them into 2019 to get past the mexican and u.s. elections. there are 30 chapters in the
nafta treaty and they are hoping they might have made enough progress to close between six and 10 of them by the time of this round is over here in montreal. the tough stuff is still to come. as long as they are making progress and talking, people are optimistic. is the: making progress key. you mentioned there are 30 parts they would have to renegotiate. how many have gone done? have they of nafta come to agreement on and can set that aside? mike: we know they have done two. they are hoping to get several more, maybe as many as 10 by the time this montreal round continues. they are working on telecommunications, digital --merce, sanitary and sanitary chapters, which means animal feed, biological waste. those are things they think they can get done. not get done, the
dispute resolutions, auto content. those may take longer. they need the principles to address. they will be here until monday. joe: there has been talk of the thorny issues. i know one was the idea floated about a nafta sunset, potential review every few years. is that something still in the air? there seems to be a desire to work on that one. we have not had a lot of reaction to the u.s. by proposals that have been floated. but we do know u.s. officials are paying attention to that one in particular. cancel that would every five years unless renewed by countries involved does not give business a secure training horizon. mexicans haveand been saying, let's review it every five years, updated so we do not go through this process again.
but we also do not give business is an artificial deadline they have to react to. that tougher issue might be the easier to solve. julie: we also were watching canada and the u.s. because of bombardier and boeing and the trade dispute between the two. trade tribunal ruling in bombardier's favor. does this change of the talks, now that this is not hanging over them? we don't think it affects the specifics of the talk. it may affect the mood a little bit. this was a complete surprise. canadian officials told me they were resigned to losing this case. the fact of bombardier was able to win is good news for canada, good news for bombardier. the canadian union is already calling on bombardier to move at their production line they were planning to move to mobile, alabama back to canada. they say that commerce
department, president trump's commerce department, said there should be 300% sanctions. but this independent tribunal ruled against it. administration put more pressure on canada because they lost the case, or give up and say it will not negotiate our negotiation -- affect our negotiations? scarlet: it seems all sides aren't optimistic. it may run up against mexico's presidential election, and u.s. elections in november. how does that complicate negotiations? we heard the mexican economy mr. -- minister tell bloomberg television from davos he thinks they could go up to the election. it may not complicate things, as far as he concerned -- as far as he is concerned. trump comments on mexico and the
waning -- the way the negotiations are going, the leader of mexico is not particularly disposed to the united states. but they say we could maybe meet in april or may. and wait until after the u.s. midterms. but just leave them where they are if everyone agrees we're making progress. and work around the politicians. scarlet: that would be novel, calling a timeout before the elections and coming back to the table. thank you so much, covering the nafta discussions. coming up, u.s. growth last quarter adding pressure to the greenback, which resumed in the march to the worst. where will the bumpy ride take the u.s., next? this is bloomberg. ♪
scarlet: "what'd you miss?" weaker than expected gdp delivering the latest blow to the u.s. currency. the report sending the dollar to a three-year low -- 3.5 year low. what does this mean for the suppose ago love getting too consistent gdp every quarter? matt bulls alert here with charts. walk us through with what you dugout. matt: gdp missed estimates. it was due to noisier components that swing around, like trade in inventories. when you drill down to the underlying fundamental trends in the u.s. economy, the report was quite good. these two lines that show the two key indicators we watch. the amber line is the contribution from consumer spending. that has been steady for a few years. the blue line is contribution
from business investment. that dipped quite a bit in 2015 and 2015 and 2016 when we had the oil crash and surge in the dollar. that hurt the oil industry and u.s. manufacturers more broadly. you can see over the last year that has rebounded quite a bit. and we are back to levels where we were before. that is a good sign. it calls into question his nest investment going forward. joe: it looks like balanced growth, not relying too much on anyone leg of the stool, well-rounded. matt: of course. that was the question a few years ago, when it tell off the cliff. scarlet: let's dig into business spending. is capitalat expenditures, investing and equipment. matt: that is a key question for the outlook going forward. with all of the stuff we have going on in congress, tax cuts, tighter labor market, are we going to see a pickup and investment? if you look at the chart, these
are the three main components of business investment. the blue line shows equipment investment. that is where a lot of the rebound has come from. the amber line is structure -- buildings, have not picked up as much. the red line, intellectual property, software, which has been more steady. the equipment investment is what has rebounded. the question becomes, how much of this is due to payback from the slide we had in 2015 to 2016, versus what is a new trend potentially taking it higher going forward? the other thing to note, equipment investment is the one where it seems there would be upside based on how high it has been in previous expansions. whereas the other two core or where you would expect. scarlet: what about the tax change? matt: that is a good question. i don't think we have that well thought out at this point. you can make different cases for all of them. it depends what industry you are focused on.
we would expect to see more in equipment and ip as opposed to structures. julie: speaking of which industry, it is interesting when you look at the equipment, where the investment is specifically. thebiggest increase now, most investment, looks to be medical equipment. matt: this is the most interesting part, to me. if you look at that equipment investment number, there are things from computers to truck's. is the red line. blue, communications, -- computers. the key driver of the boost of investment. thatnteresting thing is, information processing equipment category includes medical equipment. which is something a lot of people don't realize. you think of that as computers. you can see it in the latest report. investment and computers have picked up quite a bit.
it also fell in 2015 and 2016 when we had trouble in the oil patch and manufacturing industry. it is not clear how much is a rebound. the higher trend is an investment in medical equipment. processingng up equipment. it may be something to watch in terms of what we can see higher investment from going forward. julie: that may speak to one of the areas we are seeing inflation, and health costs, which continue to see increases. maybe that is a reflection of the aging population. matt: and the structural shifts going on in the u.s. economy. oils not so much about extraction as it used to be, but now we see the rise of the health care sector, becoming a big driver and investment. bringing usboesler, great charts as always. president trump said in a report he wanted to fire robert mueller
>> i am mark crumpton with first were news. senate minority leader chuck schumer has or checked in the white house's new integration framework, calling it the wish list immigration hardliners have been requesting for years. the administration offered to give 1.8 million immigrants brought into the u.s. as minors a path to citizenship. but also, reductions in family-based migration, and a trust fund from border security, including the president's wall. they imposed sanctions on 29 people and nine companies linked to russia's actions in ukraine in the annexation of crime era -- cranial. -- crimea.
washington is also targeting several russian officials, including the nation's deputy energy minister and companies involved in building infrastructure in crimea. mark hollis stepped down in the wake of a sexual scandal. -- hisunced his fire stepping down. nassar, a former school employee accused of molesting dozens of young girls and women for years. also worked for usa gymnastics, where he worked for elite gymnast, including several olympians. if you are a resident of the united states and not feeling well, you have a lot of company. the flu blanketed the u.s. again for the third straight week.
we have been following and talking to that state health department to ask what kind of flu activity they had seen. the third week in a row 49 out of 50 states are indicating there is widespread activity. threee not had that, weeks of 49 states, since we have been collecting this information. >> that dr. said the cdc estimates the flu season is at its midpoint and people need to remain vigilant if they are to avoid the virus area -- virus. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. crumpton, this is bloomberg. ♪ scarlet: let's get a recap of today's market option. the dollar fell, u.s. stocks rose. record highs. advance.ad an the s&p 500 had its biggest one-day gain -- julie has a
chart of this -- since march. julie: this chart also does a good job of showing the yellow percent moves. i have circled the move we saw today, as well as the move we saw last march, that was of the same magnitude. this is all in the piece, with the low volatility we had seen, has come small, daily moves in the s&p 500 on a historical basis. this is only the fourth time in the past year the s&p has gained more than 1%. likewise, only four times it has fallen. joe: i knew it was steady, but that is surprising. julie: exactly. "what'd you miss?" report said back in june trump wanted to fire robert mueller. according to people familiar with the matter, it raised concerns among his top aides
that the president would be putting himself in legal jeopardy. the new york times said president trump backed off after someone refuse the order and threatened to quit. the president called the report fake news. heats up,'s probity trump will react in an increasingly volatile way. our guess is with us here on set. great to see you. we got these reports, which i don't think are particularly surprising. this is something which had been speculated on. think it would not be a surprise to see trump tried to make this kind of move? investigationthis ends up in snaring jerebko -- jared kushner or donald trump, jr. or donald trump himself, he will fire mueller. he will not even think twice of doing it. stakes arent, if the that high and his family members
are involved, i do not think he about issues don mccann cared about last june. are you trying to get around and obstruction of justice investigation, and are you feeling recognizing the independence of the fbi? those are big issues. in the years those of happened, mueller is -- has indicted trump insiders. the investigation has become more broad-based. there are more reasons for trump to fear it. he has yet to pull the trigger on going after people closer to the oval office itself. scarlet: this happened last june but we are hearing about it now, which is curious. a lot of people think the news we are getting from inside the white house is leaked by members of the white house administration. assuming someone inside the
white house is leaking this, why would they be doing so now+ tim: what is interesting, this broke when president trump was on his way to switzerland. he was safely incommunicado. if you're speculating why people in the white house maneuvered to get this information out, one could conjecture that they were worried about the same thing as last june, that he was contemplating firing mueller again. he gave an impromptu press conference in the oval office where he said he would love to sit down with bob mueller in two or three weeks, immediately freaking out his lawyers, who walked that statement back and said, we're not sure what will happen. the president will have to listen to the advice of his counsel. and of course, he never listens to the advice of his counsel. they have been trying to figure out, how to human or the president to make a responsible decision and new the right thing? been morethere is chatter inside the white house
said he would fire mueller again. joe: in your column for bloomberg view, you call the president a survivor to his core. looking back at his career, are there any parallels where there is some big decision that seemed a good survivorship tactic, but potentially damaging? tim: being a survivor is a strength. careerhad a long, knotty in the public eye and in new york. the most direct comparison in his business life was when he almost went personally bankrupt in the early 1990's. he was guaranteed $900 million or so in debt. notad been spending money, judiciously. of the banks came calling and wanted to be paid back. his life was falling apart, his marriage. he began lashing out at everyone around him and ended up very isolated. episode,one says this
hearing how he wanted to fire mueller in june, shows how weak this president is, that white house staffers are overruling him. he wrote, most presidents are concerned by the strong example, a reputation for honesty. trump ignores those incentives, compared to most presidents, to do almost anything. a shoot from the hip, carpe diem president. how does this work with a deposition? tim: he is the worst witness a lawyer could have any deposition because of everything you just said. a shortnot prepare, has attention span, does not like to read. lawyers carefully prepped witnesses, they have binders of material to study. trump never does that. truth is a good thing to have any deposition. donald trump is a serial
fabulist. hard for him to stay on message and tell the truth. withy, he is so consumed the idea he is the first mover on everything, even if he is questioned about an event, it can be useful for him to say it is one of his deputy's positions. but he will never do that because he is them over, the man. he is nitroglycerin in the deposition. scarlet: challenges for the white house counsel. tim o'brien, thank you. coming up, a puppet of frigid weather have -- heading to the u.s. again. what it means for natural gas reserves. joe: get involved in the conversation. send me tweets. this is bloomberg. ♪
scarlet: "what'd you miss?" frigid temperatures bearing down on the u.s. sent nasdaq future prices to the highest in more than a year, as the threat of another arctic blast becomes likely, an already depleting 2018. it is only january. joining us, a chief meteorologist. natural gas -- i thought we figure this out. earlier this month, things got more towards glib rim. now reaching to an imbalance point again? >> earlier on we were confident we would make it through the winter with enough gas to not have too much market panic.
we had severe cold in january, set a record amount of gas we withdrew from storage in january. now we will get a warm end of january and things will calm down. the problem is, we are getting a second round of cold in the middle of february and stockpiled are low enough traders begin to worry, how much gas will we have at the end of this winter? julie: to show a chart of u.s. natural gas consumption, which is unsurprisingly peaking when you have cold weather. you can see it peaking every year, but this peak coincides with warm weather -- cold weather. joe: it is going to get even colder? in newi promise here york it will be upper 40's. a nice weekend. cold is on the way again, so don't get too excited. we are nationally heating demand low before we take backup. snap, as upcoming cold
couple weeks ago it was national. we saw stories about snow in texas and freezes in orlando. is that what we're looking at? jacob: there is still uncertainty. two or three weeks out. the first weekt of february in the midwest will get quite cold. it does not look to get to the south or east coast yet. is -- it is the second and third week of february our weekly models show the risks could become nationwide and that is driving up prices. if that cold does not arrive or is not as intense, you will see prices fall back quickly. julie: all of this is very short-term focused. we look at the next few weeks out, what the natural gas market will do. there was an interesting story on the bloomberg today that talked about the effect climate change is having on the cold weather. counterintuitively what we called global warming could be
contributing to some of this cooling and creating longer-term shift. can you talk me through some of that? of climateconcept change, we have altered the base state of the earth's climate. with the amount of carbon dioxide we have fundamentally changed the way that mr. operates compared to 100 years ago. trying to nail down the exact impacts of those is a very imprecise science. they did recently released a report where they broke down what we can and cannot attribute to climate change, attribution science. periods of warm and cold weather over weeks or months, those we can more readily attribute because they deal with broader changes in the weather patterns and climate system. individual storms are much harder. but we are seeing differences in the jet stream. where it is not just, it will be warmer everywhere, it is disturbed in times that can create wild weather. look at then you
north american jet streams, they are moving in unexpected ways. but is their predictability or a pattern to the new ways in which they are moving? pattern, seasonal forecasting is imprecise. trying to nail down the impact of climate change is even more imprecise. said, it is not something where we are dealing with entirely new weather patterns. we are dealing with slightly altered weather patterns. the cold we're likely to see in february is not anomalous. this is february in the united states of america, cold happens. sometimes you do see things that have not happened before, i wonder if the altered base state is playing a role? it is not that it is driving it, it is the weather. joe: back to the relationship between cold weather and natural gas, how much is the growth of natural gas exports, arising,
blooming area, change the historical interplay between cold weather and natural gas? one thing as exports rose, you would see more sensitivity to whether because the residual demand of the u.s. would be less gas. it is not risen that much recently or tightens the market. instead, we have seen production rise more. we're still in a gas glut. the prices are not moving much at all. we are confident the next few years we will have plenty of gas. up our: just to wrap conversation, i am looking at a chart that shows future prices on the upswing, that is the white line. blue bars show change in the stockpiles. gas producer or distributor, what about the price changes in january? do you change the way you operate? or next winter jacob: natural
gas markets got a little bit cocky. they did not fill stockpiles to the brim this past injection season over the summer because it did not feel it needed to. it thought it could produce its way out of any problem. a lot of that production did come online. but cold in january was enough to freeze off production. we did not see the supply we expected. now we are dealing with a shortage at the end of the winter. but the market is confident it can reset -- refill storage during spring and summer. end of short-term story, february, beginning of march storage problem. by april, what price for next winter? julie: thank you, fascinating conversation, jacob meisel. praisent trump garnering from a crowd from his antiregulatory agenda, including brian moynihan.
scarlet: "what'd you miss?" too much capital. bank of america ceo brian andihan sat down in davos said why his balance sheet has $20 million more than he would like, but why he is optimistic about the recent tax overhaul. >> the economy is going well, consumers are spending. if you look at it, america is responding to a move back to regulation. businesses i talked to are very energized. they say, on a worldwide basis, we need a lower tax rate. on regulation, we need to come back to the middle of it. we will see that play out over time.
it is only four weeks old. whatever people done? it is only four weeks old, it takes time to make business decisions. it is good for the u.s. economy and the world. faster, the world benefits. our consumers travel and spend all over the world. >> you engage on a personal level with people in washington, government. what are you telling them you would like to see would be good for your company, your industry, in 2018? >> if we think about it for a continuing the balance and regulation, pro-business policies, with a balance to make sure we are doing what we are supposed to do for customers, clients and teammate, when you think about our industry -- >> is industry top of the list? >> -- it is less about changing the pendulum, but coming back to the middle. we are for balanced, reasonable,
strong capital and liquidity. we are spending a lot of money working on something that is not the issue. the prior administration and fed realized it was time to sort through, both at a u.s. level and global level. and greg mnuchin phipps, the roadmap they put out for that. they said, here is the way to do it. we have to get a lot done. >> in that fine tuning process, there are number of things that can between. ked.hat can be twea it is all of america, about capital, getting it back to investors. 200 billion dollars in loans before we need announce more capital. even replacing loans we're still running off. >> we're talking about a
surcharge? >> it is the process of getting capital out. we have about $20 million of extra capital, based on other measures. we like to return up to return that the shareholders. we have been more aggressive. last year we returned to $17 billion. we will do $10 billion the first half of this year. for us it is about capital, capital rules. that is unique to bank of america, we have such a storehouse of capital. now we have to give that back to shareholders. >> what about leverage limits and equity requirements? >> gold plating everything has an impact, that we can do as much for our clients as we could. if you said we needed 100 basis wents, 1% less capital than
do and be just as safe, i could make it may be more -- for us, that is about $15 billion multiplied by 10. that inefficiency have to be priced through the system. that would be the difference between 11.5% capital and 10.5%. whether we get there through the leverage ratio or the seek cart test, thec whole industry has that kind of capital. it is a little too much at this point. on the other hand, where the biggest commercial bank in the united states. we have an extreme interest in making sure the industry is well run well-capitalized and well done. by the way, my colleagues think the same way. and simplify the amount of
not only did u.s. stocks close at record highs, the s&p had its best rally since march. a 1.2% gain. announces its rate decision wednesday at 2:00 p.m. earnings -- apple, amazon, alphabets next week, thursday. scarlet: after the close. julie: and the u.s. jobs report comes out friday. will there be wage growth? bloomberg technology is next. joe: this is bloomberg. ♪
a conversation in the swiss else. he declared the u.s. open for business as he pitched his america first agenda as beneficial to the world. democrats ejected the white house's new immigration framework. chuck schumer called it the wish list hardliners have been demanding for years. it offers 1.8 million immigrants a path to citizenship but demands drastic reductions in migrations and $26 billion for increased border security. -- more follow from the larry nasa or sexual scandal. betsy devos says her agency has launched an investigation and will hold michigan state university accountable for any violation of federal law. nassar works for michigan state gymnastics. the director has stepped down. an outbreak of the flu continues to spread across the country for a third straight week. the cdc says so far the -- ha